(Adds details, background, company comment)
By Nick Carey
May 11 (Reuters) - General Motors Co’s South Korean unit reiterated on Friday that it should return to profitability by 2019 and that it will invest $2.8 billion in a new, small SUV as well as a crossover vehicle for the local market and for export.
This followed a more subdued outlook for the troubled unit from the state-run Korea Development Bank (KDB), which said on Friday the unit should swing to a profit from 2022 on the back of cuts in labor costs.
GM had said last month it could return to profitability in 2019 with $400 million to $500 million in annual cost reductions through plant closures, labor and other efficiencies.
GM and South Korea have agreed on a rescue package worth $7.15 billion, including $2 billion of capital spending by GM and a $2.8 billion debt-for-equity swap for existing loans GM Korea owes to its parent.
As part of its plan, GM Korea said it would design, engineer and manufacture an all-new small SUV, and an all-new crossover vehicle for Korean consumers and for export to other markets.
It also plans to engineer and manufacture a small, fuel-efficient three-cylinder gasoline engine in Korea.
“GM Korea now has the right fundamentals to grow a successful business in Korea for the long term,” the company’s Chief Executive Kaher Kazem said in a statement.
Editing by Bernadette Baum