General Motors Co. has finally come to an agreement with the union representing its workers in South Korea, following 26 rounds of negotiations since July. The vote was passed with approximately 54% approval, with 44% rejecting the vote and the remaining 2% of votes invalid, a union official told Reuters on Friday.
General Motors Co. (GM) agreed to drop a lawsuit filed against its union for damages caused by partial worker strikes that have cost the automaker lost production of about 25,000 vehicles. GM’s South Korean workers have been demanding an end to a wage freeze that was initiated after 2018. The wage freeze was imperative in preventing GM’s South Korean operations from going bankrupt.
GM offered a lump-sum payment worth around 4 million won ($3,664.11) to each member and raised discounted rates on cars for employees and their families. The company, however, dismissed the demands to build more vehicles at one of its plants and to raise the retirement age from 60 to 65.
GM has lost production of around 85,000 units over the year, and last month, issued a strong warning that persistent and continuing industrial unrest could threaten the car maker’s sustainability to continue operating in South Korea. (See GM stock analysis on TipRanks)
Barclays analyst Brian Johnson reiterated his Buy rating yesterday with a price target of $49 (17% potential upside). Johnson recognizes GM’s readiness to tackle the Electric Vehicles (EV) market and expects EV “enthusiasm” to continue into 2021 given the Biden administration’s CO2 regulation policies.
Consensus among analysts is a Strong Buy based on 10 Buys and 1 Hold. The average price target of $51.73 implies a potential upside of around 23% over the next 12 months.
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