GM Asian Unit Faces $208K FTC Fine for Unfair Marketing Practices, Hector Villarreal Appointed New CEO

General Motors' Asian distributor has been fined $208,000 by South Korea's Fair Trade Commission (FTC) for unjustly forcing local dealers to share marketing costs, marking the FTC's first action against an imported car distributor. This announcement arrives as GM welcomes Hector Villarreal as the new CEO of its Korean branch.

From 2016 to 2018, GM Asia Pacific Regional Headquarters Ltd., a wholly-owned subsidiary of the U.S. auto giant, initiated promotional campaigns without the retailers' agreement, according to the FTC.

As a result, Cadillac dealers in South Korea were compelled to bear a portion of marketing expenses exceeding 5 percent of a vehicle's cost, eventually resulting in sellers paying around 482 million won in discounts.

Desperately needing to expand their low market share and ease the cost burdens of managing inventories, GM Asia Pacific Regional Headquarters rolled out monthly promotional events, prompting retailers to request avoiding launching such events in the first place. Despite this request and without consultation, the company unilaterally imposed discount cost burdens on retailers.

Cadillac models represented only 0.8 percent of the domestic imported car market in 2018, significantly less than their rivals. By 2020, this number decreased to 0.55 percent, necessitating desperate measures from the distributor.

Meanwhile, General Motors announced on Friday that Hector Villarreal, previously the Vice President of Vehicle Sales, Service, and Marketing at GM Mexico, will take over as President and CEO of its Korean unit starting August 1. With nearly 30 years of experience at GM, Villarreal brings knowledge and leadership to the role.

Notably, he has spent several years as Vice President of Planning and Program Management for GM Korea. His expertise will be pivotal in growing GM Korea's export business and domestic market share by defining a strong brand strategy, optimizing the sales network, and enhancing customer experiences.

Villarreal is taking over from Roberto Rempel, who retired after almost 40 years of service to GM. During his tenure, Rempel skillfully led the Korea team to lay a solid foundation for the company's sustainable future. With Villarreal at the helm, the future of GM Korea looks promising. The business was able to achieve profitable growth in the domestic market.

Photo: GM Newsroom