General Motors (GM.N) has announced plans to shut down its manufacturing operations in Colombia and Ecuador, signaling a strategic shift towards producing next-generation vehicles. 

The decision comes as part of the company’s ongoing efforts to adapt to evolving market demands and optimize its production footprint.

Manufacturing activities will cease immediately at GM’s Colmotores plant in Colombia, while operations at its Ecuadorian factory will halt by the end of August. 

The company cited low capacity utilization rates as a factor in the decision, with the Colombia plant operating at only 9% capacity and the Ecuadorian facility at 13%.

In response to the closures, GM is seeking permission from Colombia’s labor ministry to lay off 850 workers. The labor ministry has announced plans to inspect the manufacturing plant to protect workers’ rights during the transition.

The decision to close the plants comes amid challenging market conditions, with Colombia experiencing a 14-year low in new vehicle sales in 2023 compared to the previous year. Despite the manufacturing closures, GM clarified that it does not intend to exit either country entirely. 

Instead, the company plans to maintain its presence through dealership networks in both Colombia and Ecuador.