SOUTH KOREA: Excluded Daewoo assets to be sold not shut
Most overseas units excluded from the deal to sell Daewoo Motor company assets to General Motors will be sold off rather than closed down, reports said.
Daewoo Motor chairman Lee Jong-dae told reporters the company was preparing the units, most of which are overseas, for sale and was trying to make them more attractive by controlling their debt load, for example.
He added that most overseas units excluded from the deal would be sold off with the Polish car assembly plant gone within two years.
The deal gives GM entry to a growing 1.4-million unit a year car market from which imports are still limited to about 50,000.
GM chairman Jack Smith told reporters at the signing ceremony that Korea was a market the company needed to participate in.
Ironically, it did once. GM licensed a predecessor company of today's Daewoo Motor to build a modified version of the mid-1980s Opel Kadett/Vauxhall Astra which was sold in Korea and parts of Europe as the Daewoo Racer and in the US and New Zealand as the Pontiac Le Mans.
The cars used GM Europe-designed engines, with two-litre versions coming from GM's Australian subsidiary Holden.
Smith also said that Daewoo's fast development capacity was also attractive to GM and the various Daewoo R&D operations would be combined with the car giant's own around the world.
The new GM-Daewoo joint venture company will build vehicles in three of its own plants - two in South Korea and one in Vietnam.
The Korean plants, in Kunsan and Changwon, hava a capacity of 520,000 passenger cars and 40,000 commercial vehicles or SUVs a year while the Vietnam facility can assemble a further 20,000 cars a year.
The deal signed today leaves creditors with 16 Daewoo plants in locations as diverse as Egypt and Poland.
The oldest and largest Korean plant in Pupyong, west of Seoul, had been a major source of speculation as the deal was finalised, due to its age and militant unions.
Having signed a deal over work practices with the unions, GM has cleverly avoided taking on the plant. Instead it will buy vehicles, engines and components for a six-year period while retaining the right to acquire the plant later, presumably once it has established whether the notoriously militant Daewoo unions will stick to their side of the bargain.
Daewoo's total South Korean production capacity, including a third Korean car factory in Pusan, is around one million passenger cars and 46,000 light commercial models.
Bankruptcy in 1998 has affected Daewoo's market share in its home market to the benefit of rival Hyundai - which is linked to Mitusbishi and DaimlerChrysler - and its Kia subsidiary.
But Nick Reilly, the former Vauxhall chairman who will head the new GM-Daewoo company thinks the brand will rebound due to "the confidence factor" of today's signing which hitches the Korean nameplate to the world's largest car maker.
Reilly said the new company would build sport utility vehicles and minivans to enter Korea's fastest-growing market segments.