Holden will wind down GM Daewoo Australia by 31 December 2004 and remove the brand from the local market.
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A company statement said Holden’s board made the decision in light of the brand’s current and forecast performance in Australia as well as the broader competitive environment.
The 37 employees of GM Daewoo Australia, a wholly owned subsidiary of Holden, and the 110 GM Daewoo Australia dealers have bee notified.
Holden established the new local distributor in late 2002, in conjunction with investing on behalf of General Motors in GM Daewoo Automotive and Technology in Korea.
Holden executive director sales and marketing Ross McKenzie said the board had made the right decision to ensure the most successful future for GM operations in Australia.
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By GlobalDataMcKenzie said Holden would ensure GM Daewoo owners would continue to receive warranty, service and support from participating Holden dealerships and spare parts outlets after GMDA dealers were wound down by December 31.
“We acknowledge that GM Daewoo has had difficult circumstances in the past few years at the global and local level. However, the situation with the brand’s reputation in Australia, local distributor and dealer network was more difficult to re-establish than we initially believed,” he said.
“This is a matter of brand value and strength rather than a reflection on the products themselves. The positioning of the GM Daewoo brand in Australia simply does not warrant maintaining the current structure.
“The segments in which GMDA participate are incredibly competitive and have become even more intense in the past two years. The bottom line is that you need a strong brand to stay alive.
“Holden’s investment, as a member of the General Motors family, has been at a global and local level and remains an important part of GM’s footprint in the Asia-Pacific region. The basis of that strategy and regional footprint remains unchanged.
“General Motors continues to believe in the value proposition of GM Daewoo products and will investigate options across the Asia-Pacific region for the longer term.”
McKenzie said Holden had established detailed plans to assist employees, dealers and customers during the transition phase before 31 December.
“Holden Human Resources and GMDA management will meet with each staff member to work through their individual circumstances. Employees will be offered support and assistance to find alternative work, within or external to Holden, in keeping with their skills sets and interests,” he said.
“The existing Daewoo network will continue servicing responsibilities until December. Daewoo owners will then be supported by participating Holden dealers, which represent Australia’s largest automotive network.
“Holden will make arrangements to cover warranty obligations, including any applicable warranty offered by the previous distributor, as well as roadside assistance.”
McKenzie said Holden had been in regular discussion with GM Daewoo dealers about their future since GM Daewoo Australia was established in late 2002.
“We have told dealers as soon as was practical given the number of parties with a direct interest in this decision and formal corporate approvals required here and overseas,” he said.
“We acknowledge some dealers may be disappointed by our decision but we must act in the best interests of GM in Australia.
“We will work with dealers to help wind up their franchises in the most effective way prior to December 31. This will include a range of initiatives to reduce factory and dealer inventory.”
The decision does not involve Daewoo New Zealand. Holden New Zealand established GM Daewoo as a trading division to handle the distribution of GM Daewoo vehicles and will separately review that market.
