Daewoo Motor Sales Corp., South Korea's sales agent for GM Daewoo Auto & Technology Co., said second-quarter net income plunged 78% because of a drop in sales fees from the country's third-largest car maker, the Detroit News said.

The report said the company's net income fell to 6.2 billion won ($US5.3 million) in the three months ended June 30, from 28.1 billion won a year earlier.

The Detroit News noted that Daewoo Motor Sales agreed last year to accept a drop in fees from GM Daewoo, starting this year. The commission rate fell to 15% from 18% of the value of a vehicle and the sales agent also agreed to pay for cars received from GM Daewoo after 45 days, rather than 180 days, reducing its interest income.

"These two major changes will reduce about 100 billion won in annual profit," Kim Ki Ho, a Daewoo Motor Sales spokesman, said, according to the Detroit News. He reportedly added: "We have been stepping up our efforts to diversify our businesses to exporting used cars, selling imported cars and other to cover losses from smaller fee income."

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