Holden is to invest $US251 million to take a controlling interest in Korean car maker Daewoo on behalf of General Motors and, in a separate deal, the car maker will take over distribution of Daewoo vehicles throughout Australia, writes Mike Duffy.

Holden chairman and managing director Peter Hanenberger yesterday ruled out any product sharing deals between the two companies.

But he said: “We are moving to secure the future of our own four cylinder engine exports and seek new business.

“It is a quantum step forward and furthers our ambitions on the world stage.”

Hanenberger will have a seat on the board of General Motors Daewoo.

Holden’s move to take a 42.1% stake in Daewoo follows the bailout by General Motors of Daewoo in April caused by a prolonged period of falling sales and financial crisis.

Production of Family II four cylinder engines at Holden Engine Operations in Melbourne are currently running at 400 units per day, less than half the 900 engines a day once exported — with the majority going to Daewoo.

“The return of a healthy, vibrant, fully productive Daewoo will have a positive flow-on effect for HEO staff,” Hanenberger said.

He said that, during Daewoo’s problem period, the engine division’s workforce had been reduced by 1,000 by natural attrition and voluntary separation packages.

Hanenberger said growth throughout south east Asia for the automotive industry was expected to be about 8.5 million vehicles in the next decade.

“Therefore, Holden must be able to participate in the region,” he said.

GM operations in Thailand, Indonesia, the Philippines and Singapore are now grouped with Holden operations in Australia and New Zealand.

Holden sales and marketing director Ross McKenzie said GM Daewoo Australia would invite the existing 122-strong dealer network to apply for franchise arrangements.

Holden will take over Daewoo Australia’s existing headquarters in Sydney. Negotiations are taking place with Daewoo’s 63 staff over jobs.

Hanenberger said there was scope to increase the size of Daewoo’s workforce in Australia.

He said the new company expected to lift sales above 20,000 units a year.

Daewoo sales in Australia peaked in 1998 at 21,772 but fell from 20,514 in 2000 to 11,318 last year.