smiles in the UK retail motor industry are understandable at present: having shunned
the traditional dealer network when it arrived back in 1995, Daewoo is now to
recruit dealers willing to meet its standards.

Not that the company’s announcement worded it quite like that.

They put it like this: “The new business model, which will be phased in
during the autumn, is an innovative hybrid of direct outlets and high quality
franchised dealers, which is being developed in an ambitious bid to enable Daewoo
to continue to grow its market share within the UK.

“The model will allow Daewoo to improve its geographical spread, with
the total number of outlets likely to triple to around 120, giving customers
better access to Daewoo wherever they live.

“The decision is a logical progression of Daewoo’s five-year launch
strategy which set out to change the way cars are bought and sold in the UK.”

To be fair, Daewoo did turn inexpensive car retailing and servicing on its
ear in the UK, a fact confirmed by the constant bad-mouthing from the existing
trade which, for a long time, mostly refused to take the Korean upstart’s
products as trade-ins.

Although the cars initially offered were little more than recycled GM Europe
cast-offs, Daewoo prices included such things as delivery, a year’s road
tax and number plates and the cars also come with free servicing (including
consumables and labour) for three years/60,000 miles with courtesy car during
services, a three-year/60,000-mile warranty and three years’ comprehensive
AA roadside cover.

Such things were previously unheard-of at the budget-priced end of the UK car
market and they were available in bright, modern company owned showrooms heavy
on consumer-friendly displays and light on pushy salesmen and ‘finance’

Service was handled by the widespread national aftermarket chain Halfords which
also had demonstrator cars on hand in areas lacking a Daewoo ‘sales centre’.

Despite the mutterings of the established trade, Daewoo achieved a one percent
market share within its first year, the most successful manufacturer launch
ever in the country. Over 157,000 Daewoo cars have now been sold and many of
the benefits the company offered to lure those first buyers have been copied
by rivals.

Now, parent company woes notwithstanding, Daewoo’s new approach aims to
increase annual sales to 50,000 – last year 34,600 were sold.

“This announcement marks the second phase of Daewoo’s business plan
in the UK. Multi-channel retailing is now a way of life and our new strategy
reflects this,” said Daewoo UK sales and marketing operations director
Patrick Farrell.

Then he returns fire at the establishment: “Having established a strong
brand proposition, we are now seeking new dealer partners of the highest quality
who can see the benefits of our customer-focused policies.

“Dealers that are prepared to consider doing things differently have the
opportunity to take on a profitable new car franchise.

“Many of the better dealers and groups in the UK raised the level of the
service they provide following Daewoo’s arrival in the UK, employing consumer-focused
innovations similar to those we introduced, making it much more appropriate
for us to now offer them future partnerships.”

However, long-time Daewoo service partner Halfords has been given the chop.

To view related research reports, please follow the links

Car Forecasts to 2005

b2b – Strategic threats and opportunities in the automotive supply chain