just-auto.com

ANALYSIS: One year on - GM Daewoo’s key global role

By just-auto.com editorial team | 16 October 2003

A first birthday hardly seems cause for celebration in an industry more used to celebrating jubilees and centenaries, writes Anthony Lewis of the Interchange News Agency. But for GM Daewoo, one year old on October 17, it's a milestone that was almost not reached.

Year-long negotiations leading up to the deal almost failed completely at least twice, said Nick Reilly, the former Vauxhall boss who is now president and CEO of GM Daewoo Auto and Technology. Now, as the company enters its second year, Reilly is looking forward to an exciting future, not just rebuilding the brand with seven new products over the next three years and more promised, but as a key part of the General Motors' family with an important role to play in the Far East.

"The thing Daewoo has is great strength in product design and manufacturing. We can be significantly faster at bringing products to market at lower costs than is typical within GM," said Reilly.

This is partly to do with the Korean "hurry, hurry" culture and partly to do with the way the company is organised. "We thought this would be the case, but now we know it is," said Reilly, speaking in Seoul as the company geared up for its anniversary celebrations. But Daewoo will not be a GM clone. There are only 25 ex-pats from GM in a workforce of 17,000. GM Daewoo "will be a Korean company run and managed by Koreans," said Reilly.

The Lacetti 5-door, which went on sale in Korea this autumn, was the first car that the new team was really able to influence, said Reilly. It arrives in the UK next spring. This will be followed by a Nubira estate, an all-new SUV, rumoured to be based on the Saturn Vue, new Matiz, an MPV and a new large car.

Reilly is also keen to have a 'halo' car - something to rival the Mazda MX-5 - in his product stable as Daewoo tries to fill the gaps in its portfolio.

Daewoo's share of the domestic market had slipped to 10%, but gains of between 4% and 5% over the last two months prove that "the Daewoo name in Korea is by no means irreparably damaged," he said.

One of the problems - and the imperative behind the product offensive - is that where Daewoo used to compete in 65% of the market segments, it now only competes in 40%.

Full capacity of more than one million vehicles should be reached within three years. This will include some 300,000 CKD units shipped to assembly operations in China, India and Thailand. Another CKD operation will be launched in South America in 2004. Investment in 2003 will total US$450m (£300m). The main areas for investment have been new product, the design centre, IT and launching co-operative research and development programmes with universities in Korea.

He has strengthened Daewoo's design team by appointing Mike Simcoe, who joins the GM Daewoo Design Forum from Holden, Australia. Simcoe will still have responsibility at Holden. "Global sales were well balanced with 2004 forecasts of 600,000 split fairly evenly between the Far East, North America and Europe. In 2002, worldwide sales were just 350,000.

Hardy Spranger, head of GM Daewoo Europe, said that sales in 2004 should reach 200,000, back to the old company's best performance, which was in 2000. There are currently 1,300 dealers and he wants 2,000. "Multi-brand dealers boost business and our preferred partners are Vauxhall, Opel and Saab," he said.

GM DAT has an agreement with assembly operations of the old Daewoo Motor Company in Poland, Romania and Uzbekistan to continue supplying parts. But to avoid confusion between 'old' Daewoo models from these plants and new models from GM DAT, the Chevrolet name would be used in these markets.

"The choice of Chevrolet was obvious, because our products are already marketed as Chevrolets in several markets outside Europe like Latin America, North America and India, and because the two sister brands stand for very similar values," said Spranger.

Produced for just-auto by the Interchange News Agency