South Korean manufacturer Daewoo Motor has already begun reaping the benefits of General Motors’ investment. Sales have been rising since the deal was struck last week.
South Korean manufacturer Daewoo Motor has already begun reaping the benefits of General Motors’ investment. Sales have been rising since the deal was struck last week.
GM bought a 67 per cent stake in Daewoo Motor for R3,48 billion. According to Daewoo, retail vehicle sales rose to 675 units in its home country last Friday and to 1 015 on Monday. This is contrasts sharply with an average daily tally of 451 vehicles in the first 15 days of August.
"The bigger portion of the sales rise is related to customers’ confidence on Daewoo’s future with General Motors stepping in," Daewoo spokesman Kim Sung Soo said. "Exports could also rise after the signing."
The South Korean manufacturer certainly needs this after posting a 37 per cent drop in sales at home in the first eight months of the year.
But the Financial Times has said it may not be easy to turn the manufacturer into a globally competitive company. Many of Daewoo’s models – such as the Lanos and Nubira – have not been updated in years. Daewoo’s biggest competitor in South Korea, Hyundai Motor, has revamped its entire line-up. It has also won 72 per cent of the South Korean market and a growing portion of the low-end market in the US. Daewoo’s share of the market has fallen to 12 per cent this year from 20 per cent in 1999.
An analyst pointed out that the overhaul of Daewoo’s model line-up should be GM’s first priority.
Some Daewoo workers, however, do not support the sale of the company and protested in front of Korea Development Bank, the manufacturer’s main creditor, in Seoul on Wednesday.
About 600 workers held up posters that read “Solidarity” and chanted: "Let’s block the cheap sale". Many protesters were from Daewoo’s main plant, which was excluded from the GM takeover deal. The plant’s 6 000 workers fear that the sale of the company will lead to massive layoffs. Experts said the plant was inefficient, but it will remain open, providing vehicles, engines and other components. GM will consider buying the plant in the future.
GM agreed to take over two of three local Daewoo plants and 22 overseas subsidiaries.
