GM to keenly contest for takeover of Daewoo auto unit

GM to keenly contest for takeover of Daewoo auto unit
REUTERS

SEOUL, MAY 10: Jack Smith, Chairman of General Motors, the world's largest automaker, said on Wednesday that a GM takeover of Daewoo Motor could mean billions of dollars in revenue for the South Korean automaker's suppliers.

Daewoo Motor, along with 11 other companies in the DaewooGroup, ran into Financial trouble last year and has been taken over by its creditors.

GM's archrival Ford is among the other companies that havealso expressed interest in Daewoo, a company both US firms could use to bolster their modest presence in Asia's auto market.

South Korea is Asia's second largest auto market, with domestic sales of about 900,000 vehicles a year. Smith said a GM takeover of Daewoo Motor would be a boon for Korean parts manufacturers who would supply not only Daewoo but also other GM companies.

GM produces Chevrolet, Pontiac, Cadillac and other famous brands in the United States and Europe and has equity stakes in a trio of Japanese automakers - Isuzu, Suzuki and Subaru-maker Fuji Heavy Industries.

PAST TIES AN ASSET: Smith said GM's past relationship with Daewoo was a definite plus and the company's influence could still be seen in Daewoo's technology.

"We worked here with Daewoo Motor for many years. We know Daewoo," Smith said. "We have a natural relationship that would be of significant strategic advantage." GM had a 15-year relationship with Daewoo that ended in 1992 amid differences over sales strategies and marketing.

"Many Daewoo Motor vehicles were derived from General Motors platforms and they continue to use engines and transmissions of General Motors design," Smith said.

Smith said GM could help Daewoo develop very low-cost platforms aimed at the Asia-Pacific markets. "We will use Daewoo Motor's research and development capabilities to develop cars for the Asia-Pacific region and for the developing countries in the world. That is why we are here," Smith said.

DAEWOO TO RETAIN BRAND NAME: If taken over by General Motors, Daewoo Motor would retain its brand name and operate as a Korean company, Smith said. Hyundai Motor Co Ltd, which took over rival Kia Motors last year, now holds a market share of about 75 per cent.

It announced on Sunday that it had reached an agreement to jointly build a 'world car' with German-American auto group DaimlerChrysler AG and Japan's Mitsubishi Motors Corp, which DaimlerChrysler later denied. Hyundai shares were up 200 won at 11,200 at 0602 GMT. Besides GM and Ford, Hyundai, DaimlerChrysler and Fiat have expressed interest in Daewoo Motor.