17.10.2003
GM Daewoo celebrates first anniversary

In its first year GM Daewoo introduced three all-new product lines, established new sales operations and dealer networks in numerous markets and more than doubled its sales outside Korea.

One year ago today, a new car company was established in Seoul, South Korea. In that year GM Daewoo introduced three all-new product lines, established new sales operations and dealer networks in numerous markets and more than doubled its sales outside Korea. In the words of its President and CEO, Nick Reilly, the new company is "not the old Daewoo and not a GM clone – GM Daewoo is a merger of cultures, the best of both worlds."

By the end of 2003 European sales are expected to rise from roughly 100,000 in 2002 to around 140,000 (forecast based on Jan. to Sept. sales of 96,000), taking GM Daewoo's market share in Western and Central Europe from 0.6% to approximately 0.8%. This average growth of almost 30% has been generated primarily by considerable improvements in the company's key subsidiaries. Top performers in the period from January to September 2003 were Germany (+ 111 %), Austria (+ 84%), Belgium (+ 39%), Spain (+ 29%) and the Netherlands (+ 25%). These growth rates are especially noteworthy because they were achieved in virtually stagnant markets with a significant shift towards diesel engines, which are not yet part of the GM Daewoo line-up.

"In year one of the new company", says Hardy Spranger, Executive in Charge of GM Daewoo Europe, "we met our targets by remaining lean, agile and focused." The company's first priority was to bring new products to market fast. The small five-door Kalos (fall 2002) was followed quickly by the top-of-the-line Evanda sedan. By summer 2003, the Nubira had joined the line-up. With the much-loved Matiz continuing to increase its share of the mini market and the Tacuma/Rezzo ready to enter model year 2004 with a re-designed exterior styling, GM Daewoo is now competing in 43 % of the European market. Within this competitive set, the new company has increased its market share from 1.3 to 1.8 %. 2004 will see the introduction of the Lacetti compact hatch and the Nubira station wagon.

In Europe, GM Daewoo has moved equally fast in growing its distribution network. The total number of dealers has risen to 1300 within the first year of operation and will continue to increase to around 2000. More than 25% of the franchises are partnerships with other members of the General Motors family: Opel, Vauxhall or Saab. "Thanks to a rapidly growing product portfolio and the continued expansion of our dealer network, we are confident that we will be able to continue this year's remarkable growth in 2004," says Hardy Spranger.

Beginning this month, GM Daewoo has begun to extend its reach by marketing its products as Chevrolet in individual Central and Eastern European countries. The assets GM Daewoo acquired from Daewoo Motor Company in October 2002 did not include the Daewoo Motor Co. plants in Romania and other Eastern European markets. However, GM Daewoo agreed to supply Daewoo Motor Craiova with component kits until 2005. The use of the Chevrolet brand will differentiate GM Daewoo's own Korean-built range of new vehicles from Daewoo-badged cars built at the Daewoo Motor Co. plants. The Chevrolet cars sold in Romania will have the same model names (Kalos, Nubira and Evanda) as their Daewoo counterparts in Hungary, the Czech and Slovak Republics as well as in Western Europe.

The dual-brand approach for Europe follows GM Daewoo's global strategy to market its products under a variety of its shareholders' brands in different regions. "Our products travel well," says President and CEO Nick Reilly. "As a company that exports more than 65% of its products, GM Daewoo's future growth depends on how successful we are in the global market."

GM Daewoo already sells its products under the Chevrolet brand name in several Asian markets, as well as in South and North America. In China, two products, a Buick and a Chevrolet, have been introduced through GM's partnership with Shanghai Automotive Industry Corporation (SAIC is a 10.6% shareholder in GM Daewoo). By implementing CKD operations like those in China, GM Daewoo is in a strong position to sell its products in high potential but high-duty rate countries.

To meet growing international demand for its products, GM Daewoo hired 2,500 new employees in South Korea and added second shifts at the Gunsan and Bupyung production facilities. In Changwon a new engine plant went into operation and in Bupyong a new design center was opened in October. The state-of-the-art facility will be headed by top designer Mike Simcoe who will lead the design strategy and oversee day-to-day design operations at GM Daewoo, while remaining responsible for design at GM's Holden unit in Australia.

"In 2004, we will continue to build on our low-cost, fast-to-market engineering and manufacturing capabilities," says Nick Reilly. "Investments will be doubled with a focus on more, exciting new products." To complete its line-up GM Daewoo is fast-tracking the development of an SUV as well as a luxury-size sedan for the Korean market. Next in line is the new-generation Matiz.

This month GM Daewoo signed a memorandum of understanding concerning the acquisition of a modern transmission plant from Daewoo Powertrain. An agreement with a major international supplier of diesel engines is also expected soon, allowing GM Daewoo to introduce its first diesels in 2006.

Speaking to employees at the company's first anniversary celebrations, President and CEO Nick Reilly praised the workforce's outstanding achievements in a time of dramatic change. "It is said that change brings strength," he said. "GM Daewoo is a good example of just how much strength change can bring."