Daewoo Will Sell Cars in U.S.

08/15/96

Reuters has reported that Korean Carmaker Daewoo will start selling cars and trucks in the U.S. late next year or early in 1998. The Daewoo Group expects their sales to reach 100,000 per year by the year 2000.

The plan has U.S. automakers sweating bullets, as they are worried that another wave of low cost imports will continue to erode their market shares and prices. The Big Three Detroit carmakers have already been complaining that Korea has pursued an aggressive export strategy while shutting it's domestic market to imports.

Hyundai was the first Korean carmaker to sell vehicles in the U.S. (1989) and quickly met with success, selling 200,000 units a year, although quality problems quickly turned that success around. Korea's Kia Motors entered the market in 1992. It now sells Sephia sedans and Sportage sport utility vehicles in some areas.

Samsung (best known for microwave ovens and VCRs) plans to enter the Korean car market in 1999. Analysts expect that Samsung will target the U.S. car market eventually.

Daewoo hasn't sold cars in the U.S. under its own name, but it supplied the Pontiac LeMans to GM for several years in the late 80s and early 90s. GM severed the partnership in 1992 because of poor sales and quality problems.

The Daewoo group says they have studied the U.S. car market and have been preparing to enter it for five years. In an attempt to differentiate itself from other carmakers, the automaker will bypass the traditional dealership system, which can add 20% to the retail price of a car. Instead the automaker will market its cars directly through company owned stores.

Daewoo currently sells cars in England and some other countries through direct marketing, and about 90 percent of the cars Daewoo sells in South Korea are sold that way. The company plans to experiment with sales over the Internet.

Paul Dever -- The Auto Channel