GM plans to sell 200,000 Daewoo cars in Europe

August 5, 2002 LONDON Bloomberg News reports that General Motors Corp. aims to sell 200,000 Daewoo Motor Co. cars a year in Europe to make up for a sales decline of the U.S. carmaker's Opel and Vauxhall brands in the region.

The world's largest automaker and partners including Suzuki Motor Corp. agreed in April to buy some assets of bankrupt Daewoo Motor for $1.17 billion in cash and assumed debt. General Motors plans to set up a venture to control the South Korean company's assets and sell Daewoo-brand vehicles.

"The focus will be to improve Daewoo sales as quickly as we can," said General Motors Europe President Mike Burns in an interview.

The combined market share in Western Europe of General Motors' Opel, Vauxhall and Saab brands has fallen to 9.9 percent this year from 12.2 percent in 1997. The company said in July that its European unit won't reach a target of cutting the 2002 loss in half from last year's $767 million because demand is falling.

Sales of 200,000 Daewoo cars would amount to a 1.4 percent market share in Western Europe. General Motors hopes to reach the target in a few years, Burns said, without giving details.

Daewoo's sales of Matiz, Lanos and other models in Western Europe fell 38 percent to 128,431 vehicles in 2001 from 208,292 vehicles in 2000. Daewoo specializes in low-priced compact cars.

"I have no doubt they will be able to sell 200,000 cars if they offer them at extremely attractive prices," said Peter Schmidt, an auto industry consultant with AID Ltd., in Warwick, England. "The image of Daewoo has been dented badly by the bankruptcy, especially in markets like Germany."

The carmaker will build a network of dealerships in the U.K. using Vauxhall dealers and rely on current dealers in Italy and France. General Motors executives said they plan to get the sales network operating as soon as the Daewoo purchase is signed.

"If you look at the customer base, there's very little overlap," said Jonathan Browning, General Motors' vice president of sales and marketing in Europe. "People who buy Daewoo cars aren't the same ones who buy Opels and Vauxhalls."

There are no plans to build Daewoos at General Motors plants in Europe or to sell Daewoos as Opel, Vauxhall or Saab models, Browning said.

General Motors also is working to expand sales of its current brands. The carmaker's six-month sales in Europe fell 15 percent from a year ago to 770,068 cars and trucks. Burns said he believes the decline has bottomed out.