GM Launches South Korea Operations After Taking Over Key Assets of Daewoo

BUPYUNG, South Korea October 28, 2002; Jae-Suk Yoo writing for AP reports that pitching new models, General Motors Corp. formally launched its car business in South Korea on Monday after taking over key assets of bankrupt Daewoo Motor Co.

"GM Daewoo Auto & Technology Co. is open for business," declared Nick Reilly, president of the new carmaker, during a ceremony at Daewoo's main plant in Bupyung, west of Seoul.

"This is not the end of Daewoo Motor's problems. This is another start. We have many challenges ahead," said Lee Young-kook, the former Daewoo Motor chief who is now GM Daewoo's senior vice president.

GM signed a deal in April to take over Daewoo, which went bankrupt in 2000, but its formal South Korean operations had been delayed until now pending negotiations on financing and other details with its Korean partners, which include Daewoo creditors.

GM has invested $251.3 million for a 42.1 percent stake in the joint venture. Japan's Suzuki Motor Corp. has a 14.9 percent stake, China's Shanghai Automotive Industry Corp. 10 percent and Daewoo creditors 33 percent.

The launch gives GM a foothold in South Korea's growing but virtually closed market, access to China and to the world's second-largest car market, Japan.

Reilly said, however, that he expected "some losses early on" from the Korean operations. Declining to reveal any specific targets, Reilly said he expected domestic sales to pick up in the first half of next year and exports in the second half.

About 1.41 million cars were sold in South Korea in 2001, 12.1 percent of which came from Daewoo, down from 25.6 percent in 1998.

Weary of violent anti-globalization protests by local labor activists, Reilly repeatedly stressed that "GM Daewoo is still a Korean company."

Outside the Bupyung plant where the launch was announced, 50 laid-off Daewoo Motor workers protested GM's takeover. "We oppose GM. We want our jobs back!" they shouted.

GM Daewoo's new models to be marketed in South Korea are largely modified and upgraded Daewoo Motor sedans. A new Daewoo-developed mid-size car will make its debut in November.

Reilly said the new firm had no immediate plans to bring in GM-developed car frames to South Korea, or market cars made by its Japanese and Chinese partners.