GM plans to spend up to $416 mln on GM Daewoo

SEOUL, Feb 12, 2003; Reuters reported that General Motors said it plans to invest up to 500 billion won ($416 million) this year in its South Korean unit, GM Daewoo Automotive and Technology Co, to beef up design and production.

GM agreed in April of 2002 to take a majority stake in GM Daewoo for $251 million, providing the world's largest auto maker with a springboard to expand in Asia's fast-growing automobile market.

"A lot of it (the 400 to 500 billion won investment) is going to go to the Pupyong, Kunsan and Changwon plants", Nick Reilly, the head GM Daewoo, told Reuters on the sidelines of a press conference. All the plants are in South Korea, including the largest and oldest plant in Pupyong, west of the capital of Seoul.

"They've had very little money to work with until now," Reilly added.

Since its former parent Daewoo Group became insolvent in 1999, GM Daewoo, South Korea's third-largest auto maker and formerly Daewoo Motor Co, has seen its market share of South Korea's 1.6 million vehicle market fall to around ten percent, half its share in 1996.

Following its formal launch last October, GM Daewoo rolled out its latest passenger car, the small-to-mid-sized Lacetti late last year. The company has said it may also launch a large passenger car and a sports utility vehicle to compete with South Korea's largest auto maker, Hyundai Motor Co.

Reilly said around two billion won of the investment plan would also go to improve the design facilities of GM Daewoo vehicles.

The smaller two billion won investment was announced before news of the main investment plan.