Daewoo, back from the brink, is celebrating its first year of partnership with GM. Andrew Hamilton joined the celebrations in Korea
For most big birthdays, car manufacturers have to be 50 or 75 or 100, but this was one celebration with a difference. The celebrant was just one year old.
In the Land of the Morning Calm, otherwise Korea, a proud and beaming parent celebrated the occasion with good news stories of expanding sales and an expanding influence. General Motors is the parent and Daewoo, or more correctly GM Daewoo, is the one year old. In a previous incarnation, Daewoo was the second-biggest Korean-owned car manufacturer until its spectacular collapse four years ago under a mountain of debt, estimated at about $1.2 billion.
For a few years it had an uncertain future and in European and Irish markets, customers stayed away; they too got to hear the gloomy stories in the financial press. Eventually, after much due diligence, General Motors formulated a rescue package that was accepted. GM paid a modest $400 million for the takeover, although not before other big names like Ford had looked under the Daewoo bonnet.
Now all over Seoul and elsewhere in this populous country - the third highest in the world after Bangladesh and Taiwan - there are no vestiges of the old Daewoo and the new badge with the GM appellation is very much in everyone's face.
"Our new face is about getting much bigger in the Korean domestic market," says Nick Reilly, a Welshman with Irish roots who is GM Daewoo's president and CEO, and who was formerly boss of Vauxhall in the UK. Hyundai, with Kia, account for 70 per cent of home sales, whereas the Daewoo brand is a derisory 10 per cent. Daewoo happens to be more expensive than the other two Korean marques.
But the good news really lies beyond Korean borders. Nick Reilly is able to point to total projected 2003 sales of 270,000, compared with 132,000 last year. Europe will take 154,000 Daewoos this year against 99,192 last year.
In some regions the cars are being badged with other GM-associated names, like Chevrolet in eastern Europe, in order to avoid confusion with "old" local Daewoo operations. But the baby Matiz is also the Chevrolet Spark in Latin America, Africa and the Middle East, while the supermini Kalos could be the Suzuki Aveo or Verona in the US and the Suzuki Swift in Canada. Other "badges of convenience" are Buick for China and Pontiac for Canada and Mexico.
The flow from expanding sales is the re-hiring of ex-employees and the hiring of new people, so that with 13,000 workers, there's the same employment as in the pre-GM days. Birthday events for the European media group included a visit to a spanking new design centre, where three-door and estate derivatives of the Kalos and Nubira were presented. A full-size photographic image of a future SUV was also shown and there were glimpses of a somewhat concealed future Matiz.
The three-door Kalos, Nubira estate and new Matiz will be all coming our way soon. A major priority for Daewoo's European operation is diesel engines, which will be coming in 2005. Currently, there are 1,300 dealerships in western European and in the next few years that figure is projected to grow to 2,000. GM Daewoo Europe's boss, Erhard Spranger, indicates preferred partners in growth, such as Opel or Saab dealers - plausible, as they are within the GM family.
It seems to be good news now, but it wasn't always so. Nick Reilly, who was involved in the negotiations from the beginning, says there at least a couple of times they fell apart and it looked as if GM wouldn't be doing business.
"On one occasion when things were tense and it looked as if we were at the end of the road, the lights in the hotel room went out. It didn't happened in the rest of the hotel but somehow it gave us the breathing space we needed. Then when we thought everything was okay and I had my furniture and belongings shipped out from Europe, we came to a major unexpected difficulty and I said to somebody not to have my stuff unpacked; it would be pointless. Something happened after that comment and we got back to the table again."
Of GM Daewoo, the biggest shareholding is held by GM itself, at 44.6 per cent. Creditors, mostly banks, account for 29.9 per cent while Suzuki has 14.9 per cent. GM may be the master or parent but it wants to give a Korean aspect to its corporate governance and Nick Reilly speaks Korean on domestic television commercials. The man who has had a confrontation or two with Vauxhall workers and their unions in the past, says Koreans are the most caring and efficient employees he has ever come across.
He points to a recent typhoon which caused flooding damage at the Changwon plant. It happened during a weekend and half the workforce came back to the plant voluntarily to help with the clean-up. "They were worried about their jobs, of course, but they were concerned about the efficiency of the place and they wanted to minimise disruption. It doesn't happen elsewhere."
It doesn't happen elsewhere that a car manufacturer is celebrating just a year, confident, apparently, of sustained growth and winning vast numbers of value-driven customers. GM Daewoo perhaps can take a cue from the Korean family life as enunciated by Dr Junsok Yang, president of the Catholic University of Korea, the only non-motoring speaker at the anniversary event. "For a child who is one, it's a very, very special event here, it's called chut-dol and we all look at the progress already made and then ahead, and make wishes."