Current Financial Difficulties at General Motors not to Affect Korean GMDAT Division

Photos

Chevys Aveo is a strong seller in the entry-level subcompact segment. (Photo: Alexandra Straub, American Auto Press)

Suzukis involvement in the GMDAT project has allowed it to bring the new midsize Verona to market, expanding its vehicle lineup into a much more profitable segment. (Photo: Suzuki)

GM Canada offers the midsize Epica, a model not available here in the U.S. (Photo: Rob Rothwell, American Auto Press)

Chevrolet has expanded into Europe, thanks to its Korean GMDAT division, and is already showing prototypes of next-gen vehicles at European auto shows. (Photo: General Motors)

GMDAT Achieved Record High October Exports

“If you cant beat em, join em,” is an old adage that General Motors adhered to when it became obvious emerging markets would continue to eat away at its eroding market share to the point that building small cars, at least, would no longer be potentially profitable.

The opportunity came in 2002 when Daewoo hit rock bottom and GM, along with joint venture partner Suzuki, came to the “rescue” and purchased a majority stake in some of its assets, including the rights to the name, all the vehicles it current offered globally and, most importantly, the manufacturing facilities in South Korea. Now, GMDAT (GM Daewoo Automotive & Technology Co.) is one of GMs shining stars in a black hole of corporate challenges, and South Koreas third-largest automaker after Hyundai and its affiliate Kia.

Automotive market analysts had had concerns, however, that the Generals current financial difficulties might negatively effect its GMDAT division, but according to that companys CEO, no such worries are warranted.

“We are self-financing and we have credit lines if we need to grow on them,” GM Daewoo CEO Nick Reilly stated to media gathered at a press conference in Pusan, South Korea, introducing a GM hydrogen fuel-cell car co-developed with Toyota. “The problems in the United States are somewhat overblown and theres a plan to get out of the problems … in the meantime its not affecting us,” Reilly added.

Overblown? The concern, of course, is warranted, being that independent rating agency Moodys Investors Service recently reduced GMs debt rating to “junk” status, citing that its continual slide in market share plus concerns about whether or not GM will be able to overcome legacy health care costs, the high cost of servicing its pension plan, plus competition from its Asian rivals, Toyota, Honda and Hyundai, especially, will make a turnaround extremely difficult.

In case youre not aware, the Chevrolet Aveo, Aveo 5-door, Optra and Optra5 (not available in the U.S.), and Epica (also not available in the U.S.) are Korean-made despite being sold under the all-American bowtie brand, while Suzuki sells the Sprint+ (not available in the U.S.), Verona, Forenza and Reno. Elsewhere in the world, the Matiz, Kalos and Lacetti models were sold under the Daewoo badge until recently, when GM decided to rebrand them as Chevys and expand that divisions global sales.

Altogether, strong exports pushed GMDATs monthly sales to a new record of 112,631 units in October, up 41 percent compared to October 2004. GM is no doubt best to leave this division as independent as possible.