Chevy's risky rebranding in South Korea is paying off
Fresh out of bankruptcy, General Motors embarked on a risky rebranding overhaul in a country that makes a quarter of the world's Chevrolets but whose people rarely, if ever, bought one.
South Korea long had anchored GM's global empire as its center for small-car production and engineering. It operated there under the household name of Daewoo.
But by 2011 it was time to leverage Chevrolet as GM's ambitious global mass-market brand.
The company dropped the name GM Daewoo Auto & Technology Co. for GM Korea Co. and quickly began phasing out Daewoo-badged products in favor of those with the Chevrolet bow tie.
GM spared no expense in hyping Chevy's local debut at the Seoul Motor Show in March.
Its sprawling stand nearly matched those of local giants Hyundai and Kia in floor space -- unheard of in earlier times. And it unveiled a locally developed hybrid sports concept, the Chevy Mi-ray, to showcase GM's Korean r&d team, which heads global small-car development.
A 1956 Chevy Bel Air and 1960 Corvette on loan from Detroit headquarters lent ambience.
GM also paired the brand launch with a service program dubbed 3-5-7. It offers three years of free maintenance, a five-year warranty and seven years of roadside assistance.
Supplanting the Daewoo name with Chevy could have backfired in nationalistic South Korea, where Daewoo has deep roots and foreign cars win just a sliver of the market.
Arcamone: Bow tie had exotic allure
But Mike Arcamone, CEO of GM Korea, saw an upside.
Daewoo was ripe for the change because of its history as a bankrupt company that was bought by GM, Arcamone argued. "In the culture here, it's a failed company," he said.
Indeed, throughout South Korea, Chevrolet brand detailing kits were popular with Daewoo customers who wanted to trick out their cars with bow tie badges and Chevy nameplates.
Said Arcamone: "Our customers, although they buy Daewoo, wanted to convert to Chevrolet."
And that conversion is well under way.
GM Korea's domestic sales are up 21 percent from the year-ago period in the seven months since the introduction of the Chevrolet brand on March 1.
The company still trails local favorites Hyundai and Kia. But GM is targeting double-digit market share this year, compared with 8.1 percent in 2010.
GM sells Cadillacs in Korea and the Buick LaCrosse as a stand-alone Alpheon subbrand.
But Chevrolet is the mainstay, and the Spark minicar is its best-seller. And GM is reinforcing the lineup.
This year alone, Korea has received or will receive the Chevrolet Camaro sports car; Orlando small minivan; redesigned Aveo small car, as both a hatchback and notchback; Captiva SUV; Cruze hatchback; Corvette; and redesigned Malibu sedan.
GM Daewoo was created in October 2002 from assets purchased from bankrupt Daewoo Motor Co. Ltd. for a bargain price of $251 million in cash.
Today GM leans on the operation as its center for global small-car design, development, engineering and manufacturing. Insiders and outsiders alike credit it with enabling GM to raise its game when it comes to small cars such as the Chevrolet Cruze.
And Korea's footprint on GM's global business shouldn't be understated. GM Korea factories, churning out cars for home and abroad, account for 22 percent of GM's worldwide sales. And one of every four Chevrolets sold globally is manufactured there. To GM, then, it's only fitting that Chevy take a higher profile in the country that helps it stand out overseas.
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