Daewoo Motors and General Motors have evidently agreed to share the Ukrainian automaker AutoZAZ. Daewoo would be the big stakeholder.
Pavlo Lazarenko, prime minister of the Ukraine, announced that GM and Daewoo would form a joint venture to produce cars there. Neither company would confirm the announcement.
The companies had been competing with each other to take over the AutoZAZ factory in Zaphorozje.
AutoZAZ has been seeking outside investors for two years. Both Daewoo and GM made offers.
Daewoo proposed to spend $150 million, committing to an annual build of 150,000 units of its own Tico, Nexia and Espero models and 100,000 of AutoZAZ's small Tavria cars.
GM proposed to spend $23 million initially, committing to output of 80,000 Tavrias and 40,000 Opel Vectras.
Under the plan announced by Lazarenko, GM will produce 35,000 Opel Vectra cars a year within four years and Daewoo will make 150,000 Tico, Nexia and Espero models a year. AutoZAZ will continue to produce 70,000 units of its Tavria, which will be modernized with the help of both GM and Daewoo.
Thus, each of the three partners gets more or less what it proposed, except perhaps the Ukrainian government. The Ukraine had sought investment of $1 billion. It would appear that the cash involved will be well below that figure.
Still, Ukrainian authorities are happy. AutoZAZ wants to maintain a 70 percent local content, which could encourage supplier investment.
Ukrainian authorities have been desperate for foreign investment. Since the breakup of the Soviet Union, the Ukraine has suffered inflation, charges of corruption, and a declining standard of living.
AutoZAZ built 130,000 cars in 1992; it built 6,881 last year.
AutoZAZ has a modern plant by east European standards. Its assembly line was built in 1994 with Italian equipment. However, the Tavria cannot meet present emissions standards in Western markets, precluding exports.
In April, the chairman of Daewoo, Kim Woo-Choong, hinted at the Ukrainian deal.
'Daewoo and GM have not yet reached a mutual agreement to establish a closer relationship in third countries,' he said. 'The details on the mutual exchange of car production have been under negotiation and concrete results are expected to come within the first half of this year.'
Oles Gadacz and Reuters News Service contributed to this report