DAEWOO MOTOR CO. Ltd. President Kim Tae-Gou does not mind that Daewoo lost out in the bidding for Kia Motors Corp.
He is busy managing Daewoo's rapid overseas expansion program, and trying to integrate SsangYong Motors, which Daewoo acquired earlier this year.
Daewoo, the South Korean industry's most active overseas investor, has assembly plants in Uzbekistan, Poland, Romania, the Czech Republic and India.
Kim spoke with Automotive News Europe staff correspondent Oles Gadacz in Seoul. Edited excerpts of the interview follow.
With Hyundai's takeover of Kia, is Daewoo perhaps now interested in taking a stake in Samsung?
We'll just have to see. But we think a two-company industry in Korea is desirable, and that's been our goal.
Your home market is down some 50 percent so far this year. What's your forecast for 1999?
We're expecting between 12 and 15 percent growth. We hope the market will have fully recovered by 2001.
Has the recession in South Korea had an impact on your overseas investment plans?
We're completing ongoing projects, but new projects are on hold. Fortunately, most of our overseas ventures are showing improvement. While we had difficulties in India, things are getting better now that the Matiz minicar has been added to the product lineup.
Hyundai has downsized by some 20 percent or more. How about Daewoo?
First, Chairman Kim Woo-Choong has said Daewoo will avoid forced layoffs at all costs. Second, we've been leaner than Hyundai all along as a result of campaigns which started in the early '90s. We are less reliant on the domestic market than Hyundai, so downturns like the current one have less of an effect on us.
What impact has financial and economic turmoil in Russia had on your operations in Eastern and Central Europe?
I was very worried in the beginning, but the impact is far less severe than I had feared. In Poland, Daewoo has been the market leader since July. Our Romanian operation is recovering little by little. In Ukraine, we started full-scale production and sales activities in June. However, due to the worsening economic conditions there, we believe we need to modify some of our business strategy in the near future.
What's the update on your investment in China?
We have two component joint ventures in China, which represent a total investment of over $900 million. One is expected to start up in the first half of 1999 and the other in the second half of that year. One will produce 300,000 engines and 200,000 transmissions each year, while the other will make chassis components and electrical parts. We hope eventually to do a complete car in China.
Is your operation in India living up to expectations?
India has huge potential, but the fact is that minicars account for some 80 percent of the market. The Matiz production line just ramped up in October, and we expect to sell 2,000 units per month this year. Next year, we hope to sell a total of 65,000 units, and 80,000 in 2000, to give us 20 percent share or more of the market. We'll also start exporting to neighboring countries. Our investment there is basically complete.
You started the year with a promise of forging a new relationship with GM, yet we've heard little about the progress of those negotiations.
Our discussions are continuing and have not been concluded yet because the situation has changed so much during this year. We have agreed on some issues of local cooperation, but to make a new alliance, that needs more time.
What about co-production with GM in Eastern Europe, where you are both active?
We have discussed cooperating in a number of markets, including Ukraine. But since the financial crisis in Russia, we are just watching developments.
It has been almost a year since Daewoo's takeover of SsangYong. How are the two operations integrating?
It has been smooth, but we still have a lot of work to do. Their research and development people and salespeople have been integrated into Daewoo, and our two business and product development plans have been combined. We believe we have prepared Ssangyong to move forward next year.
When will you completely phase out the SsangYong brand?
The SsangYong badge has already been replaced on some models. By next spring's shareholder's meeting, we hope to have a new name for SsangYong approved. Fortunately, the product lines of Daewoo and SsangTong are quite different, so we can develop those lines separately.
With the SsangYong deal, you inherited Daimler-Benz both as a technical and equity partner. What are the prospects for expanding that relationship?
Their equity stake is very small, something like 2 percent, but technical assistance and collaboration are more important. We will continue the relationship and, if possible, would like to develop a deeper business relationship.