GM-Daewoo: Can GM Stop A Chinese Takeover?

Edward Niedermeyer
by Edward Niedermeyer

Reuters reports that GM’s deadline to participate in its Daewoo division’s $424m rights offering has passed without GM putting any money down. But the Korean Development Bank, which GM-Daewoo owes $2b (soon to be closer to $3b), isn’t freaking out yet. “Given that GM is not allowed to take money out of the United States, it seems to have a plan from the beginning to drop the rights and use its units to buy them,” say KDB spokesfolks. KDB will not participate in the offering until GM stumps up some cash, so the betting marker has been passed to GM’s units. But which unit will answer the call? Opel is days away from being sold, so you can rule that out. Holden is a possible white knight, but the Australian division is hardly a piggy bank with which to keep other operations afloat. Which leaves only GM’s South American, Chinese and Indian operations to pick up the slack.

China’s SAIC is already an investor in GM-Daewoo, and as GM’s main Chinese partner, access to Daewoo’s small car technology is crucial to its continued success. Look for SAIC to step in with cash, a move that would see KDB force GM to relinquish even more control of the struggling Korean division. During the bailout era we were constantly checking on rumors that cash-flush Chinese firms would buy out GM. Instead, it seems that GM has been forced out of its major small and mid-size development outposts, and Chinese firms look most likely to step in and pick up the wreckage for a song. Either way, without Opel and Daewoo to fill its new product portfolio, GM is looking like the next Chrysler in the making.

Edward Niedermeyer
Edward Niedermeyer

More by Edward Niedermeyer

Join the conversation
4 of 7 comments
  • Autonut Autonut on Oct 21, 2009

    South Koreans need Chinese market to sell those Daewoos. Going against SAIC is like going against Chinese Communist party (just who owns SAIC?). Koreans understand this very well, I suspect that SAIC will be new owner.

  • Nicodemus Nicodemus on Oct 21, 2009

    Hang on, Holden owns Daewoo as a flag of convenience, much like Ferrari's prior ownership of Maserati.

  • Pista Pista on Oct 22, 2009

    Holden a white knight? Holden hasn't made a cent in more than half a decade. It lives on handouts from GM and, to a lesser extent, the Australian government.

  • NN NN on Oct 22, 2009

    The Daewoo based Chevy's and Buick's in China are very guess is that is probably Daewoo's biggest single market. They may be assembled in China, but certainly lots of parts are coming from Korea. The Chinese are in a perfect position to fund GM Daewoo, and nobody else is better suited to. No one will turn them down, either.