GM-Daewoo Stayin' Alive. Barely.

Edward Niedermeyer
by Edward Niedermeyer
gm daewoo stayin alive barely

An interview with Forbes the boss of the Korean Development Bank, which GM-Daewoo still owes several billion dollars, reveals that GM’s South Korean unit had a debt-to-equity ratio of 912 percent as recently as last June. GM “rescued” its crucial small-car development center by buying up all $413m of GM-Daewoo’s recent share offering, keeping the the KDB from imposing its will on the automaker. That was enough to keep the wolf from Daewoo’s door in the short term, but if Daewoo is ever going to develop a new generation of GM small cars and global products, it will have to address its $2b KDB debt and raise additional funds. For now though, GM-Daewoo is just hoping to keep a little momentum going.

Thanks to the already-developed Lacetti Premiere (Chevy Cruze) and Matiz Creative (Chevy Spark), Daewoo has new products that are actually selling quite well. Daewoo’s December sales were up 65 percent, to their highest level since 2006 on the strength of those two new models. But, as the Korea Times reports, quality issues are dogging those models. Airbags and windshield wipers have already proven to be a trouble point on the Spark, while seatbelts and software troubles have marred the launch of the Cruze. Presumably GM will fix these issues before the models debut in crucial markets like the US, but in the damage has already been done in Korea where GM-Daewoo’s market share dropped from 10.7 to 8 percent last year, despite the year-end surge.

But despite the thoroughly mixed picture coming out of GM’s Korean operations, GM-Daewoo’s executives remain blithely optimistic. “We’re self-sufficient. We are generating cash and don’t need a line of credit. We’re starting 2010 with a very very strong cash position,” Daewoo President and Chief Executive Mike Arcamone tells Reuters. Huh? There’s no way that the less than half-billion dollar cash injection made a game-changing impact on GM-Daewoo’s 900 percent debt-to-equity position. So what gives? Arcamone credits “aggressive cash conservation efforts over the past year and improving auto industry conditions,” for his assessment.

The “cash conservation” aspect is definitely the crucial element, and it’s not something that GM can afford to keep up if it wants Daewoo to continue developing so many of Chevrolet’s global products. And with GM injecting hundreds of millions into Opel with no sign of European governments offering to lend a hand, there are just too many hungry mouths abroad for GM to save them all. If Opel is really supposed to be a more independent division going forward, look for GM to send more taxpayer cash to South Korea. Or, at the very least, to shift some of its exposure to Daewoo to its Chinese partners along the lines of its recent India strategy.

Join the conversation
2 of 4 comments
  • Jack99 Jack99 on Jan 18, 2010

    In light of this news, it comes to no surprise the Korean government turned its back on GM-Daewoo the last time the company asked for welfare money. I recall several months back when that happened the comments section of that news article was rife with Americans/westerners in general asking why America didn't take a cue from them... Oh well!

  • Robert.Walter Robert.Walter on Jan 18, 2010

    "... keep a little momentum going..." Momentum can also be found when moving in reverse ... and sadly seems to apply here...

  • Art Vandelay Dodge should bring this back. They could sell it as the classic classic classic model
  • Surferjoe Still have a 2013 RDX, naturally aspirated V6, just can't get behind a 4 banger turbo.Also gloriously absent, ESS, lane departure warnings, etc.
  • ToolGuy Is it a genuine Top Hand? Oh, I forgot, I don't care. 🙂
  • ToolGuy I did truck things with my truck this past week, twenty-odd miles from home (farther than usual). Recall that the interior bed space of my (modified) truck is 98" x 74". On the ride home yesterday the bed carried a 20 foot extension ladder (10 feet long, flagged 14 inches past the rear bumper), two other ladders, a smallish air compressor, a largish shop vac, three large bins, some materials, some scrap, and a slew of tool cases/bags. It was pretty full, is what I'm saying.The range of the Cybertruck would have been just fine. Nothing I carried had any substantial weight to it, in truck terms. The frunk would have been extremely useful (lock the tool cases there, out of the way of the Bed Stuff, away from prying eyes and grasping fingers -- you say I can charge my cordless tools there? bonus). Stainless steel plus no paint is a plus.Apparently the Cybertruck bed will be 78" long (but over 96" with the tailgate folded down) and 60-65" wide. And then Tesla promises "100 cubic feet of exterior, lockable storage — including the under-bed, frunk and sail pillars." Underbed storage requires the bed to be clear of other stuff, but bottom line everything would have fit, especially when we consider the second row of seats (tools and some materials out of the weather).Some days I was hauling mostly air on one leg of the trip. There were several store runs involved, some for 8-foot stock. One day I bummed a ride in a Roush Mustang. Three separate times other drivers tried to run into my truck (stainless steel panels, yes please). The fuel savings would be large enough for me to notice and to care.TL;DR: This truck would work for me, as a truck. Sample size = 1.
  • Ed That has to be a joke.