GM Daewoo steering toward profit in year 4

Michael Grimaldi

GM Daewoo and Auto Technology Co. has invested over 3 trillion won ($3.2 billion) in new product development since 2005 and will invest another 3 trillion won in facilities in 2008-2009, according to chief executive Michael Grimaldi.
“Our vision over the next three years is to build an expanded portfolio of products, enhance our image and grow sales in Korea and overseas,” said Grimaldi in a recent interview at the Seoul Motor Show.
The driving force behind such large-scale investment is GM Daewoo’s strong sales and profit in recent years.
The Korean unit of General Motors Corp. of the United States turned a profit last year for the first time since it was launched in 2002.
Hyundai Motor Co. and its affiliate, Kia Motors Corp., two Korean carmakers not controlled by foreign parents, posted three straight years of profits decline from 2004 to 2006.
Analysts say GM Daewoo's progress has been sparked by a recovering domestic market as well as exploding export volume.
GM bought Daewoo in 2002 and is Korea’s third-largest automaker. It sold 1.52 million vehicles last year, and exports accounted for almost a third of the volume.
“As a company we are only four years old, and this October we will present some interesting surprises at the five-year anniversary,” Grimaldi said.
Regarding the recently clinched free trade agreement between Korea and the United States, he said the impact of free trade agreements has been positive historically for GM Daewoo, and GM has supported other FTAs.
Asked if GM has plans to expand its distribution network in Korea for imports under the GM brand, such as Cadillac and Saab, to benefit from the free trade agreement, Grimaldi said the company plans no key changes at this moment. But he said GM plans to introduce more new products, without offering specifics.
The American chief executive, who took the helm last August as successor to Nick Reilly, made it clear that recent media reports that GM Daewoo is closing factories in Korea and moving to China or India are false.
Manufacturing facilities of GM Daewoo in Bupyeong in Gyeonggi province, Changwon in South Gyeongsang province and Gunsan in North Jeolla province have maximum annual vehicle production capacity of 900,000 units, and the plants are already churning out 850,000 units per year.
“We are not facing any major restructuring but will continue to reduce costs, improve quality and expand facilities to existing plants,” he said. “Cars that we are developing in Korea, as part of a mini and small car development studio for GM, will be produced here and also in other parts of the world.”

By Seo Ji-eun Staff Writer [spring@joongang.co.kr]