Daewoo slump responsible for drop in car sales
A sharp drop in Daewoo's car sales in the first few months of 2000 is being blamed for the industry's overall 9% drop during the same period.
In January, Daewoo slumped 35% compared to the same time last year, bringing the Korean automaker's total market share to 19.5% by the end of that month. In January 1999, Daewoo had a total market share of approximately 30%.
In February, 42,617 cars were sold in Poland, almost 3,000 less than at the same time last year. Total sales since the beginning of the year came to 81,791, down by 8,415.
The dearth of interest in Daewoo cars may have stemmed from overall uncertainty as to the future of the company and its troubled parent. U.S. automakers Ford and General Motors (GM) have both reportedly talked to the auto division of Daewoo about taking over the operation.
"Customers are just waiting," said Wojciech Drzewiecki, head of the automotive research company Samar. He also said the automaker's financial troubles have forced it to scale back on promotions and advertisements.
Daewoo's future does not look much brighter, as it will now have to compete against a team of Fiat and GM, which signed a strategic alliance March 14.
Their agreement entails a share swap in which GM is to take 20% of Fiat, while Fiat walks away with 5.1% of GM. Each share tranche is worth approximately $5 billion. Jim Collins, a transport analyst at Donaldson, Lufkin & Jenrette in London, said the two companies will likely close the deal sometime mid-year.
Despite a closer working relationship globally, the alliance is not expected to significantly impact either company's operations in Poland, said Tim Armstrong, a senior associate in the global automotive research group at Standard & Poor's/DRI.
"The only thing that can happen in the future is that they will use similar parts," Drzewiecki said. He also said he did not think either company would radically alter its product line.
Those potential similarities could cause Daewoo difficulties, because both Fiat and GM will have equal access to certain types of competitive information as well as cheaper access to components.
"I think you won't see changes on the consumer level for the first four or five years," Collins said. But he did mention that the companies could work on producing similar designs, such as chassis, in the future. "You will at some point need a combined product strategy," he said.
Fiat and GM officials in Poland have been tight-lipped about the alliance. "It's hard to say anything as far as the situation in Poland is concerned," said Maciej Brzozowski, press spokesman for Fiat Polska. "We have to wait until our bosses decide what to do."
The strategic alliance may give Fiat unhindered entrance to the U.S. market, but GM is unlikely to get immediate access to Fiat's retail network in Poland because the two companies' product lines are so different.
Fiat, known for its Cinquecento, Seicento and Maly Fiat (a.k.a. Maluch) models, produces cars in Bielsko-Biala, while GM produces its Opel line in Gliwice. Of the two, GM has a much lower market share.
Currently, Daewoo is said to be in talks with a number of other auto companies to form some sort of an alliance. According to Drzewiecki, those companies include Daimler-Chrysler, GM, Ford, Hyundai and Fiat. Daewoo's representatives were not available for comment.
In January Fiat sold 13,947 cars, giving it a 35.6% market share in Poland. GM sold some 2,646 Opel cars during the same period, giving the U.S. automaker a 6.75% market share.
