New van to put Daewoo back on the road again

A new van could be the answer to Daewoo Motor Polska's (DMP) financial troubles, industry insiders said last week.

On the back of a court-appointed receiver's decision to lay off 1,100 workers at DMP's factory in Lublin, the receiver's spokesman, Mirosław Konarzewski, said the automaker's new LD-100 van may be an attractive enough project to lure investors to the bankrupt company. DMP was declared insolvent by the commercial court of Lublin on Oct. 1.

"LD-100 will be the key asset for potential investors," Konarzewski said.

The receiver, who has managed the DMP plant since it was declared bankrupt, announced last week he would cut more than half of the plant's 2,000 workforce. "(The remaining) 1,000 workers will be enough to manufacture components and to assemble (the outgoing Lublin van model)," Konarzewski told the Business Journal.

Despite the layoffs, industry sources said DMP's future hinges not on the Lublin model, but on the LD-100. While the new van is nearly ready for production, its manufacturing facility has yet to be completed, as DMP could not scrape together the final $130 million necessary to complete construction. A new investor is needed to kick-start the project.

"Several potential investors are interested in the continuation of the LD-100 project," Konarzewski said. "We're now holding talks with (them)."

Warsaw-based Pol-Mot Holding, an automotive distributor, has for the past few months expressed interest in buying into the Lublin plant.

"We're holding talks with Pol-Mot Holding, but other investors as well," Konarzewski said, refusing to be more specific.

For his part, Jerzy Musiał, spokesman for Pol-Mot Holding, said his company is waiting for the receiver to clarify his plans before making any commitments.

"First of all, the receiver has to establish how many assets are still available after the bankruptcy," he said. "We can't just chase the creditors away and march into the factory."

On the other hand, he said, "before the bankruptcy, DMP had to consult with its Korean parent company, now the receiver has a free hand."

Pol-Mot Holding, which purchased the last two 500-vehicle deliveries of the soon-to-be retired Lublin van model before the company went bankrupt, has since halted additional orders.

"We are still interested in taking deliveries of Lublin from DMP on our previous terms, meaning we buy the parts, DMP assembles them and we pay them only for the work," Musiał said. "(However), Pol-Mot needs to clarify with the receiver if DMP is still able to meet these terms."

According to Wojciech Drzewiecki, owner of auto-market watcher Samar, Pol-Mot Holding has been eager to see DMP survive long enough to launch production of the LD-100 van, which is why it bought up the last 1,000 units of the Lublin model - to keep the facility going.

"Continuing the production of the Lublin would allow it to keep its workforce, and it would give Pol-Mot Holding more time (before production of the LD-100 can be started)," he said.

Andrzej Chrząstowski, the leader of the Solidarity trade union at DMP, said the first LD-100 van "wouldn't roll off the assembly line earlier than 15 months after any investor decides to complete the project."

Drzewiecki said Pol-Mot would likely resume ordering at previous levels in the coming months.

"Lublin is still the cheapest van on the market and it's quite a good car," he added.

Robert Wylot