General Motors Co. will eliminate the Daewoo car brand in South Korea as the company begins selling vehicles in the country using the Chevrolet nameplate in an effort to increase local sales.
GM will introduce eight new or refreshed Chevrolet-branded vehicles this year in South Korea, and its domestic operations there will become GM Korea Co., said Michael Arcamone, the unit’s chief executive officer.
“We want to provide the consumer in Korea with more product choices,” Arcamone said in a telephone interview. “We made the decision to give the consumer in Korea the same choices around the world that Chevrolet is providing.”
The closely held unit, which GM expects to rename from GM Daewoo Auto & Technology Co. by the end of the first quarter, was profitable last year for the first time since 2007, Arcamone said. Renaming the unit Chevrolet may help Arcamone, 52, achieve a goal of increasing market share in South Korea to at least 10 percent.
“The brand and company name changes will likely improve their image as people have a negative impression of Daewoo cars’ quality,” said Lee Sang Hyun, a Seoul-based analyst at NH Investment & Securities Co. “Still, I don’t expect their sales in Korea to rise sharply.”
The Incheon, South Korea-based unit increased domestic and export sales by 20 percent last year to more than 1.8 million, according to a Jan. 3 statement. Its share in the Asian nation was 8.6 percent, according to the Korea Automobile Manufacturers Association.
“We expect to achieve a double-digit market share in South Korea this year,” said Ankush Arora, vice president of GM Daewoo in charge of sales and marketing. “The growth rate for combined domestic and export sales will likely be similar this year to last year’s 20 percent.”
The Chevrolet Spark and Aveo small cars, Cruze compact, Camaro sports car, and Orlando and Captiva sport-utility vehicles will sell in South Korea this year, Arcamone said. The Camaro will be the first Chevrolet brand sold in the country.
South Korea is the only country where GM Daewoo still sells vehicles under that brand name instead of the Chevrolet badge, Arcamone said last year.
GM’s South Korean unit plans to spend more than 6 trillion won ($5.36 billion) on product development and facilities over the next two to three years, Arcamone told reporters at a press conference in Seoul today.
The unit will build six of the eight new models that will be introduced this year in South Korea. Chevrolet vehicles account for 92 percent of GM Daewoo’s global exports, the company said.
The U.S. automaker fell 1.7 percent to $37.40 in New York Stock Exchange composite trading yesterday. The stock has risen 0.9 percent in 2011.
GM owns a 70 percent stake in the South Korean unit, while Suzuki Motor Corp. holds 6.8 percent and SAIC Motor Corp., GM’s China partner, has 6 percent. Korea Development Bank, GM Daewoo’s main creditor, owns the remaining 17 percent.
GM took over some assets of South Korea’s insolvent Daewoo Motor Co. in 2002 to set up the venture. GM Daewoo fully repaid a $1 billion revolving credit facility led by Korea Development Bank in December, reducing the company’s borrowing costs.