Skip to content
Subscriber Only

Why Gm And Daewoo Wound Up On The Road To Nowhere

At the time, it was the sort of manufacturing tie-up that international business theorists love. General Motors Corp. and South Korea's Daewoo Group in 1986 launched a joint venture to build a car in Korea for sale in the U. S., based on a design by GM's Adam Opel unit in Germany. "In a very real sense, this vehicle is a product of the best that Germany, Korea, and the U. S have to offer," said Roger B. Smith, GM's then-chairman, in Seoul in September, 1986.

The best wasn't good enough. Today, the tie-up is in trouble and being renegotiated. A dispute at the 50-50 venture, called Daewoo Motor Co., isn't surprising. U. S. sales of the subcompact Pontiac LeMans, which it built, collapsed to just 39,081 cars last year, down 39% from a 1988 peak. This year, sales are down a further 15% so far. The weak sales reflect a carmaking operation dogged by a host of problems. "The joint venture has not been a happy one, because they have not done as well as they expected, both in Korea and in America," says Boston University professor Yu Sang Chang.