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Global Carmakers Eye Daewoo Motor Amid Asian Market Prospects

Strategic Insights

— 1 min read

Global carmakers General Motors, Ford Motor, and DaimlerChrysler are intensifying their bids for Daewoo Motor, a South Korean automaker on the verge of bankruptcy. The three carmakers are racing against time to secure a significant foothold in Asia, where the car market is expected to surge in the next decade. General Motors, the world's largest carmaker, has informed Daewoo Motor's creditors that it will send a high-level negotiating team to discuss new proposals for acquiring the troubled company.

Key Takeaways:

  • General Motors, Ford Motor, and DaimlerChrysler are competing for Daewoo Motor, with the three carmakers seeking a significant foothold in the Asian market, which is expected to grow sharply in the next decade.
  • Daewoo Motor has liabilities of Won18,600bn (Dollars 16.4bn) and assets of Won12,900bn, with an auction potentially yielding a higher price for the carmaker as competition increases.
  • An international auction would require the agreement of foreign creditors to a work-out programme for Daewoo Motor, which has been delayed due to demands from domestic creditors for foreign banks to write off substantial portions of unsecured loans.
  • General Motors and Daewoo Motor have signed a memorandum of understanding on a new strategic alliance, but have yet to reach a final agreement on GM buying a stake in the troubled carmaker.
  • Hyundai Motor, Korea's largest carmaker, has denied interest in acquiring Daewoo Motor, citing its focus on integrating operations with recently acquired Kia Motors.
  • The acquisition of Daewoo Motor would give the winning carmaker a substantial presence in South Korea, which is Asia's second-largest car market after Japan.

Statistics:

  • General Motors' market share in Asia is approximately 4.5%, while Ford's and DaimlerChrysler's market shares are 2% and 1.3%, respectively.
  • New vehicle sales in Asia are expected to rise more sharply over the next decade than in Europe or North America.
  • Daewoo Motor's foreign creditors are holding Dollars 792m in secured debt and Dollars 805m in unsecured debt, with the latter 67% of which they are demanding that foreign banks write off.

Sources:

  • Yonhap (Korean news agency)
  • KDB (Korea Development Bank)
  • Bloomberg News
  • Reuters

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