Hyundai and Ford Consider Strategic Alliance Amid Daewoo Sale Talks

Strategic Insights -

As South Korea's Daewoo Motors is reportedly being wooed by several of the world's biggest car-makers, including General Motors and Ford, analysts predict a potential alliance between Hyundai and Ford to counter the GM-Daewoo partnership. Hyundai has expressed interest in acquiring Daewoo, while Ford is said to be eyeing a strategic alliance with Hyundai to expand its presence in Asia. This move comes as Hyundai is planning to expand its Kia joint venture in China and ambitions to secure a foothold in the international automotive industry where megamergers are expected to leave only a few top players.

Key Takeaways:

  • General Motors is reportedly the preferred candidate to buy Daewoo Motor due to its long-standing partnership, said Richard Pyo, an analyst at Credit Suisse First Boston.
  • Ford could pursue a strategic alliance with Hyundai to counter the GM-Daewoo alliance, said Han Kum-hee, analyst at Merrill Lynch Korea.
  • Hyundai's bid for Daewoo would give it a virtual monopoly in the market, which currently has Hyundai commanding a share of over 70% including Kia sales.
  • Ford aims to acquire up to 10% of Asia's vehicle market by 2010 and sees Hyundai and Kia as key partners to achieve this goal.
  • Hyundai plans to expand its Kia joint venture in China, which is one of Asia's most important markets.
  • Hyundai may need a foreign partner like Ford to provide the necessary money and technology to compete in the international automotive industry.
  • A committee overseeing the sale of Daewoo Motor has invited bidders, with Ford having until February 21 to submit a letter of interest.

Statistics:

  • Hyundai currently commands a share of over 70% in the market, including Kia sales.
  • Ford aims to acquire up to 10% of Asia's vehicle market by 2010.
  • Hyundai and Kia account for about 10% of Asia's small-car segment.
  • General Motors had a 15-year relationship with Daewoo that ended in 1992.
  • Ford once held a 16.9% stake in Kia Motors.

Sources:

  • Richard Pyo, analyst at Credit Suisse First Boston
  • Han Kum-hee, analyst at Merrill Lynch Korea
  • Hyundai
  • Ford
  • Peugeot-Citroen
  • Daishin Economic Research Institute