Wagoner: Daewoo talks in final phase

Negotiations to take over all or parts of bankrupt Daewoo Motor Co. will be resolved within two months at the most, General Motors CEO Rick Wagoner said in Frankfurt last week.

"This thing isn't going to last forever," Wagoner said. "Over a certain timeframe, whether it's one month, two months, this thing is going to be resolved, in my point of view. It can't keep going on forever because, frankly, the state of Daewoo continues to deteriorate."

Despite reports that the talks are foundering, Wagoner said, negotiators are "cutting the number of issues down … the lists of 25 and 50 and 100 issues have been narrowed down to two or three tough issues."

Similarly, talks with Rupert Murdoch's News Corp. regarding the sale of DirectTV continue to move forward, he said, even though Murdoch rival EchoStar is pushing an alternate bid.

Wagoner said the deal "could absolutely get done." But he said tighter credit in the United States and declines in the stock prices of News Corp. and DirectTV parent Hughes Corp. are obstacles because the deal would be structured as a stock swap.

"It doesn't say that deals can't get done, but it does say that these dynamics that are playing around - economic, market related - are not making it easier," Wagoner said.

Currency conflict

Wagoner also fired another salvo in GM's attack on the strong dollar, an issue first raised by CFO John Devine this summer.

"If you take my currency down by 38 percent over five years, I'll be pretty damn competitive in somebody else's market," he said. "It's not an accident that, on top of good cars and expanded model lineups, the pricing, particularly for some of the German products, has been positioned way down in the U.S."

Wagoner said fast-growing Korean automakers also have benefited from currency discrepancies in their U.S. pricing. But he credited the Korean makers with rapid upgrades in product quality, as well.

To respond to car share loss, Wagoner said, GM will cut and freshen its lineup of mid-range cars to get higher sales from fewer vehicles.

"We'd like to, over time, attack that market and get some products that run a little higher volume and perhaps free up some slots, or those chits, for some other kinds of products in the portfolio," he said.

GM's share of mid-range cars has remained steady in the past five years, Wagoner said. But, in an apparent nod to critics who say GM spreads its marketing funds too thinly over multiple models, such as Chevrolet's Impala and Monte Carlo, Pontiac's Grand Prix, Saturn's L series, and Buick's Regal and Century, he said GM can be more efficient.

Volume, pricing balance

"I think the issue for us is can we get the right volume and pricing, and perhaps cover that range of the market with fewer entries and, therefore, maybe get some into the higher volume models," Wagoner said.

GM's contrasting success in trucks is in part a fluke of the product cycle, he said. GM did several car programs when it was in dire financial shape in the early and mid-1990s, forcing it to be cautious, while it has replenished its truck lineup in recent fat years.

"To be fair," he said, "it's a little easier to be innovative and bright and think differently in the truck side of the business because it's been nowhere near as exploited as the car side of the business has."

You can reach Dave Guilford at dguilford@crain.com

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