SEOUL - And suddenly there were two.
Barely 10 days after Hyundai Motor Co. completed its acquisition of bankrupt Kia Motors Corp., Daewoo Motor Corp. last week agreed 'in principle' to take over Samsung Motors, the startup automaker that proved to be one straw too many on the back of Korean automaking capacity.
Under a government-led restructuring of Korea's huge conglomerates, or chaebol, Samsung Group will swap its automaking unit to Daewoo Group in exchange for Daewoo Electronics.
The swap completes the consolidation of the Korean auto industry, which had grown to include six major makers. Combined with an earlier acquisition of Ssangyong Motor Co. Ltd., Daewoo now has a 36.4 percent share of the Korean market, based on year-to-date sales.
Hyundai, with Kia and its Asia Motors truck unit, has a 63.6 percent share.
'The restructuring is basically good for the Korean automotive industry. But in terms of synergy and economies of scale, Samsung really doesn't add much to Daewoo,' said Elaine Ahn, automotive research analyst with SG Securities Ltd. in Seoul.
PLANT IS PLUM
Samsung's one major asset is its Pusan plant on Korea's south coast, a state-of-the-art facility built around Nissan's Intelligent Body Assembly System. The Nissan system permits quick retooling in order to manufacture several body versions along the same line.
The company's annual production capacity is rated at 200,000 units.
Samsung's liabilities are equally obvious: about $2.15 billion of debt, enough to push its debt-to-asset ratio to 313 percent.
Although Ssangyong's lineup meshes nicely with Daewoo's, Samsung's SM-5-series cars, which are based on the Nissan Cefiro/Maxima, do not fit into the Daewoo range.
In its various versions, the SM-5 competes at home against the Daewoo Leganza, a proprietary product, as well as the Chairman, a lightly modified older Mercedes-Benz E class built under license.
The SM-5 could become a potent competitor in export markets, however.
Unlike the Chairman, which cannot be exported to Western Europe or North America because of tough licensing terms imposed by DaimlerChrysler AG, Nissan did not impose any overseas marketing restrictions on the SM-5, according to Samsung Motors spokesman Kim Jong-Ho.
That basically gives Daewoo a free hand to sell the SM-5 throughout its global dealer network. Samsung already had started shipments of the SM-5 to Peru, Chile, Panama, China, Lebanon and Egypt.
While the SM-5 has some export potential, the real plum in the swap may prove to be Samsung Commercial Vehicle Co. Ltd. The truckmaker produces small and heavy-duty trucks under license from Nissan Diesel, giving Daewoo entry into a segment where it had been shut out.
But the collapse of the domestic market this year magnifies Samsung's - and now Daewoo's - problems. Samsung's domestic registrations through November total only 37,000 units, far off the original full-year 1998 target of 80,000.
Industry observers say they believe most of those sales are in-house to employees of the Samsung Group and its suppliers and their families.