LOS ANGELES - With a dealer body now at 500 throughout the United States, Daewoo Motor America executives say the automaker has 'grown up' and is ready to play hardball in the industry.
This air of confidence comes while Daewoo's insolvent parent company hangs on to existence only at the whim of the South Korean government, sympathetic banks and equally hard-pressed suppliers. And this year's U.S. sales will fall about 30 percent short of the 100,000 units Daewoo executives predicted they would sell.
But Daewoo is looking hard for silver linings in a sky full of storm clouds.
'We are making a profit on our operations (in America),' said Daewoo Motor America president D.J. Lee.
'Our sales were strong through September, then in October they went down because Ford withdrew from negotiations (with the parent company). And November was down because of the announcement that we are in receivership. But we will show gains in 2001 because we will emphasize our price advantage and how we make sense to people on a budget,' Lee said.
Changing sales mix
In that vein, and with the industry and U.S. economy slowing down, Daewoo expects to change its sales mix more heavily toward the budget-minded subcompact Lanos and compact Nubira sedans and away from its mid-sized Leganza sedan.
Lee predicts the automaker will sell a 'modest' 130,000 cars in 2001, up from about 70,000 this year. Most of the 2001 gain will come from having a complete dealer body; Daewoo had only 200 dealers in January 2000. Lee expects the dealer count to peak at 550 early next year.
With this expected growth, Daewoo plans to hire a dedicated ad agency in 2001, after several years of using job shops to do its advertising. Lee said Daewoo's marketing budget will increase from $90 million this year to $130 million in 2001.
Daewoo and its dealers will have to grow with a new financial services partner. With Debis Affinity Services getting out of the automotive finance business, Daewoo has turned to Primus to be its captive finance ally.
Scholarships for slogans
Daewoo also still has its quirky, almost laughable, moments. For instance, until Daewoo hires an ad agency, Lee wants to hold a scholarship contest among college students to come up with advertising slogans for the automaker. And the company still has three factory stores remaining from its initial 49 it had at start-up, although Lee said those last stores should be sold soon.
To be sure, Daewoo will have to make its sales gains with product identical to what it offered this year, as well as without the three-year free-service plan, which was scrapped this summer over some dealers' objections. But if the automaker remains independent and is not folded into another company's operations, then two new products are scheduled to arrive for 2002.
A redesigned Leganza is slated, equipped with a narrow-angle 2.5-liter V-6 to replace the wheezy four-cylinder engine that currently powers it. More angular sheet metal will replace the lozenge look. Its wheelbase and overall length will be the same as that of the Avalon, yet it will be priced less than Camry.
Jumping into the mini-minivan segment could be an unnamed product for the U.S. market but known as Tacuma or Rezzo in other markets. This five-seat tall wagon is powered by a 2.4-liter inline-four cylinder engine and will be priced under $16,000.
Then there are the Korando and Musso sport-utilities under the Ssangyong name. But after counting on the arrival of those products for several years, Lee no longer will count those products as coming, as Ssangyong may be a separate negotiating point for any automaker looking to invest in Daewoo.