The company is struggling to work though an inventory glut, which last November hit 45,000 units - or an 18-month supply at then-current sales rates. Inventory since has been trimmed to 28,000 units - about 15,000 in dealer stock and 13,000 in ports - representing about a 158-day supply, Lee acknowledged.
He confirmed that the company owes some $80 million to Chicago-based PPM America Inc., which finances its inventories at 70 percent of the vehicles' wholesale price to dealers. PPM has turned down repeated requests for an interview.
Sales for the U.S. subsidiary slid 29.4 percent to 48,296 units last year. In the last two months of 2001, the company sold an average of 2,564 units a month among its 525 dealers.
But Daewoo sales have doubled to about 6,000 a month since December. In January, the company added limited-term 0 percent financing, a five-year/100,000-mile warranty, incentives up to $2,500 per vehicle and a $5 million ad campaign on cable network TV.
Despite not being profitable last year, Lee said Daewoo Motor America is able to pay for the incentives and advertising from its cash flow.
In fact, Lee insisted last week, Daewoo's backup plan calls for higher ad spending and expansion of the U.S. dealer base in the event GM walks away from a takeover.
"DMA is Daewoo's most important marketing subsidiary worldwide and is crucial to its profitability," Lee said. "We will become more active."
But with models made from decade-old dyes and no new products in sight, the company will struggle to survive should the companies fail to reach a deal, said George Peterson, president of AutoPacific, a market research company in Tustin, Calif.
"The real question is whether Daewoo can be a viable brand in the U.S. unless GM decides to put a lot of money behind them," he said. "And it's going to be very difficult to do so."
That question was punted back to GM last week by Daewoo's creditors and the Korean government, a message not lost on observers in Seoul.
"Strong economic conditions give (the finance minister) confidence," said Shim Dong Jin, an auto industry analyst with KGI securities. "He's saying he's ready to dig in and not give any further concessions to GM." c
Staff Reporter Dave Guilford in Detroit and Staff Correspondent Oles Gadacz in Seoul contributed to this report