General Motors notified a Florida administrator last week that it expects to sell rebadged Daewoo vehicles in the United States.
That disclosure shows how GM will compete at the low end of the U.S. market. But 23 Daewoo dealers in Florida say it lends weight to their legal argument against GM.
Daewoo dealers claim that GM's refusal to purchase Daewoo Motor America as part of its deal to buy core assets of Daewoo Motor Co. Ltd. violates dealer franchise laws in most states. GM denies it, and last week in federal court GM stalled legal action in Florida.
When the deal was signed, senior GM officials said there were no immediate plans to sell rebadged Daewoos in the United States. "The possibility is only in the thinking stages, really," Chairman Jack Smith said in an April 30 interview.
GM stated its intentions to sell rebadged Daewoos in written response to a letter from the Florida Department of Highway Safety and Motor Vehicles, which questioned GM to determine whether a complaint filed by the Florida dealers should be heard by an administrative law judge.
"It is anticipated that in the future, some motor vehicles produced by plants acquired in Korea will be sold in the United States, including Florida," read the letter, written by GM attorney Lawrence Buonomo. "However, no final decisions have been made regarding specific models or brands."
The letter from Florida asked GM to explain why the automaker's deal to buy the core assets of bankrupt Daewoo Motor Co. does not violate state franchise law and the rights of Florida Daewoo dealers. It was written after the state's Daewoo dealers made complaints, arguing that a manufacturing entity would violate state franchise laws by selling the same products in the state through different sales channels.
The dealers requested that an administrative law judge conduct hearings into the legality of GM's refusal to keep Daewoo's U.S. dealers in its takeover of the Korean company's assets.
Buonomo said the Florida law does not apply because the vehicles GM will sell won't be of the same "line make" as Daewoo vehicles. Instead, they would be rebadged. The GM lawyer claimed that Florida law only would prohibit GM from selling Daewoo-badged vehicles through an alternate sales channel.