General Motors is disappointed with the Jan. 27 Automotive News editorial regarding the business plan for GM Daewoo Auto and Technology Co., the entity that acquired some of the assets of the bankrupt Daewoo Motor Co.
We understand that some of your readers are displeased that GM did not rescue the Daewoo dealers in the United States, but that does not excuse your failure to acknowledge publicly available information establishing that GM is not responsible for their disappointment.
To set the record straight, here are the facts that were missing from your editorial:
First, GM never promised to purchase Daewoo Motor America or continue the Daewoo brand in the United States.
GM entered into a nonbinding memorandum of understanding with Daewoo Motors in September 2001 that envisioned an acquisition of Daewoo Motor America.
However, that agreement was nonbinding for a reason. GM had not yet conducted the due diligence necessary to determine whether a business plan based on the original memorandum of understanding made sense. GM's subsequent business judgment was that it did not.
Second, there is no basis to blame GM for the misfortunes of dealers, suppliers or other creditors disadvantaged by the financial failure of Daewoo Motor Co. Daewoo went into bankruptcy in November 2000 with more than $13 billion in acknowledged debts and obligations.
GM did not cause that situation. The Korean court ultimately approved a sale of certain Daewoo assets because it benefited customers, creditors and employees more than a simple liquidation.
Naturally, every one of Daewoo's creditors, including dealers, would have preferred to be made whole. However, that was obviously impossible.
Third, GM has never tried to conceal the terms of the transaction or that, ultimately, products manufactured in Korea by GM Daewoo Auto and Technology Co. might be sold in the United States.
Upon completion of due diligence and negotiations, GM promptly disclosed (on April 29, 2002) the final terms of the transaction. Those included a list of the sales subsidiaries that would be acquired by the new company.
In that same press release, Chairman Jack Smith is quoted as follows: "GM's investment in this new company allows us to participate in the important South Korean market, and share in the benefits associated with its outstanding product development and manufacturing capabilities. This enterprise will produce a new generation of cost-competitive vehicles that can be marketed around the world."
Although details were not provided, GM has never stated that products produced by GM Daewoo Auto and Technology Co. would not be sold in the United States. Indeed, Automotive News has reported occasions when GM representatives have stated the opposite. GM has repeatedly confirmed that neither GM Daewoo Auto and Technology Co., nor GM, nor our affiliates intend to offer a Daewoo-branded product in the United States. That continues to be true.
In conclusion, there is a world of difference between legitimate actions, which disappoint some constituencies, and conspiratorial conduct justifying an accusation of "shame." Your editorial blurs that distinction.