DETROIT - General Motors is expected to debut at auto shows next week a South Korean-made Chevrolet car to be sold in North America, the No. 1 automaker's latest venture to compete against low-priced Asian imports, sources familiar with the plans said on Thursday.
The move should bolster GM's weak small car sales, but risks hurting relations with North America automotive labor unions and Daewoo's former U.S. dealers, who were left without a car to sell when Daewoo folded U.S. operations last year.
The Chevrolet subcompact car, a version of the Daewoo Kalos hatchback sold in Asia and Europe, will be shown at the Chicago and Toronto auto shows, the sources said.
The car will be manufactured in South Korea at GM Daewoo Automotive & Technology (GMDAT), the new company controlled by GM that was formed late last year from many of the assets of the bankrupt automaker Daewoo Motors.
"(There's) nothing we can announce at this point," Chevrolet spokesman Tom Wilkinson told Reuters. He declined to comment further.
Suzuki Motor Corp. also is expected to announce plans to sell two cars in North America made by GMDAT under the Suzuki nameplate later this year. Suzuki has a 15 percent stake in GMDAT.
South Korean automakers Hyundai Motor Co. Ltd. and Kia Motors Corp. are among the fastest-growing automakers in the United States, gaining market share at the expense of the U.S. automakers with their low-priced offerings.
Once dismissed by American automakers as little better than used cars, the two Korean automakers have improved their quality and grown in recent years by undercutting their competitors to command a substantial share of the U.S. market.
Bill Lovejoy, GM's former head of North American vehicle sales, service and marketing, told reporters in October that GM's most challenging competition comes from Korea. A weak Korean currency and a low-cost manufacturing base allow Korean automakers to offer lower prices and extended warranties that are expensive to match, he said.
LIFE IN THE FAST LANE
Hyundai sold 375,119 vehicles in the United States last year, more than its more established and better known competitors such as Volkswagen AG, Mitsubishi Motors Corp. and Mazda Motor Corp. Kia sold 237,345 vehicles in the United States last year.
"We've got a strategy for the low end of the market," Gary Cowger, president of GM North America, told Reuters when asked about selling a South Korean car last week.
Referring to GM's new "Delta" group of small cars to be manufactured in the United States, Cowger said; "Delta is a part of that strategy, but there are other opportunities to do other things at the low end of the market."
Cowger did not elaborate, but GM may also be laying the groundwork to compete against Toyota Motor Corp.'s new Scion brand, to be launched later this year with two small vehicles targeted at young buyers, said Jeff Schuster, head of North American forecasting with J.D. Power and Associates.
"I suspect they're trying to cut off that angle as well," Schuster said.
He said the South Korean-made Chevrolet, which may go on sale later this year, could be priced at around $10,000, far below the price of any current Chevrolet sold in the United States.
Chevrolet's current lowest priced model, the aging Cavalier coupe, retails for $14,595 in the United States, although consumers can often buy it for $2,000 or $3,000 less with incentives.
BEAT KOREANS AT OWN GAME
GM's plan to beat the Koreans at their own game angers some former Daewoo dealers. When GM finalized a deal last fall to buy a 42 percent stake in the former Daewoo Motors for $251 million, they passed up several assets, including the U.S. sales arm, leaving 525 Daewoo dealers without any Korean-made cars to sell.
"I think it stinks," said Rick Varley, who used to run a Daewoo dealership in Pennsylvania and served as the co-chairman of Daewoo's dealer advisory council.
Varley, who now sells Mitsubishis from his old Daewoo lot, is among a group of former Daewoo dealers who have filed a lawsuit against GM, alleging that some invested a substantial amount into their dealerships believing GM would continue with the Daewoo brand in the United States.
Said Varley: "While they were wooing us, they were building a guillotine, and nobody knew."