GM Daewoo Auto & Technology will invest $1 billion (E852 million) over the next three years to turn the South Korean automaker into a low-cost supplier for General Motors in China, India, Thailand and the USA.
Most of the investment will go into a much-needed modernization of the GM Daewoo range, and to start local diesel production. Creditors stopped product development work after the old Daewoo Motor went bankrupt in 1999.
"We had to start again," says Nick Reilly, who became president when GM Daewoo was formed last October.
GM Daewoo recently hired another 150 engineers, and is taking on 2,000 additional assembly workers in order to keep the recovery on track.
The strategy involves shifting the philosophy of Daewoo. While the Daewoo brand name will be used in South Korea, Europe, Australia and New Zealand, the rest of the world will increasingly know the products as Chevrolets or Suzukis.
Shanghai GM last month began producing the Daewoo Lacetti, which will be sold in China as the Buick Excelle. GM facilities in India and Thailand are also being converted to produce Daewoo products that will be sold locally as Chevrolets.
Meanwhile, Chevrolet dealers in the USA will sell re-branded versions of the Daewoo Kalos supermini imported from Korea. Suzuki dealers in the USA will have an expanded product lineup thanks to Korean-sourced Daewoos, the Lacetti and larger Magnus.
But GM Daewoo's new role is not just as a global product supplier. It has an extensive and cost-competitive die- and tool-making facility, which Reilly says has bid for work at other GM companies.
To expand the Daewoo brand, the company will introduce a hatchback version of the Lacetti sedan at the end of this year, followed six months later by a station wagon.
Other cornerstones of its product plan are a large sedan - important for the Korean market - and a sport-utility.
Reilly would not confirm how GM Daewoo will create these products, but the automaker is expected to draw on technology from GM and its affiliates. The large car may be based on the Holden Statesman, initially imported from Australia and subsequently built in Korea. GM Daewoo looked at sourcing the sport-utility from Suzuki but the Japanese carmaker's existing models are too small. So GM Daewoo is exploring other alternatives.
GM Daewoo will also offer diesels from 2005 using 1.3- and 1.9-liter common-rail engines from the Fiat-GM Powertrain joint venture. The company will source the 1.3-liter from Poland but will build the 1.9-liter locally in South Korea.
Reilly says GM Daewoo will make more than 400,000 built-up vehicles in Korea this year, compared with 240,000 last year and a projected 600,000 next year.
The strategy calls for a major increase in production of kits for export - from 100,000 last year to 300,000 by 2005.
Luca Ciferri contributed