General Motors' plan to penetrate world markets with Daewoo-built, Chevrolet-badged models is a clever way to offset declining vehicle sales in North America.
GM's relatively cheap acquisition of key Daewoo Motor Co. assets in 2002 looks more brilliant by the day. GM Daewoo Auto & Technology Co. has become a powerful weapon in the company's global arsenal.
GM moved in after Ford Motor Co. backed out of a plan to buy the bankrupt Korean company. Among the various miscalculations of ex-Ford chief Jacques Nasser, not doing the Daewoo deal may have been one of the worst.
Daewoo was broke, but it was well-placed. For example, it was the best-selling brand in central Europe. GM's investment and management discipline makes the aggressive and innovative Korean automaker a force to be reckoned with. Chevy-badged Daewoo sales are growing fast in Asia, Europe, South America and even North America.
What's more, General Motors now has a prized engineering base in Korea and is discovering a new group of low-cost Daewoo suppliers that can be used around the globe.
But that happy story of rapid overseas expansion sounds familiar. GM moved swiftly into developing markets a few years ago. It outraced Ford and others to set up operations in such places as Poland, India, Argentina, Thailand, Brazil, the Ukraine and China. Indeed, GM's aggressiveness in the mid-1990s set the stage for its current success in China.
When the emerging markets imploded in 1996 and 1997, GM was caught short. The hard lesson learned: Expect sharp reversals when dealing with the developing world. GM must guard against overreaching overseas.
Moreover, the small-car wars beyond U.S. borders will force GM to accept profit margins so slender that the American market seems like lush pickings. There's little leeway for putting cash on the hood when selling Daewoos in the Czech Republic. GM's main mission is still here in North America.