SEOUL -- To the casual observer, things appear quiet in the camps of rival bidding alliances Hyundai Motor Co. Ltd./DaimlerChrysler AG and General Motors Corp./Fiat SpA following Ford Motor Co.'s stunning $6.9 billion preliminary winning bid June 26 to buy troubled Daewoo Motor Co. Ltd.

Ford has until this month (August) to seal the deal, which will provide it a key production base in Asia, a quarter of Asia's second-largest car market, plus modern manufacturing facilities in Poland and India, and entrée to dozens of other Daewoo ventures scattered around the globe.

But while things seem calm, such is not the case.

DaimlerChrysler, which had not bothered to take a very good look at Daewoo Motor before a joint bid to purchase the carmaker was submitted, also appears not to have looked very deeply into its intended partner, Hyundai Motor, which is undergoing an internal power struggle among controlling family members.

Hyundai and DC now are enmeshed in their own due diligence, indicating that this alliance still is months away from being cast in stone, when DC hopes to purchase 10% of the car subsidiary. The in-depth analysis didn't begin until June 26, after a non-binding letter of intent had been signed between the two on the same day that their Daewoo bid was submitted.

Though much has been made of a joint 1.0L world car Hyundai plans to build with Mitsubishi Motors Corp., with input from DC, it is Hyundai's commercial vehicle operation that holds the greatest attraction for DC's Mercedes-Benz truck division.The due-diligence process is expected to last at least through the rest of the year. Only after that can the two companies consider forming a 50/50 JV, which calls for some restructuring of the existing plant in Chonju.

The Hyundai-DC joint bid of $6 billion for Daewoo Motor (which includes subsidiary Ssangyong Motor), however, was predicated on having a solid alliance in place. Observers say the "iffy" partnership hurt the duo's chances with Daewoo's creditors. DC also indicated only a lukewarm enthusiasm for taking over Daewoo operations. Chief Executive Juergen Schrempp publicly stated he was interested in "parts of Daewoo Motor," but not necessarily the whole package.

Despite the machinations taking place to cement the DC alliance, some well-placed sources suggest that Hyundai is quietly hatching a strategy to grab a piece of Daewoo, even if it means offering a deal to Ford. Daewoo Motor's chief spokesman in Seoul vehemently denies that such a move is under way.

The spokesman does allow that Hyundai does not view Ford-Daewoo as a done deal. "It's not all over until the fat lady sings," he says, "and we have not yet heard her sing." Should the Ford-Daewoo negotiations falter and the opportunity arise, he indicates Hyundai Motor would plunge back into the renewed auction process.

Hyundai's stellar sales performance belies a need for Daewoo. Six-month sales figures are up 22% over like-period a year ago, with 731,848 cars and commercial vehicles sold worldwide. The No. 1 Korean carmaker in June, alone, sold 150,308 cars and trucks globally (up 24% over June 1999), of which 57,276 were sold in Korea. Domestic sales included 38,212 cars and sport/utility vehicles (SUVs), plus 19,064 trucks and buses.

Hyundai's domestic market share is about 52%, compared with Daewoo's 34%. Combined with subsidiary Kia Motors Corp.'s sales, Hyundai dominates with roughly 76% of total market share. Were Hyundai to acquire Daewoo Motor, it would control nearly 100% of Korean automotive output - an issue of concern to the Korea Fair Trade Commission.

GM, too, remains hopeful, insisting its Daewoo evaluation team remains at the ready should Ford falter. This, despite the fact that GM's fifth floor war room in the Saab Building here is bare of personnel. "The Daewoo team is being kept intact for the time being, but everyone who doesn't live in Korea has gone back home," a GM spokesman tells WAW.

GM, he says, continues to study the Daewoo-Ford situation and other Korean production base options. "When you are looking at capturing 10% of the Korean market, you need to look at manufacturing within Korea," he says, noting that a greenfield program is out of the question.

Observers here question how closely GM is tracking things when its team of evaluators has gone home. Among them are David Jerome, GM's Korea managing director, and Alan Perriton, GM's top executive in charge of the Daewoo acquisition project. Both left for the U.S. shortly after GM's bid was turned down on June 26.

Mr. Jerome reportedly is engaged in intense strategic meetings focusing on introducing non-Korean-made cars into the Korean market. These include the small YGM-1 concept car unveiled at the Tokyo Motor Show last fall and shown again at the import motor show here in June. The Chevy-badged car, sources say, will be built on a Suzuki Motor Corp. platform in Thailand. The Thai-made Zafira microvan also is a Korea-bound contender.

GM and Daewoo are by no means strangers, GM having had a 20-year history as half-owner of Daewoo Motor and its predecessors. In fact, when GM partnered with Shinjin Motor Co. in 1972, the 50/50 JV was called General Motors Korea. In 1978, Daewoo Group purchased Shinjin's shares, which had passed into the hands of the Korea Development Bank.

In 1982, GM Korea was renamed Daewoo Motor Co. Ltd. Ten years later, after much wrangling over product quality and Daewoo's ambitious plan to produce its vehicles globally, GM pulled out, selling its 50% interest for little more than half a billion dollars. Ironically, GM offered a reported $5 billion to $6 billion to take over the troubled carmaker last year, following lengthy negotiations in which GM was the sole suitor. But Daewoo creditors rejected the offer, believing they could drive up the price through a global auction.

GM officials say they correctly calculated that Daewoo's worth had deteriorated as losses and emergency loans mounted during the first six months of this year. The automaker reduced its monetary offer to $4 billion to $5 billion to reflect these realities -- hoping to win the deal through a superior package of intangible promises, including job security and supplier benefits.

But this was an auction where some 160 creditors wanted to garner as much as they could. Ford Vice Chairman Wayne Booker realized this early on and signaled Ford's bidding policy at a May news conference. If it worked out that Ford did not have adequate time or good enough information for in-depth due diligence, Mr. Booker said, "then we'll have to roll the dice."

As it turned out, Ford only had a few weeks to review the voluminous data. Mr. Booker admitted it would likely take until year-end to complete the bidding process. But the course to victory was a simple one if one's board of directors were bold enough to endorse a bid higher than GM's 1999 offer. Once past the preliminary bidding stage, the finalists would have lots of room to examine things more deeply and then seek pricing concessions where they could be justified.

Thus, Ford's $6.9 billion non-binding offer was nearly $2 billion higher than GM/Fiat's and roughly $1 billion higher than that of Hyundai-DC. The creditors accepted it promptly and pushed the other two bidders out of the auction. "It would seem that GM took a Western approach by bidding low, with proviso for upping the price if necessary," a well-placed Hyundai Motor insider says. "Ford took a very Asian approach, with a very high bid, with the intent and hope of later knocking down the price through negotiation."

"Our bid was high enough that we had some concern about how the board of directors would react to it," counters GM" Mr. Jerome. "
"We did what we think was the right thing. Out of all of this, I feel sorry for Korea. We know Daewoo better than anyone else and we had made planes to cover its recovery in total. All Korea would have benefited from this."

Outside the public affairs office at Daewoo Global Headquarters hang three telling photographs. One shows GM's team toting in a carton of bidding documents that weighs about 30 lobs. Another shows the Hyundai-DC team with a carton nearly as heavy. The middle photo portrays the Ford team, one member grasping the bidding papers between his fingers--a package so thin it could fit into a business-size envelope. "The Ford document probably only mentioned the price," a GM insider says. "That's all the creditors' committee needed to see."

--with Barbara McClellan in Detroit