Epitaphs were being prepared in December for South Korean upstart Samsung Motors Inc., which officially entered the auto industry last May with the launch of itsMaxima-based SM5 car and already may be on its way to becoming a footnote in the annals of automotive history. Under government pressure designed to shore up struggling conglomerates, Daewoo agrees to swap its electronics unit for Samsung Motors. The trade is part of a slew of corporate restructuring plans - known as the "Big Deal" in Seoul - being put into motion. Among the top three chaebol, Group reportedly is reducing its subsidiaries from 63 to 30 and will concentrate on automobiles, construction, electronics, heavy chemicals, finances and services. Samsung will focus on electronics, finance, trade and the service sector; shrinking from 65 to 40 units. Daewoo will shed 10 subsidiaries from 41 by focusing on automobile, shipbuilding, trade construction, finances and services. Insiders from both Samsung and Daewoo say they are puzzled by the deal. "For one thing, Daewoo Electronics is largely consumer appliance-based and produces washing machines and television sets. These are all items that are not selling well in Korea and they are items we are not interested in," says one Samsung source. Although Daewoo will be forced to take on a bigger financial burden, it does stand to benefit by the elimination of a competitor. It also gains Samsung's commercial vehicle group, which recently launched production of a 1-ton light truck said to be sold out for the foreseeable future. And Samsung's spanking new state-of-the-art auto production factory in Pusan could be a possible replacement for Daewoo's tired and worn Leganza plant. There's no word whether the Samsung name will survive.
GM wakes up to potential of Saab
It's taken almost a decade, but there are positive signs thatCorp. finally understands the enormous untapped potential of Saab Automobile AB and is beginning to think beyond just replacements for the existing range. A new $100 million, 160,000-vehicle-per-year paint shop surely proves GM is thinking long-term and not looking to sell out. The paint plant comes on stream next March, in line with Saab's plans to sell 150,000 cars in 2000. Saab's also on a hiring spree. The search for another 200 engineers, a 27% increase in talent over the current 750, has begun. And GM's finally making moves where diesel engines and Saab are concerned. Saab, until this year without any diesel offerings, had effectively eliminated half of its potential customers in some key European markets where oilburners take upwards of 40% of sales. Saab began offering a 2.2L diesel in its 9-3 car this year, and it has plans to use a new GM common-rail V-6 diesel in the pipeline for 2000 in its 9-5.
And the vehicle is ... Zafira
GM will stick to its game plan, announcing it will build an Opel Astra derivative - in this case the upcoming Zafira microvan - at its new facility under construction inThailand. There was some speculation that GM would produce a car with Daewoo Motor Co. Ltd. there. Instead, GM says it will produce some 40,000 Opel Zafira microvans per year at the new facility. The Zafira, the Astra-based model that will be launched in January at Adam Opel AG's Bochum, Germany, plant, is GM's entry into Europe's hottest new segment, currently dominated by theMegane Scenic. The Thai-built Zafiras will be sold throughout Southeast Asia, company officials say, with first exports expected by early 2000. The $555 million plant is slated to begin production in January 2000. The Zafiras will have some measure of local content. So far, GM has signed contracts with 40 local partsmakers.
VW's big check may benefit Skoda
A new engine and transmission plant in the Czech Republic is likely to be part ofAG's aggressive $79 billion global investment plan for the next five years. The Prague government's approval of tax breaks through 2003, plus duty-free import of capital equipment for the plant and grants for worker training have all but sealed the deal for the new plant, which could be built at the Mlada Boleslav base of VW's Czech unit Skoda Auto a.s. While VW refuses to comment on plans for the new plant, the automaker does say that almost half of its planned spending is earmarked for the development of new models and to modernize production and technical research to increase output globally.