(Adds CEO, analyst comments)
By Nam In-soo
SEOUL, Oct 28 (Reuters) - General Motors Corp said on Monday its South Korean venture, GM Daewoo Auto & Technology, was holding talks with a Chinese partner to sell cars in China and it was also looking for opportunities in Japan.
GM agreed in April to take a 42.1 percent stake -- the largest -- in GM Daewoo for $251 million, providing a springboard for the world's largest automaker to expand in Asia.
"We intend to leverage, to use the GM family, especially in China," Nick Reilly, GM Daewoo president and chief executive, told a news conference after officially launching the venture.
The company was holding talks with Shanghai Automotive Industry Corp Group (SAIC), China's third-largest auto firm, which has a 10 percent stake in GM Daewoo.
Global carmakers are jockeying for position in China, hoping to capitalise on the country's low manufacturing costs and rising incomes. Steady economic growth is expected to push China's car sales to one million this year, up 40 percent.
GM Daewoo was also looking at opportunities in Japan, although it had no immediate entry plans, he added.
Analysts said GM, which was already rolling out Buick sedans and family cars at a joint venture with SAIC in Shanghai, could expand its presence in China by adding Daewoo cars.
"Daewoo cars have a competitive price, which is good for GM hoping to expand presence in the fast-growing market," said Song Sang-hoon, an analyst at Dongwon Securities.
He said GM Daewoo's China plan would boost procurement of auto parts from Daewoo's parts suppliers in South Korea.
REGAIN MARKET SHARE
GM said last week it was in talks with Chinese carmaker Yantai Bodyworks Co and others to expand its presence in China.
Yantai, based in and owned by China's coastal province of Shandong, makes cars using technology from Daewoo Motor.
In South Korea, GM Daewoo faces the task of regaining market share lost to rivals Hyundai Motor Co , the country's largest automaker, and its affiliate, Kia Motors Corp , during the years Daewoo Motor faced financial troubles after the collapse of parent Daewoo Group [DWGR.UL].
Smaller automakers, sport utility specialist Ssangyong Motor Co and unlisted Renault Samsung Motors Inc, are also rapidly expanding vehicle sales in South Korea.
"By capitalising on our strengths in the design and production of high-quality, innovative and affordable vehicles, we expect to grow GM Daewoo into a sustainable and globally competitive company," said Reilly.
But he said the company had no immediate plans to bring GM architecture to Daewoo product lines. He also said the company could rehire laid-off workers from Daewoo if business took off.
"Daewoo's domestic market share once hovered around 30 percent, although it has fallen to about 11 percent now," said Song at Dongwon Securities."Whether Daewoo can go back to those days depends on how aggressive GM's marketing is."
GM Daewoo plans to unveil its first joint product, project-named "J-200," a mid-size sedan which is a follow-up model to Daewoo's Nubira, during the Seoul Motor Show in early November.
Japan's Suzuki Motor Corp owns 14.9 percent in GM Daewoo, while state-run Korea Development Bank owns 33 percent. GM Daewoo owns three plants formerly run by Daewoo Motor Co.