Daewoo's woes include disgruntled dealers and parts shortages

Legal holdups and disgruntled dealers are causing problems for Daewoo customers in the U.S., says Ben Rainwater, vice president-parts and service at beleaguered Daewoo Motor America Inc.

Problems started after the South Korean auto maker's U.S. arm declared bankruptcy May 16. General Motors Corp. is acquiring certain units of Daewoo Motor Co. Ltd, such as overseas factories. But GM is uninterested in Daewoo's network of about 500 U.S. dealerships — a system set up after Daewoo's failed experiment of hiring college students to sell cars at school.

Now, Daewoo Motor America is struggling with widespread parts shortages and problems with dealers, some of whom aren't honoring the manufacturer's warranties even though GM vows to work something out.

Initial parts problems are getting straightened out, too, says Rainwater, the current highest-ranking member of the skeleton crew running the moribund U.S. operations.

“We are ordering, receiving and distributing parts,” he says. “We're not able to order quite as much stock, which puts us into a little bit of a back order occasionally.”

For two months after the bankruptcy, there were no parts orders, funds, “nothing,” Rainwater says. Now, a creditor committee must approve parts orders. It limits orders to 30 days of inventory. That's causing some parts to run out, especially bumpers, front fascias and other such units needed to repair vehicles damaged in accidents.

Rainwater is trying to ensure that dealers honor manufacturer warranties. But many miffed Daewoo retailers are in uncooperative moods.

“Our biggest challenge overall is keeping dealers focused on the Daewoo product,” says Rainwater.

He says several dealers stopped servicing Daewoo customers after hearing of the pending takeover. That created “havoc,” he says. “If I don't have anybody out there to work on the cars, it really makes it tough.”

Many Daewoo dealers claim Daewoo Motor America shorted them financially. The auto maker still owes dealers back sales incentives.

Rainwater says a third party will handle warranties when the GM-Daewoo deal is finalized.

A GM spokesman is unsure who will handle the Daewoo warranties. But manufacturer's warranties will continue to be fulfilled, GM promises. The spokesman says a trust fund may be set up for that.