Besides early retirement of a bloated, unionized workforce, GM needs new products to save itself. Obviously, products like the Hummer won’t help as GM announced that they will close four large truck manufacturing facilities.
The current situation has created an odd dynamic in the used car industry. One of the hottest cars in the used car market is… (drum roll)… GM’s Geo Metro. You know that 55 hp econo box based on Japanese technology that could do 0 to 60 in 12 seconds flat, but gave you 50 miles to the gallon! Used Metros are selling for as high as $7k, interesting when you consider the last year they made the Metro in 2001, sticker was $8k.
In a recent BusinessWeek article by Jim Henry brings out this interesting little fact about the Metro and parlays this into the strategy that will save GM:
In general, prices for newer models of small used cars are rising while other segments’ prices are down, especially big pickups and SUVs. This trend should be encouraging for Chevrolet, which announced in late 2007 it will build a minicar based on the Beat concept car, co-developed with its South Korean partner, GM Daewoo…. The new car is expected to get 50 mpg, with production starting in 2009. The Beat-based car was not expected to come to the U.S. market right away, but if people are lining up to buy 10-year-old Geo Metros, maybe GM ought to rethink that. (Emphasis mine)
The Beat essentially shares most of its innards with the Daewoo Matiz. Both of these cars have been designed by Korean engineers (although the Matiz does have some legacy Suzuki technology from the late 90’s) in Bupyung district of Inchon. They will be rebadged as Chevys in the U.S., Europe and India. Matiz based cars are so popular in developing countries that China carbon copied it.
What does this have to do with the FTA and beef? Nothing really, other than demonstrate that much can be achieved if Koreans and Americans work together rather than bitch separately.
44 Comments
Excellent analysis. The whingey plodders should follow Patton’s advice:
Lead, Follow, or Get Out Of The Way!
this makes me very proud of my people- the koreans and americans. and wang is right; we can work together if we try!
Uh oh… comment by pawi.
Please let there be no flame war… please let there be no flame war… please let there be no flame war…
My last car in the US was a ‘97 Geo Metro. Got over 40 Mpg. Great little car.
However, the manual transmission crumbled and the engine went bad. Repairs would of been over 1K. It sold fast over Craigslist.
I believe the Americans have always had open arms for partnership with Korea. It’s the Koreans who are the ones that need to get over the insecurities. Having said that, I bet you Ford is kicking themselves in the leg for not buying Daewoo after they had won the bid to buy it.
Actually, the much-derided suggestion last week that Daewoo had “saved” General Motors was not so far off the mark. Daewoo turned out to be a proving ground for a number of talented GM executives, and a wellspring of engineering talent for small cars which GM desperately needs.
The danger for GM is that oil may break and go back to more “reasonable” levels — the company will then revert to what’s easier, which is big, bloated sedans, trucks, and SUVs. I’ve always been a small-car guy myself, and have long wondered why Korea’s small cars get such comparatively awful gas mileage.
Since the idea of cooperative approaches has been brought up in a thread dealing with GM Daewoo and its Bupyeong factory, folks should remember that GM actually didn’t want the Bupyeong plant, and intended to close it if their purchase bid were accepted. By their reasoning, the factory contained outdated lines which would cost too much to modernize, and so would be shut down. As GM Korea constructed the factory in 1972, presumably they had some knowledge of its facilities. This article (which, coming from a union website, is supportive of labor) outlines the reception the American corporation received from Daewoo factory workers at the Bupyeong plant to that idea.
In the end, GM was strong-armed into agreeing to continue operations at the Bupyeong plant. As you see in the linked IHT article, GM instead invested billions into the plant, and it is now an example of advanced productivity and cost effiency.
For all that, it’s easy to forget that this was hardly the road GM wanted to walk down when then they were making their bid. At that time, they hadn’t intended on making the Bupyeong plant into anything more than available commercial real estate, and it was only after they were forced to accept continuation of facility operations there that they began to pour money into modernizing it.
And, for that - for bring a company back from the brink due to Daewoo’s massive corruption, and turning a factory it hadn’t wanted into a truly good production facility - GM Daewoo president and chief executive Nick Reilly was still snubbed by the Korea Automobile Manufacturers’ Association, who refused to allow a ‘foreigner’ to serve as president of the association despite it being Daewoo’s turn at helm.
Remember those lessons too, folks.
My ‘96 Kia Sephia was an abomination that got less than 20mpg in city driving, less than 25mpg on the highway… It also destroyed a battery per year and the dash warped even in covered parking in Texas.
Neither my ‘03 Chevy S-10 nor my wife’s ‘02 Buick Century have any of those problems… The each get better gas mileage, have more front seat, passenger, and cargo room, and draw far less derision from the folks who know me…
Mind you, I’d love to get one of those 150mpg hybrids; but there are enough old Suburbans on the road–many driven by uninsured, document-challenged guest-workers–that I’m okay for now…
The cars that have caught my fancy have been the Smart fortwo (which despite its small size, apparently doesn’t get such good gas mileage) and, lately, the 300mpg Aptera Typ-1. Oh, how I wish there was any appetite for such cars in Korea.
A matiz on LPG with a hybrid motor would be an outstandingly economical vehicle. Cars here are too big, reflects export focus. we need to look at Japan and europe. American car companies are really late to the game, if it wasn’t for their overseas subsidiaries, they’d be dead by now.
And, for that - for bring a company back from the brink due to Daewoo’s massive corruption
Much fuss is raised about the corruption of Daewoo’s management and especially of the meglomaniacal Kim Woo Choong. However, this was a kind of “corruption” that resulted in a buying spree of many appliance and auto factories in Eastern European nations during the 90s. It was a kind of corruption that created jobs and industry. The Daewoo Group fell apart due to overexpansion and the bad timing of the IMF crisis.
This brand of corruption is unique to Korean chaebol chieftains and ministerial mandarins. It drove Korea’s development since the days of Park Chung Hee and is a reason why Korea is no longer a Phillipines or a Zimbabwe, whose leaders engage in the more straight-forward corruption of self-enrichment not on behalf of larger goals. It is also distinct from the good-ole-boys-club corruption of decaying empires such as Enron or Halliburton.
swlee — You’re probably right. I’ve been reading about a quirky bunch of folks called hypermilers who go to great lengths to wring fuel efficiency out of their vehicles. The key appears to be running the engine at as close to a constant rate as possible. Some hypermilers push-start their cars so as not to waste gas on achieving high torque. To my understanding that’s what the hybrids do too — run the combustion engine to charge the batteries for electric drive.
Combining LPG with hybrid drive in a small car like the Matiz would seem to be a terrific energy saver. But Koreans are like Americans in that they love large cars. Gas is eight bucks a gallon here in Korea, and it doesn’t seem to slow the preference for bullshit bloatmobiles like the Hyundai Genesis.
Anyway, the Matiz needs better fuel efficiency. Its 12.7 km/l in the city is less than 30mpg (bleh), while the late, great Geo Metro was getting 50mpg.
I saw a Smart Roadster last week in the Dosasndaero area of Apkyujung-dong. A relative was showing me the remodelling being done on his home, and the Roadster was parked near his.
I’m not sure about the Fortwo, but the Roadster really looks like a kit car - it’s interesting, but has a sort of unrefined look, like a concept car at an auto show. That’s not an insult, just an observation; some guys prefer that look.
Bluejives @11, what a gigantic pile of shit. Did you actually just put corruption in quotation marks, as if it were anything but? Are you really so dense as to believe that Daewoo’s decades of fraud and CORRUPTION were not responsible for just as many, if not more, lost jobs and destruction of industry when their scam was uncovered?
Kim Woo-choong was just like every other corrupt asshole. He embezzled billions of dollars from Daewoo for his own self-enrichment and funneled it through shell companies in Europe. I suppose that massive villa in France was part of the “larger goal” and had nothing to do with self-enrichent, right? What a fucking joke. Trying to paint him as some kind of Robin Hood acting to benefit the country is a nationalistic, revisionist fantasy. He was a petty thief on a grand scale, willing to lie and steal from his own people under the guise of big business.
Daewoo was an underperforming pile of fraud and corruption propped up by cheap government loans on the backs of taxpayers. It should have gone under in 1989 when the shipbuilding unit was bailed out by the government, in what would have otherwise destroyed the entire company. For the next decade until collapse it was hemorrhaging billions in reality but played accounting games to make it appear solvent. One unit would be “sold” to another unit at drastically inflated value creating billions in fake “profits” while nothing changed hands. It was one big scam, nothing more. Meanwhile, Korean taxpayers, creditors and investors kept feeding a simple criminal tens of billions on uri nara faith.
Since the entire sinking ship was kept afloat for decades by tax-payer dollars, and the taxpayers got fucked again when the government had to take $58 billion from the IMF largely due to Daewoo, that “larger goal” you spoke of ended up destroying those people you claim were supposed to benefit from Kim’s stupidity and arrogance. Who do you think paid the $29 billion in public funds to rescue numerous Korean banks that funded Kim’s racket? Korean taxpayers, fucked again. How about the tens of thousands of suppliers and sub-suppliers that went bankrupt, along with hundreds of thousands of their employees lives destroyed? Try selling your fairy tale to them…they’d just assume have their graves pissed on than listen to you talk about Kim like he was a misunderstood Mother Theresa who was a victim of “bad timing” rather than a complete failure indulged and protected for decades by government when in a real competitive market he would never have made it out of textiles.
How predictable of you to try and paint Kim’s incompetent larceny as being “uniquely Korean.” Let me guess…we’re supposed to “understand his situation,” right? Typical of you to try and glorify Kim’s “benevolent” corruption while denigrating western corruption as the “real” evil. Much like Pawi, you’re an American on paper, but your deeply-held contempt for the country you call home bleeds into just about everything you write. You may as well go hold a candle near City Hall with all the delusion you’re feeding yourself.
Sometimes I think posts here at the ‘hole is like milk left in a warm kitchen. Still good for a bit of time, but starts getting sour a little while later.
True.
And sometimes the milk comes out of the fridge with a wretched stench already attached, and there’s nothing a warm kitchen of commenters can do to reverse that smell.
It could be one of card GM wants to play while on special diet. It will shut down its pickup truck factory in Oshawa, ON where more than 90 % of trucks were exported crossed the border. GM recorded 20% loss in YOY! It will do anything to survive.
http://ca.news.yahoo.com/s/reu.....hawa_col_1
Well IHBB,
It’s true that Daewoo Motors of pre 1998 was a house of cards with a ton of corruption, but I’m talking about what Daewoo Motors became post 1998 as a 51% GM owned operation (I think Suzuki and a few Korean banks own the remainder).
I mean, 1998 was 10 years ago after all.
Wangkon, my comment @14 had nothing to do with your original post. It was directed at bluejives @11 and his ridiculous revisionist history and underplaying of the massive toll Daewoo’s collapse as a whole had on the country.
“’ve always been a small-car guy myself, and have long wondered why Korea’s small cars get such comparatively awful gas mileage.”
Brendon,
I’m not an engineer or anything, but I have noticed that the 2.0 liter engine in the current Elantra (or Lantra as it’s known in Korea) had the same iron block engine in it for the past five years. However it’s gas mileage and performance got better over time. A friend of mine said that an engine’s efficiency is determined by how much compression it can transfer from the pistons to the power train. The energy transfered is influenced by the quality of the materials used in an engine, the precision that the block is machined, so on and so forth. It could be that over time, the Koreans just got better at making engines.
The 2.0 liter Hyundai Beta II came out in 2002 and first offered 21 city and 30 highway. My 3.2 liter v6 offers 22 and 29! By 2008 the engineers at Hyundai coaxed the Beta II to produce 24 city and 33 highway, which is respectable vs. it’s competitors (Corolla & Civic).
Considering the narrowness of the streets and the price of gasoline in this country, I’ve always been a bit surprised at how large the cars are. And while more fuel efficient vehicles are marvelous in the short term, this only serves to highlight how important it is to develop alternatives to petroleum. We need to get out of from under the thumb of the Saudis, not just my own country (USA), but everyone.
We’ve had internal combustion engines for how long now? Computing power can go from the equivalent of a digital wristwatch taking up a warehouse to a terabyte in a paperback book in 50 or so years, yet we can’t seem to “”COAX”" more than 50 mpg from an old Geo in 100 plus years?? Follow the money trail, in both industries.
@20: it’s not known as the Lantra in Korea, it’s known as the Avante.
Yeah, the fuel efficient Geo (XFi) model’s engine vitality wasn’t the greatest apparently, and all too often sloppy repairs hampered it’s fuel efficiency. Last one produced was 1995 IIRC, the other models still had decent fuel efficiency, but not worth getting for a decade old car.
WK, pawi made a positive comment for once, no need to make fun of him for that.
And I’m not too sure that the Chevy Beat will be the car “that will save GM.” OK, gas prices are rising and yes cars like the Beat will look attractive, but still for someone with a wife and two kids it’s not the type of car one wants to buy. And I don’t have any numbers with me but they are a significant market themselves. So, by skipping this significant market I’m not sure it will make such an impact.
Anyway that’s my personal opinion, but if you have any facts and figures that show otherwise please feel free to present them.
I have a Chevrolet Aveo on a two year lease. What a piece of crap it was. In that two years, it had a new engine, transmission and two computers. There are not isolated incidents in these cars, they are now becoming famous as lemons, in particular premature timing belt failure. Probably the worst aspect of the thing was that even with a manual transmission, it still only got 20 miles per US gallon in city traffic.
I was dumb and did not buy Japanese. I now have a Honda Fit. It costs a whopping $24 a month more on the lease but it gets an honest 30 mpg in the city and 40 on the highway. I save more than the extra payment in gas and do not have to shuttle the thing to the dealer once a month. It has tons of room, a great stereo and with VETC, it goes like snot. Also standard ABS and six airbags It has more than enough room for four people. the icing in the cake was a $1000 federal fuel economy rebate and is exempt from PST.
I will never buy a Korean car again, what a POS and GM dealers are awful. Honda dealers are great because you never see them. Go ahead and buy your Deawoo. Just hope your local GM dealer has free coffee because you’ll spend lots of time there.
Any by the way, for the cost of used small cars, you may as well but something new. A ten year old Civic is not worth $10k.
Besides I don’t think the Matiz saved Daewoo from its troubles.
Well, I don’t know if one single car is going to save a $180 billion dollar company. However, it will be a range of products and penetrating those products into international markets that will. The Beat by itself won’t save GM. However, it’s the idea around the Beat that will save them and that idea is of a small, but stylish car, that’s as fuel efficient as standard gas combustion engine technology can allow. Furthermore, it’s also having a small car technology platform that can not only be sold well in the U.S. but also in the rest of the world with the appropriate cosmetic and rebadge changes. For example, the Indians love the Chevy Spark (Daewoo Matiz) and we already know that the Chinese have copied it almost bolt for bolt.
So is the title a bit of a misnomer? Yes. Is is completely inaccurate? I don’t think so. Remember, it wasn’t that long ago where GM insiders were saying that the Hummer would be the “car that saves GM” because of its fat profit margins (and GM needs profit any way it can get it). However, with gas prices being what they are, and even if there is a deflating of gas prices in the near future, gas will just continue to go up and up in the long term, it’s going to be cars like the Beat and its derivatives that will save GM.
Daewoo Motors has been GM’s small car AND developing world distribution hedge since 2001 and that hedge has begun to pay off now. It’s also a hedge that the other big three don’t seem to have right now (at least not in the scale that GM has).
I’ve been to India a couple of times, saw a lot of Suzukis, Tatas, Toyotas, and Hyundais, but didn’t see a lot of Chevy Sparks.
# 23,
You are right. Thanks for the heads up.
# 29,
Well you wouldn’t… it was just introduced in 2007. The reviews have been very positive.
All in all, that segment of India’s market is a crowded one w/a lot of competition. But at least GM has a product to compete in that space. If it didn’t have the Matiz/Spark, they wouldn’t of had anything that could of readily been rebadged and put into the market quickly.
“the icing in the cake was a $1000 federal fuel economy rebate and is exempt from PST.”
Good luck trying to get that money, cause I doubt you’ll ever see it. Lot of people fell into that government scam and have yet to see a check. In the end, the federal program was stopped.
Chevy Aveo was rated as one of the 10 worst cars by Fortune. Daewoo has always lagged behind in technology, even in its heydays. But not all Korean cars are crap. For instance, Hyundai Accent came second to Honda Fit in quality of subcompacts according to JD Powers 2008.
The Daewoo Kalos/Chevy Aveo is crap. But since it has the Chevy badge on it and is sold through the Chevy dealer network it’s still a money maker for GM. It would be a BETTER money maker (and have a more secure product life cycle) if they improved the quality though.
#14 << …what a gigantic pile of shit. Did you actually just put corruption in quotation marks, as if it were anything but? Are you really so dense as to believe that Daewoo’s decades of fraud and CORRUPTION were not responsible for just as many, if not more, lost jobs and destruction of industry when their scam was uncovered?
…acting to benefit the country is a nationalistic, revisionist fantasy.
I hate to bring up late 19th century American history in a Korea thread but here goes. I looked up “robber barons” in Wikipedia and found this:
Appearing in literature during the late 19th century, the Robber Baron thesis was popular until the 1940s. Matthew Josephson’s the Robber Barons gave the term its most enduring expression. The theme had much popularity during the Great Depression as there was widespread public scorn against business enterprise.
But by the end of the Great Depression though, other historians, notably Allan Nevins, began advocating the “Industrial Statesman” thesis. Nevins, in his John D. Rockefeller: The Heroic Age of American Enterprise (2 vols., 1940), took on Josephson directly. He argued that while Rockefeller may have engaged in unethical and illegal business practices, this should not overshadow his greater contribution of bringing order to the industrial chaos of the day. Gilded Age capitalists, according to Nevins, sought to impose their will for order and stability on the competitive business environment. Their work ultimately made the United States the foremost economy by the twentieth century.
The whole Robber-Baron-or-Industrial-Statesman debate was sidestepped by Alfred D. Chandler in his Visible Hand (1977). There Chandler contended that the business of industrializing America was a historical process and not a morality play of good versus evil. As he later expressed, “What could be less likely to produce useful generalizations than a debate over vaguely defined moral issues based on unexamined ideological assumptions and presuppositions?”
My thesis regarding Kim Woo Choong is similar to that of Allan Nevins regarding Rockefeller. The mentality and business practices of Kim W Choong is representative of most Korean chaebol chieftains of his generation. Like Rockefeller, Kim W Choong engaged in unethical and illegal business practices…but this should not overshadow his contributions to Korean industrialization.
Does anyone know what happened to the Dodge Neon? They were everywhere for a while, until they changed the body style so you couldn’t see out of the back. I had one of those for years until I got hit head on by a drunk driver. I survived, but the car didn’t. Great gas mileage. That sucker got high twenties in the city and almost 40 on the highway.
# 35,
“The Neon was offered in multiple versions and configurations over its production life, which ended on September 23, 2005…. The Dodge Neon was replaced in the spring of 2006 with the 2007 Dodge Caliber, which is based on the shared Chrysler/Mitsubishi Motors GS platform.”
From “en.wikipedia.org/wiki/Dodge_Neon”
Thanks, I meant “what happened to it” more in terms of how they took something that was IMHO, a great car if you were in the market for a compact car, and ruined it to the point that it was discontinued and changed to whatever that ugly new thing is. I certainly wouldn’t touch it.
Half of the Neon’s success was great marketing, and the other half was delivering the product that I wanted. I had a 96 and I recommended it to a friend, who bought a 2000 model, the first year they changed the body style. It broke constantly, it wasn’t as easy to drive, and you couldn’t see out of the back. That particular one could have been a lemon, but I noticed there were far fewer of the newer ones on the road.
My point is, there are plenty of different ways and plenty of time for GM to muck this up before it hits the US market.
And for GM in particular, I also don’t understand why they couldn’t take something like the Vibe and make it a worthy compact car competitor. It already gets good gas mileage and its not a big hulking SUV.
The Rockefellers, unlike Kim, have maintained highly profitable business interests. The names of many robber barons live on in established business and respected cultural entities like Morgan-Stanley, the Hearst Corporation, Carnegie-Mellon Hall, the Guggenheim Museum, and Duke University. Kim Woo-choong’s crowning achievement was getting his alma mater Yonsei to name its new college of business building Daewoo Hall.
“they took something that was IMHO, a great car if you were in the market for a compact car, and ruined it to the point that it was discontinued and changed to whatever that ugly new thing is. ”
I don’t know. Detroit has had a lot of stories like that where promising products are not developed properly and more undeserving products (i.e. SUVs and Hummers) were given greater attention. My gut tells me that Neon’s margins were just too low, not matter how practical it may have been for a particular consumer segment. It’s hard to make a small car in America and make money off it when you were distracted by the fat margins that SUVs were giving you in the early 2000’s.
Americans are freaking out about 4$ per gallon? But, that’s less than 1$ Canadian per liter! Canadians would love to pay as little as that for gas…so would the rest of the world, for that matter.
I’m glad to see somebody pick up on the idea that GM should hurry on up with the Chevy Beat for the U.S. market. If I were GM or Ford or Chrysler, I would be asking my small-car people what’s taking them so long. And maybe they are doing that, hopefully they are doing that, behind the scenes.
“Good luck trying to get that money, cause I doubt you’ll ever see it”
I got the cheque eight weeks after I applied for the grant. The Feds have stated the programme will stop in April of 2009. However, in a minority government, this might not be easy to do. Another friend also recently collected on the grant. The PST exemption was taken care of by the dealer.
So negative!
“For instance, Hyundai Accent came second to Honda Fit in quality of subcompacts according to JD Powers 2008.”
That’s why I have a Honda Fit. The residual after a four year lease is 55% of the sales price. You will probably do better if is kept in a garage and driven on salt free Vancouver roads, too, like mine is!
As for Korean cars for the North American market, cars such as the Opel Aguila or Corsa would be much better and more to our tastes.
On another topic, our Canadian Retard Auto Workers are now responding to the impending closure of their pick up truck plan by blockading it. I am sure this will encourage GM to bring in new products to Oshawa for production.
Well, well. Looks like Hyundai plants in the U.S. are actually more efficient then Hyundai plants in Korea. More efficient by a WIDE margin.
It takes only 20.6 hours to make a Hyundai in Montgomery, Alabama but it takes a whooping 30.2 hours to build a car in Ulsan!
The joys of a non-unionized workforce (Ulsan has one of the most militant labor unions on planet Earth, whereas Montgomery has… none).
Nice article today in BusinessWeek regarding GM and Daewoo.
Photos here.