GM to Develop Subcompacts in Korea

The U.S. automaker GM has designated GM Daewoo as the development center for light and small cars, and is planning to develop a follow-up model to the Matiz model and put it on the market by 2009. In exchange for bringing the light and small car development effort to Korea, research and development for medium and big cars will be sent abroad. Consequently, medium and big cars like Lacetti and Tosca will most likely be developed abroad; this means that the general research and development effort at GM Daewoo will likely go through a downsizing.

GM says rough sketch for the new model is ready-

GM Daewoo said on Thursday, that it would spend 400 billion won on the development of the M300 (code name), the follow-up model to Matiz, the light automobile, and begin selling it by 2009. GM Daewoo will be in charge of research and development on the model. In foreign markets, it will be sold under the Chevrolet or Pontiac brand.

GM Daewoo said, “The big picture for M300 has already been drawn up. Daewoo’s light car technology, and GM Daewoo’s design and auto frame technology will meet to create a car that the whole world can embrace. GM has already placed executives and employees who specialize in light and small cars from Germany and the U.S. in Korea and is planning to place German manufacturing technicians in the M300 team.

Research and development function may shrink-

GM’s business strategy is to disperse its development headquarters all over the world.

According to GM’s plans for development centers, light models like Matiz and small cars like Gentra will be developed in Korea and produced in Korea, India, and China. Small and medium cars like Lacetti and Opel in Germany will develop medium-sized cars like Tosca. GM Daewoo said there would be no restructuring and disclosed that development would not shrink in Korea, because although development on medium-sized cars will be taken abroad, development on small cars like Opel’s Astra will be brought to Korea.

Factory workers feeling hopeful and anxious-

Workers at GM Daewoo’s factory in Gyeongnam Province, which will be the site of the production of GM’s light cars from 2009, have both high hopes and anxiety. On October 31, the production line at the GM Daewoo factory was surprisingly quiet. Half the factory, which used to produce the old Matiz, was left idle. A factory representative said, “Light automobile sales in Korea have been slow lately. We keep some production lines idle, because production takes too long at the weathered factory. Since the beginning of the year up till October, Matiz production for the domestic market shrunk to 31,462 cars, down by 20 percent from the same period last year. Fortunately, 70 percent of the cars produced are exported.

In 2002, Hyundai Motors halted domestic production for the light car Atoz and Kia Motors also did the same with the Bisto in 2004.

Executives and employees at Changwon factory seemed to welcome the designation as the development center for GM’s light automobiles.

General Director Hwang Woo-sung, who is in charge of the Changwon factory said, “Thanks to Matiz, we maintain a lead in light automobile manufacturing The light cars that roll out of this factory will become the global standard due to GM’s light automobile technology. Factory workers seemed to anticipate more work.

Some point out, however, that should the dip in domestic demand continue, depending on exports would have its limits.

Researcher Cho Cheol of Korea Institute for Industrial Economics and Trade said, “The reason GM chose GM Daewoo as the development headquarters for light cars, is because GM Daewoo has superior technology. But if the domestic recession continues and the emphasis on research and development dies down, GM Daewoo may end up to be merely one of GM’s factories.

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