D.J. Lee, president-CEO of the U.S. car marketer, projects sales of 70,000 cars in the U.S. this year, growing to 130,000 units next year. He said his operations are separate from parent Daewoo Motor Co., which is in bankruptcy in South Korea. The U.S. unit has not filed for bankruptcy, and it has a positive cash flow, he said.
The bankruptcy "is an extremely positive step to restructure Daewoo," Mr. Lee said. He said bankruptcy in South Korea differs from the U.S. because the government there and the car maker's suppliers will pay its bills.
Ford Motor Co., selected as the preferred bidder, ended negotiations to acquire Daewoo in September. General Motors Corp. is reportedly still an interested suitor.
Daewoo entered the U.S. in September 1998, selling cars via a college-student sales force. It changed strategy last year, adding franchised dealers. It has 500 dealers and 10 company-owned stores.
The marketer's ad spending has been spotty, although it recently started a big national push. J.C. Lee, general marketing manager of the car maker (and no relation to the company's president) said Daewoo started spending more than $10 million monthly in September for a media buy with national cable and broadcast TV, outdoor and national newspaper. The push will continue through December.
Daewoo developed the creative in-house, then hired Vihlene & Associates, Laguna Hills, Calif., to produce work for the flagship Leganza sedan. BNC Advertising, Los Angeles, did the Nubira sedan ads. Kay Davis Advertising, San Diego, has bought media for the car maker for the past year.
The marketer spent $12 million in measured media in the first half of 2000, up from the $9 million it spent in calendar year 1999, according to Competitive Media Reporting.
Daewoo has delayed its first national brand advertising until early next year. It will emphasize the cars' styling, quality and value pricing. J.C. Lee said he anticipates next year's ad budget will increase, although he said spending hasn't been finalized.
"It's going to take some time to build Daewoo's dealer base and customer base," said Bob Schnorbus, a director at consultancy J.D. Power & Associates. "You have to start somewhere."