Daewoo: Brands In Trouble

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Daewoo motor america, the nation's newest auto brand, simply is not on buyers' radar screens.

"Not many people are aware of our brand. That is the No. 1 problem," conceded J.C. Lee, general manager of national advertising at the South Korean car importer.

The marketer started selling cars in the U.S. in fall 1998. It doesn't have a U.S. agency of record. An agency review has been on indefinite hold since early last year, due to what Mr. Lee called "some uncertainties."

Those uncertainties include Daewoo's bankrupt parent, which has liabilities of nearly $18 billion; whether General Motors Corp. will close its deal to acquire key parts of the parent; and if so, whether GM would keep the brand in the U.S. In late August, Daewoo let go nearly 25% of its 220 member U.S. staff.

A GM decision is expected by early this year. Mr. Lee said even if the GM deal doesn't go through, "We should survive here as a stand-alone company."

Up against bigger competitors with deeper pockets, Daewoo spent just $5 million in measured media in the first half of 2001, according to Taylor Nelson Sofres' CMR. In 2000, it spent $50 million, CMR reported. That's when Daewoo posted its best U.S. sales of 68,360 cars, according to Automotive News, although that gave it only a 0.4% share of the total auto market. Daewoo reported this month that it sold 48,296 vehicles in 2001-far short of President D.J. Lee's 2001 sales' projection, made in 2000, of 130,000 cars. Even with no-interest financing post-Sept. 11, October's monthly sales spiraled downward by nearly 50%, compared to the comparable month in 2000.

Mike LaFontaine, a multi-brand car dealer in the Detroit area, said he gave back his Daewoo franchise recently after nearly two years because, "We weren't selling any cars."

J.C. Lee said most dealers are taking a wait-and-see approach. Daewoo now works with small creative shops and production companies for advertising. Sometimes it borrows footage from counterparts in Korea or Europe. Vihlene & Associates, Laguna Hills, Calif., created two current TV commercials, airing on at least five national cable networks.

The marketer "has a lot of opportunity to grow, but it's been held back by its parent company," said Steve Saxty, executive director of the auto practice of Interpublic Group of Cos.' FutureBrand consultancy. Daewoo should do brand development work "to see what it needs to be," he suggested. Mr. Saxty helped Daewoo's successful European launch in 1994 without dealers. He said Daewoo's U.S. launch, using college students on campus as its main sales staff, "was not necessarily a good idea. It was certainly radical."

Daewoo scrubbed that plan in early 2000.

J.C. Lee remains optimistic. He expects to relaunch the brand early this year. An all-new 2003-model Leganza sedan is also slated to be launched in fall.

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