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This year’s "CEAR™ Central Europe Automotive Executive of the Year" award is presented to Daewoo Group Chairman Kim Woo-Choong. The CEAR™ chooses Chairman Kim to receive this award because of his dynamic leadership and active involvement in Daewoo’s massive investment program for the Central European automotive industry.

Under the guidance of Chairman Kim, Daewoo’s strategic assault on Central Europe has had a profound impact on the competitive dynamics of the region’s auto sector. The boldness and sheer magnitude of Daewoo’s attack surprised many and has forced competitors to speed up and bolster their own activities in Central Europe.

Chairman Kim is a man of action. In 1997, he spent a total of 233 days overseas, which included 23 business trips to 42 countries. He spent an incredible 775 hours in the air and traveled some 520,000 kilometers.

Daewoo Fortifies Position in 1997

In 1997, Daewoo fortified its activities in Central Europe with the investment of over $1 billion into its local operations -- this is money actually spent, not just promised. The investments primarily funded new equipment and buildings in Poland and Romania.

Daewoo also strengthened its sales in Central Europe during 1997. In Poland, for instance, Daewoo closed the gap with its rival Fiat. At the end of November 1997, Daewoo’s market share in Poland was almost 26%, compared to Fiat’s 35%.

Chairman Kim didn’t direct Daewoo’s efforts from a comfortable office suite in Korea. He traveled to Eastern European countries 18 times during the year, including visits to Poland, Romania, Hungary, Czech Republic, and Bulgaria. He also made 16 trips to CIS countries such as Uzbekistan, Ukraine, Kazakhstan, Russia, and Belarus.

$660 Million Invested Into Warsaw Factory

In 1997, Daewoo pumped $660 million of its planned $1.5 billion investment into its Zeran factory in Warsaw. About $556 million has been set aside for production of a new model for the Polish market -- the Lanos -- and assembly of the Nubira and Leganza.

Daewoo’s investment program at the Zeran factory will fund a new press line, a new line for die stamping, welding shop modernization, construction of the second half of the paint shop, and a new hall where the Lanos will be assembled.

$450 Million Invested Into Engine & Transaxle Production

Daewoo’s operations in Romania were hit hard by the political and economic turmoil experienced in that country in 1997. Spiraling inflation and interest rates and an unstable currency forced Daewoo Automobile Romania to lower its production targets for 1997 due to poor domestic sales prospects. Union troubles also rocked the company early in the year.

Despite these problems, Daewoo’s assembly line revved up to full speed in 1997 and the company invested $450 million into new machinery for in-house production of engines and transaxles.

New R&D Center In Warsaw

In 1997, Daewoo also started preparing for the opening of its R&D center in the buildings of the former State Motoring Institute in Warsaw. So far, 200 of the 1,000 engineers planned for the center have already been hired. The center will specialize in projects for the Central and Eastern European markets.

Components Group Established

Daewoo’s activities in Poland in 1997 also included the inauguration of the Daewoo Automotive Components Group in September. This new group should substantially improve the quality of components available to not only Daewoo but other auto makers in Central Europe.

The components group is comprised of the many sub-assembly production plants that Daewoo acquired when it purchased the FSO plant in 1995. By the year 2001, Korean firms are expected to have invested $364 million into these plants in the form of joint ventures with Daewoo, sales of the companies should reach $735 million, and total employment will rise to over 8,500 workers.

Daewoo Avia in the Czech Republic expected to produce and sell 5,500 Avia commercial vehicles in 1997, up 23% compared to sales of 4,448 units in 1996. Some 2,800 Avia vehicles were expected to be exported, an 80% increase compared to 1996.

Is Daewoo’s Pace Sustainable?

Indeed, Daewoo was busy in 1997. And certainly, Chairman Kim is not likely to slow down the company’s efforts in 1998. Critics and competitors, however, wonder just how long Daewoo can keep up the furious pace, and whether there are enough consumers to buy the 1.1 million vehicles the company plans to produce in Central and Eastern Europe by the year 2000.

Chairman Kim is confident. And he says the severe economic crisis Korea is currently grappling with will not change Daewoo’s plans for Central Europe. Time will tell. The company must overcome many obstacles before it can reap the rewards of its grand strategy for the Central European auto industry.

The Central European auto industry is a remarkable market. Billions of dollars are being plowed into the auto sector and scores of the world’s leading automotive companies have established strongholds throughout the region. The market is rich with talent and expertise. Dynamic executives such as Chairman Kim ensure that the future holds great promise and excitement.

This article is from a past issue of the CENTRAL EUROPE AUTOMOTIVE REPORT™. If you would like to receive our most current information and all the articles included in our information packed report, subscribe today.