POLAND: GM considers stake in FSO

[FISH]

http://www.just-auto.com/news_detail.asp?art=51238

15 Mar 2006


GM is considering purchasing a stake in FSO, in Warsaw, to build Chevrolets, according to the Financial Times.

The plant has been controlled by Avtozaz of the Ukraine since last year and has capacity to build 350,000 cars a year. GM’s plans would see production of up to 100,000 units a year in the medium term.

Avtozaz is still talking to other companies, although GM is in a strong position as the Avtozaz plant in Zaporozhye, Ukraine, already assembles Chevrolets.

GM is also still considering sub-contracting assembly to the plant, rather than taking a stake.

GM needs the capacity...

Continued:http://www.just-auto.com/news_detail.asp?art=51238

[Bravada]

It's good news for everyone, I think, but the Polonez has not been manufactured for a good few years now. Today, FSO makes older-gen Daewoo Matiz and Lanos, it has also been assembling other Daewoo models as well as Opel Astra A and Vectra B in the past.

[nadepalma]

Originally Posted by Bravada

It's good news for everyone, I think, but the Polonez has not been manufactured for a good few years now. Today, FSO makes older-gen Daewoo Matiz and Lanos, it has also been assembling other Daewoo models as well as Opel Astra A and Vectra B in the past.

This is good news. But I didn't know that FSO made older Daewoos. What brand do they sell them under? Not Daewoo or Chevrolet, right?

And what do the Astra A and Vectra B look like? Are they also sold as Opels or under the "FSO" name? I'm just kind of curious. I know that brands like Fiat have some interesting ties to companies like Zastava in which old versions of Fiat cars are licensed to Zastava and sold under their own marque. So the older Punto will now be the Zastava 10. Is that how it works in Poland, but through FSO?

[nadepalma]

Originally Posted by Just-Auto.com

GM needs the capacity because GM Daewoo lacks capacity in South Korea, having seen sales grow more quickly than expected.

Wow, I didn't realize that capacity had become an issue for GM of late. I would have thought that GM was keeping up with demand. Though this does make sense in light of GM trying to take over an old Daewoo India factory and converting it to make more Matiz/Spark models locally in India. Maybe long term, they are hoping to grab FSO as well?

[TLCOR]

Building Saabs in USA, and Chevrolets in Poland and Korea? Is there something I'm missing?

I think GM have lost track on their badging.

[JVal14]

Wait, I'm confused. FSO makes GM cars but it's owned by a Ukrainian company? The article says GM is considering contracting, but they're already having cars built at the factory?

[powervette]

thanks God that FSO doesn't produce the Polonez anymore,I am sure that if it was still produced ,GM would come up with a great idea of selling it as Chevrolet.

[GM-10]

Extra capacity...yeah!!!!

[toronado10]

Expanding? That's always good news. I had to read the article twice to notice that it mentioned AvtoZaz and AvtoVaz. I'm surprised there is no lawsuit over that similarity.

[Bravada]

I have just written a lenghty answer to all questions posed here TWICE but they got deleted thanks to my fabulous laptop keyboard. Excuse me while I get pissed off - I will return to it tommorrow...

[DmitryKo]

Well, FSO was a wholly owned subsisiary by Daewoo Motors as far as I know, and AvtoZAZ was a part of a joint venture with Daewoo Motors, so it made perfect sense for UkrAvto, the current parent of ZAZ, to continue their relationships with GM Daewoo and also buy the remains of FSO.

I'm not really sure what the use of acquiring FSO, because the only car under full-scale production is a ZAZ-produced Lanos version of the Lanos that's sold in Russia under Chevrolet brand. All the rest is just CKD kits of GM Daewoo cars which are assembled for local Ukrainian market.

[Geotpf]

Originally Posted by nadepalma

Wow, I didn't realize that capacity had become an issue for GM of late. I would have thought that GM was keeping up with demand. Though this does make sense in light of GM trying to take over an old Daewoo India factory and converting it to make more Matiz/Spark models locally in India. Maybe long term, they are hoping to grab FSO as well?

GM has plenty of capacity.

GM Daewoo is out of capacity. Cheap cars sell well in emerging markets.

[SimonDavid]

Originally Posted by Geotpf

GM has plenty of capacity.

GM Daewoo is out of capacity. Cheap cars sell well in emerging markets.

Yes GM Daewoo is pretty much maxed out on capacity. And also in the long term you don't want to have all your sales in developing markets dependant on the value of 1 currency.

Sales of Daewoo based Chevrolets are booming in Europe, and the market in Russia is taking off as well. It makes sense to get some low cost production capacity close to Russia asap. Buying into FSO, which has some experience in assembling Daewoo product, gives GM a quick route to that.

[DmitryKo]

Originally Posted by SimonDavid

the market in Russia is taking off

Yeah, the sales of all the Korea-sourced Chevrolets totaled at, like, 15 000 units in the last year... the Ford Focus and the Toyota Corolla were at about 17 000

[Bravada]

A quick history on the FSO:

It was a state-owned (how could it not be) automotive factory set up in the socialist times, it maufactured a version of the Russian GAZ-M20 Pobeda called Warszawa (Warsaw) since early 50s, and in the 70s started the manufacturing of Fiat-licensed 125p. In 1978, FSO developed the Polonez liftback (Fiat actually did the styling) based on 125p mechanicals, which was rehashed many times later.

After the transformations of 1989 took place, subsequent governments tried to privatise the FSO, but they somehow couldn't get to terms with investors (every major auto company was involved in some talks at some point), which can be partially attributed to the fact that we went through six governments 1989 through 1996. The obvious partner, Fiat Auto, acquired Poland's other car factory, the FSM in Silesia, and wasn't interested in more manufacturing capacity here.

Finally, an agreement with GM was struck, which provided for the Astra A to be assembled at the FSO, which started in 1994. However, the rapidly-at-that-time-developing Daewoo offered to take over the entire factory, so the government sold FSO to them (Daewoo also acquired a few other factories in post-socialist countries, including the manufacturer of the Oltcit, Automobile Craiova in Rumania).

Daewoo started the manufacturing of Lanos and later Matiz at FSO, as well as assembly of other Daewoo models, like Nubira and Leganza, mostly for domestic and Eastern European markets (Western Europe got cars from South Korea). They also continously updated the Polonez, which still sold due to dirt-cheap prices and the fact that it could be repaired by your local village blacksmith It brought about such horrors as the sedan Atu and the wagon version and the "Plus" facelifted model featuring more plastic cladding than any Pontiac ever and some Daewoo Nexia and Espero parts inside. Polonez was also exported for some time, in some markets it was sold as Daewoo-FSO Celina . Polonez production was halted in 2002 when Daewoo couldn't really find anybody to take one anymore.

OK, back to FSO. After Daewoo has taken over FSO, GM wasn't actually very happy about it, so they started building a brand new plant in Gliwice, where the production of Astra A was moved. The assembly line in FSO was used then for the assembly of Vectra B, until GM ceased their cooperation with FSO completely.

After Daewoo went down under and GM subsequently acquired the remnants, it refused to take over overseas plants, which included FSO. FSO became independent again, and lenghty negotiations ended up in FSO being given rights to manufacture the first-gen Matiz and Lanos until 2007. They couldn't sell them in Western Europe, and there was also competition from Daewoo introducing facelifted models made in Korea. Fortunately, cheap FSO cars found a big new market in the Ukraine, where SKD kits were sent to local AvtoZAZ for assembly. The Ukrainians mildly facelifted the Lanos (in a different way than Daewoo did) and sold it as Sens, as well as struck an agreement with GM whereas Sens' are sold in Chevrolets in Russia (cars assembled in the Ukraine are exempt from import duties in Russia).

In the end, AvtoZAZ acquired a majority stake in the plant and promised "new models" (that would be required to keep the plant running after the Lanos and Matiz licenses expire). It was obvious that ZAZ can't come up with any design of their own, and everyone looked at GM, which is AvtoZAZ's partner (AvtoZAZ assembles GM DAT Chevrolets for the Ukrainian market, as well as Opel cars). Sometime ago, a rumor appeared that GM started talks with FSO about possible assembly of Kalos/Aveo and Lacetti for European markets. The main reason might not be manufacturing capacities (all Korean manufacturers, including Daewoo, had huge excess capacities before the Korean crisis), but the fact that it takes up to 2 months to get cars from Korea to Europe, as well as non-EU cars are subject to 10% import duties (not much, but still something considering very low prices of GM DATs in Europe).

*****

BRANDS:

Opels were invariably sold as Opels.

Daewoo cars were sold as Daewoo, the Polonez was sold as Daewoo-FSO afterthe "Plus" facelift. After the demise of the Daewoo, the Lanos and Matiz from FSO were sold just as Matiz and Lanos, although they were referred to as FSO Lanos and FSO Matiz wherever required. In the Ukraine, I believe that no brand was used, but perhaps the Sens was sold as ZAZ. As I said, in Russia Sens is sold as Chevrolet by GM dealers. Generally, the branding of FSO/ZAZ Lanos and Matiz models is a mixed-up thing.