Daewoo's Popularity Soars in Eastern Europe

Daewoo, competing in Eastern Europe with the world's leading car manufacturers, is now ready to take the lead over Volkswagen. In a recent article, Financial Times reported that, "Volkswagen has brought on a boom in the Eastern European automobile market for the past three years, but currently Daewoo is threatening to take the lead with a 40% increase in sales."

According to the article, Volkswagen sold 257,458 cars in 1998, showing a 2.8% decrease, while Daewoo sold 218,690 cars, displaying a 17.8% increase. Fiat, which held the lead from '93 to '95 decreased its share by 5.8%, remaining at only 195,599 cars for the year. "If the sales of Daewoo Automobile Romania S.A., the sole foreign car manufacturer in Romania, continues to rise, it will be able to catch up with Volkswagen within this year," the article goes on to say.

Since the fall of the communist Eastern European block in the early 90's, Daewoo has set up automobile sales subsidiaries in Bulgaria, Hungary, Poland, Romania, Croatia, Macedonia, the Czech Republic, Slovakia, and Slovenia.

As for car sales in the nine Eastern European countries that Daewoo operates sales subsidiaries in, Daewoo sold a total of 193,084 cars in 1998 and took the lead over Fiat, which sold 176,613 cars, and Volkswagen, which sold 52,049 cars.

The reason Daewoo is able to seeing improved competitiveness in Eastern Europe is because, above all, the company is making the most of the various incentives for local investment. Furthermore, Daewoo has been able to achieve cost-competitiveness in the Eastern European market with its localization strategy.

Since last year, the Daewoo-FSO plant in Poland began manufacturing the Lanos and has been exporting them to Hungary, Czech Republic, Slovakia and Slovenia, and the model will also be exported to other Eastern European countries this year. Daewoo Automobile Romania will go on to manufacture and export the Nubira and Matiz as well. Daewoo plans to sell 271,150 cars this year in the Eastern European region to take the lead from Volkswagen.