Tag Archives: General Motors

Changing the way to buy a new car: it’s 1995 (and Daewoo) all over again

daewoo-mirrorsTwenty years ago today, a company called Daewoo Cars was launched in the UK. It’s since disappeared and yet it’s becoming more and more current.

Car companies are only now beginning to explore new ways of engaging customers, of unravelling themselves from the restrictive dealer model and exploiting the internet – virtual showrooms, pop-ups, and shops in malls; service like you get at an Apple store. Tesla’s first UK outlet opened 18 months ago in the upmarket Westfield shopping centre in London. And now Hyundai has launched a joint venture giving it an outlet at the Bluewater shopping centre in Kent, staffed by plain-speaking, plimsoll-wearing people who are not trained to sell and are not paid commission.

New Hyundai store in Bluewater Shopping CentreHyundai’s partner Rockar claims that the end-to-end web process you can access at the outlet is a world first. It’s not. Fiat abortively launched a near-identical initiative, Fiat Click, in 2011. And if you take the website out of the equation, the business model is Daewoo’s – launch date 1995.

I was part of the Daewoo launch team. We knew that the world didn’t need another cheap Asian car brand, another Proton. But we didn’t want to be a Proton. And we had a clean sheet of paper.

So we tore up the rule book. Then burned it and stamped on it. No dealers; no third-party sales. In an industry bound to the archaic, unfit-for-purpose dealer network distribution model, that made us pariahs. It made us notorious. Which was great for our awareness but it was also smart. The message was that when you dealt with Daewoo you weren’t sold to but advised, by Daewoo employees who were not on commission. We could become number one for customer service, which we did. Overnight.

The result was record share for a new market entrant in the UK – immediately ahead of not only Korean arch-rival Hyundai but also mature brands including Volvo and Mazda – with almost 95% awareness, and the ability to stand shoulder-to-shoulder with M&S as a customer-focused high-street brand.

The Hyundai Rockar model gives a great brand message: we’re modern, we do things the way you want them done, we come to you. That’s part of it of course, but there’s a far more pragmatic driver. Car companies want to go to where there’s high footfall, but city centre land is prohibitively expensive. So let’s adjust the thinking and go to where there’s both footfall and people in a buying frame of mind. And let’s have just one car on display so it feels more like a lifestyle retail outlet.

EE_Daewoo_1_webBut remove the web element – like sat nav, Sky+ and Simon Cowell, Sky+ it didn’t exist back then – and Daewoo was doing all that and more. Showrooms exclusively at retail parks, with interactive touch-screen info pods (yes, in 1995), free coffee and children’s play areas. Smaller outlets at Sainsbury’s superstores with test-drives from the car parks. And more customer touchpoints at the Halfords service centres.

We reassured customers about buying a car from a new name with messages about the then-mighty Daewoo Corporation. When I took journalists to Korea we would arrive in a 747, parts of which were made by the company. We transferred in Daewoo coaches to the Seoul Hilton, built and managed by Daewoo, where we went in Daewoo lifts to rooms with Daewoo TVs. We flew to factories in Daewoo-built helicopters, visited Daewoo shipyards with towering Daewoo cranes, and even watched demonstrations of Daewoo military tanks.

080129-sea-slugThe car operations became healthily Europe-centric. Headed by Ulrich Bez, previously at Porsche and BMW (and later Aston Martin), the company established R&D centres in the UK and Germany. The UK retail model was exported back to Korea and I was asked to advise the global Chairman Kim Woo-Choong’s office on communications strategy – I recall sharing a meal of sea slug with him and Bez in his Hilton penthouse, discussing a plan to establish a manufacturing base in the UK. Strange days but good days.

money-graphics-2005_954555aSo why did Daewoo disappear? Not because the UK model didn’t work but because the Korean economy and Daewoo Corp imploded. The Korean car industry had to be rationalised, so Kia was absorbed into Hyundai, and Daewoo sold off into the old-school homogeneity of General Motors. Oh, and Chairman Kim fled the country in 1999 to avoid charges for his part in the bankruptcy of a conglomerate ranked 18th in the Fortune 500 only two years earlier…

GM rebranded Daewoo as Chevrolet in 2005 before dropping the latter from Europe 15 months ago. And with that the last vestiges of the Daewoo we created appeared to be gone. Dead and buried.

Yet its influence and the trail we blazed in the UK are in the here and now, the new retail motor industry landscape – ironically being championed by Hyundai’s ‘innovative’ approach. So if you hear something strange beating at the heart of the new retail motor industry landscape, remember – that really will be the Daewoo.

Chevrolet – that’ll be the Daewoo…that I die

chevrolet-logo-grillThis week’s resignation of Chevrolet’s global marketing boss, following the resignation of the brand’s European head, is an interesting step. As one of the team who launched Daewoo in the UK, I was sad to see Chevrolet pulled from the region recently by its parent General Motors, which incorporated Daewoo into the Chevrolet brand after acquiring the Korean company in 2001.

After all, Daewoo had had a great start in the UK, Europe’s second most important market. The product was several model cycles past its use-by date but a no-dealer, customer-first strategy provided real brand values and record market share for a new entrant – immediately placing it ahead of Hyundai, Mazda and Volvo – and inspired success in Europe.

The rationale for dropping Chevrolet in Europe? It was losing too much money. It was seen as having too much overlap with the Opel and Vauxhall sister brands. Volumes were too low. True, but these were largely the results; the cause was a failure to develop the right product and build a brand for Europe.

While Daewoo had become synonymous with quality customer service, Chevrolet was known more for being American. The big, brash, chrome-lined Americana image didn’t fit with compact, Korean-made value products, and the fact that these sat in the same line-up as Corvettes and Camaros with old-world V8s presented a chasm for consumers to cross.

Some have suggested that a value brand simply wasn’t right for the company, which has wanted to take the the Opel and Vauxhall products upmarket to fight the tidal wave of new models from the German premium brands. But VW Group has done just fine with Skoda book-ending a brand portfolio with Bugatti, Bentley and Lamborghini. The truth is that GM didn’t develop distinctive product and failed to present a coherent brand.

It’s ironic that Daewoo, which had come to Europe as an independent in the mid-1990s, taken on the establishment and leap-frogged its Asian value counterparts has – under the ownership of an automotive giant with three-quarters of a century’s experience of operating in Europe and with an established brand name – sold just one vehicle for every five clocked up by Hyundai and Kia.

But the ultimate irony is that, having developed a modern, lean and fit-for-purpose approach as Daewoo, Chevrolet has been driven to virtual extinction in Europe while a bankrupt GM Europe has emerged from global recession and Eurozone collapse with great-looking product.

Dropping Chevrolet in Europe may be the best decision for GM financially, and perhaps inevitable in a European market which has shrunk so alarmingly. But with all the places at the premium table taken and no value offering, the lack of strategic investment in the Chevrolet brand will surely prove to be a cause of regret.

Things are different today from when GM acquired Daewoo – excellent product is now a given. But that simply means that the brand is even more important, because it’s the differentiator, the I-want-one factor – something GM will be up against when it aims Opel and Vauxhall at those beautifully honed brands at BMW, Audi and Mercedes.