by Joseph Szczesny

(2007-07-30)

With theU.S. car market on the verge of something like a revolution, General Motors is taking a long, hard look at bringing Asian-designed minicars to the North America in the not too distant future, says a key executive.

Michael Grimaldi, president and chief executive officer of GM's South Korean-based Daewoo Automotive Technology subsidiary, said during an appearance before the Society of Automotive Analysts in Detroit that pressure for better fuel economy will very likely require a new mix of vehicles in the United States , including tiny minicars.

"With energy, fuel conservation, and environmental concerns now becoming (more important), I believe we have crossed a line and turned a corner. It's not longer a debate. We all understand the actions being taken in the U.S. Congress are going to drive a significant change in vehicle powertrain technology and alternate fuels," added Grimaldi, who is also a GM vice president.

For GM, the key is putting the right attributes in the right product, Grimaldi added. 

"GM doesn't sell a minicar here in North America because there is no market," he said. "If there appears to have been a shift and if we can make those vehicles economically, we can then determine if we should introduce those vehicles here," he said.

"We are going to see significant changes, in obviously not just GM's portfolio, but everyone's products" he said. "It's going to take a broad comprehensive strategy," he said.

Grimaldi told TheCarConnection.com that Daewoo is now slated to start building its newly designed minis "within a couple of years."

"Based on the phenomenal response (at the New York Auto Show,) we understand what is required to federalize (the minis.) Now we have to decide whether it makes sense for competitive reasons and because of the shift in the market," added Grimaldi, who indicated the idea is still very much under discussion inside GM.

"I won't put a time line on (a decision,)" he said. "There are a lot of questions being asked. The discussions in Washington, the future of CAFE and what's happening on fuel prices - all that weighs on it," he said.

General Motors Corp. expects to invest more than $6.7 billion in its Daewoo Automotive Technology subsidiary over the next four years, Grimaldi said.

"There is a major shift within GM to make sure we support these major markets around the world and one of those major markets is Asia," Grimaldi said.

DAT already has 2500 engineers at its technical center in Incheon and also will open a new proving ground and test center near its Seoul headquarters, Grimaldi said.

"GM Daewoo has the largest engineering center in Asia right now," which is based outside of Seoul, South Korea, Grimaldi noted. "Strategically it's important for GM."

Daewoo, which is a major partner for GM operations in China , is moving operations into Russia , which promises to be another tremendous market. Daewoo has even set up operations in Central Asia , he said.

"GM has a philosophy it will manufacture and build in those countries where it has significant volume," he said. "We're investing more resources in both design as well as our engineering organization. We're looking forward to the introduction of our new mini and small cars that will come to markets around the world in the next several years."

The expansion of Daewoo, which was bankrupt at the beginning of the decade, also includes an expansion of the company's manufacturing base, Grimaldi said.
Grimaldi, however, said he didn't believe South Korea would be considered a low-wage country. Labor rates at Daewoo are still significantly less than in the U.S. but pressure from South Korea's powerful labor unions have pushed labor costs into the range of $25 per hour.

Grimaldi, who formerly headed up GM's operation in Canada before moving to Asia , also minimized the significance of recent work stoppages at Daewoo's manufacturing center in Incheon. The walkouts were very brief compared to other labor disputes in South Korean auto plants, and Daewoo has now signed a new one-year labor pact with its unions, Grimaldi said.

"Our labor relations have effectively been a competitive advantage," within South Korea, he said.


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