U.S.-based automobile giant General Motors on March 27 denied that it was planning to become a partner in the troubled Avtozaz-Daewoo car-making joint venture.
Zaporizhya regional governor Volodymyr Kuratchenko, quoted by Russia's Vedomosti newspaper on March 22, said GM would become a 'full-fledged partner' in Avtozaz-Daewoo. He said the U.S. car maker plans to produce Opels at the Zaporizhya-based plant, according to the report.
However, the president of the company's Ukraine division, Stanislav Shcherbina, squashed the report.
'We aren't considering a partnership deal with Avtozaz-Daewoo – even in the long term,' Shcherbina said.
He said the joint venture's poor sales record in Ukraine and the bickering between South Korea's Daewoo and its Ukrainian partner did not encourage his company to set up car production in Ukraine. He alleged that profits from the joint venture had been unfairly distributed by the Ukrainian side of the partnership.
Nevertheless, AvtoZAZ-Daewoo spokesman Yevhen Kosachev said GM is indeed eyeing a partnership deal with the joint venture. Kosachev said GM has studied the plant's potential and has also conducted negotiations with AvtoZAZ-Daewoo on entering the joint venture.
He said that if a partnership deal were struck, up to 20 percent of Daewoo's shares in the venture would be transferred to GM. According to projections, the U.S. carmaker would produce annually up to 25,000 Opel cars at the Zaporizhya plant.
At the moment, Daewoo and AvtoZAZ each have a 50 percent stake in the joint venture.
'GM is ready to come as soon as they're sure that there is demand for their cars on the domestic market,' said Kosachev.
He said GM is waiting for an improvement in the market. Currently, four out of every five cars sold in Ukraine are second hand. Slightly more than 50,000 new cars were sold here last year, of which only 25 percent (12,624) were made by AvtoZAZ-Daewoo – the nation's only carmaker.
But with the joint venture's sales structure having been revamped, and sales soaring this year, it may not be long before GM sees a market for its cars in Ukraine, Kosachev said.
But Scherbina maintained that GM has no interest in setting up car production in Ukraine in general, and at AvtoZAZ-Daewoo in particular. He said the joint venture has yet to undergo basic restructuring, as it has failed to spin off recreation centers, nature preserves and other facilities irrelevant to the plant's core operations. He said the plant still supports unproductive infrastructure and is over-staffed.
Moreover, GM is still smarting over the government's decision in 1994 to sell a stake in AvtoZAZ to Daewoo, rather than GM. 'They never even gave our offer a hearing,' he said.
And Scherbina also cast doubt on the viability of any national carmaker, given that Ukraine is surrounded by some of the world's biggest car producing nations.
Instead, GM is pushing for a project to build a multi-purpose truck in Ukraine, a vehicle that will have real export potential, Scherbina said.
