The Herald, Sharon, PA Published Thursday, May 2, 2002

HERMITAGE

Local Daewoo dealer not happy with GM, unsure of new rules
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But customers need not worry, warranties OK

By Michael Roknick
Herald Business Editor

Rick Varley, the owner of Daewoo of Hermitage, finds himself in an odd position: He has cars to sell but isn't sure which carmaker is calling the shots.

On Tuesday, General Motors Corp. inked a deal to buy Daewoo Motor Co. of South Korea. While GM will gain control of factories in South Korea and Vietnam, Daewoo's U.S. marketing operation, Daewoo Motor America, was shut out of the deal. That leaves Varley and the other 525 American Daewoo dealers wondering what's up.

"It's like playing in a contest and not knowing what the rules are yet,'' Varley said.

Selling about 320 new and used Daewoo models annually at his dealership, Varley co-chairs the Daewoo dealer advisory council. He has spent weeks on the phone trying to discover what's up.

He said this much is clear: GM bought Daewoo's assets, the American company has the distributing rights of the Daewoo name, GM won't be marketing vehicles under the Daewoo name and GM is obligated to take care of warranty issues.

"The good news in all of this is that the customer will be taken care of -- no one will be left stranded,'' he said.

Although he applauds GM reaching a deal with Daewoo, he isn't happy with the Detroit automaker. A huge conglomorate, Daewoo was forced to unload its auto unit to shore up the rest of the company.

When learning last year GM was interested in buying Daewoo, Varley thought they were sweethearts. Now that romance is waning.

"Yeah, I feel jilted,'' Varley said.

He continues to believe the car is a super value. A top-of-the-line Daewoo car fully loaded lists for $20,000. Varley also wonders why Daewoo didn't structure a better deal for its American dealers.

Revved up for a fight, Varley said the Daewoo dealer group has engaged the Florida law Myers & Fuller take on any GM attempts to discontinue American franchises.

"GM contends it doesn't have any obligation to dealers but they'll take care of any existing warranties,'' Varley said. "It's contradictory. But according to our attorneys it's code talk.''

Dealers are taking the position GM has to honor a prior deal.

"GM has interfered with our agreement with Daewoo of America,'' Varley said "Our agreement with Daewoo of America is to do business until 2008.

To complicate matters the Korean automaker will continue to exist after the deal but is responsible for maintaining vehicles during the next three to four months while the sale is finalized.

"Somebody is subject to franchise laws in this country,'' Varley said. "We'll let the legal people figure this out.''



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