Daewoo Motor sales collapse

Daewoo sells fewer cars, and earns less on each sale

Daewoo Motor Sales, the marketing arm of bankrupt South Korean car maker Daewoo Motor, reported a catastrophic fall in first-half revenues and profits.

The firm, which is the only publicly-quoted part of the car firm, said sales fell to 1,650bn won ($1.3bn; £903m) in the first six months of the year, down from 2,600bn won in the first half of 2000.

Profits over the same period were 14.2bn won, down 71% year-on-year.

After reporting some mildly optimistic results earlier in the year, the new figures will make worrying reading for US General Motors (GM) and Italy's Fiat, which jointly submitted a takeover bid for Daewoo Motor in May.

Commission complications

Part of the reason for Daewoo Motor Sales' grim results was a straightforward fall in the number of vehicles sold.

Workers fear the outcome of restructuring

But the firm's bottom line was also hit by its policy of cutting the commissions it charges on vehicle sales.

The company has reduced commission fees to 15% from 18% in an attempt to drum up business.

Shares of Daewoo Motor Sales fell 3.6% on Tuesday, closing at 3,650 won.

Speedy sell-off

The figures are likely to speed up plans to move the car firm into new ownership.

Daewoo Motor was made bankrupt last November, and - along with a host of other troubled Korean firms - is now awaiting the outcome of government corporate reform plans.

The Korean state has dragged its feet over selling off and breaking up its many distressed companies.

GM and Fiat have been interested in Daewoo for a year, but talks have progressed slowly and secretively.

Meanwhile, Daewoo Motor workers, almost one-third of whom have been laid off since bankruptcy, have repeatedly protested against restructuring at the firm.

They have also picketed GM, in the hope of forcing it to safeguard jobs and plants.