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DMIL downsizes, unlikely to launch new models

Daewoo Motors India Ltd, which is facing financial problems and a steep fall in sales, has started retrenchment of employees in a big way, despite presenting a smart look.

In spite of tough resistance from the unions against retrenchment without compensation, a large number of employees have already been sacked.

Production of Matiz has come down to a trickle following lack of demand. The company is having second thoughts on the announced launch of three new luxury car brands in the Indian market. According to an earlier announcement, the company was planning to import and sell the luxury brands of Magnus, Lanos II and Nubira II.

The management now feels that the (import) duties are too high and it may not be advisable to import and sell under present circumstances.

Sources said the company incurred a loss of Rs 3.40 billion during the last fiscal, compared to Rs 1.16 billion in the previous year.

The sale of Matiz in June had come down to 2033 from 4702 in the corresponding month of the previous year. The company has, however, not disclosed the production figures. Cumulative sales figures from April-June this year have gone down to 6436 from 15,802 in the corresponding period last year.

The company could export only five vehicles in June compared to 507 during the same month last year. The cumulative exports from April-June too have dropped from 1272 to 30.

However, the company's new managing director Y T Cho is making all efforts to win back consumer confidence through a series of initiatives like introducing new colours for the Matiz. It is also offering attractive finance schemes, expanding the dealership network and giving a boost to customer service, but the response is not very encouraging.

He said the company would introduce three more colours this month -- 'golf green', 'whispering violet' and 'challenger red'. He said the company has plans to open showrooms this month in Gurgaon, Faridabad, Karnal and Bhubaneswar.

In an effort to allay apprehensions about shortage of spare parts, the company has appointed stockists in 14 cities.

The company had stopped regular production of its mid-sized cars, Cielo and Nexia long back. However, according to Cho, these cars can be manufactured on-demand.

DMIL, which started operation in June 1994, invested Rs 40 billion in setting up its manufacturing plant and research and development facilities at Surajpur, Uttar Pradesh.

Cho also asserted that Daewoo Motor Korea is undergoing an aggressive restructuring which is nearing completion.

UNI

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