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Daewoo vows to return to profit

SEOUL, Mar 10 – GM Daewoo, the South Korean unit of struggling US auto giant General Motors, said Wednesday it intends to return to profit this year and currently needs no further financial support from creditors.

"In 2010, GM Daewoo will be profitable. That is my target," CEO Mike Arcamone told journalists, outlining plans for more aggressive marketing and new model launches.

"We are looking at double-digit growth this year…and 2010 will be a turning point for GM Daewoo."

The company aims this year to export 1.6 million vehicles including those supplied in kit form, up 13 percent from last year.

It targets a 20 percent increase in domestic sales from what Arcamone described as an "unacceptable" 114,845 vehicles last year.

GM Daewoo, hit by falling demand amid the global downturn, suffered a net loss of 876 billion won (773 million dollars) in 2008. Arcamone said it was also in the red last year, without elaborating.

To achieve profitability, he said the company would employ "aggressive" sales tactics and improve sales networks, reduce structural costs, launch three new models and manage working capital more efficiently.

The company is targeting a domestic market share of more than 9.9 percent this year. To diversify its line-up it intends to launch the Matiz Creative LPG minicar, a mid-size sedan and a new sports utility vehicle.

GM Daewoo\’s domestic market share fell to 7.9 percent last year from 9.6 percent in 2008 amid the economic downturn.

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Arcamone said GM Daewoo, the country\’s third largest automaker in terms of sales, did not currently need any financial support from creditors.

"Our financial position in terms of liquidity has improved from 2009… our liquidity position is very solid," he said.

"We currently do not seek any other financial support from our creditors."

Last year GM Daewoo and its main creditor, the state-run Korea Development Bank (KDB), failed to agree about a fresh loan worth one trillion won after the carmarker used up a two billion dollar billion credit line.

But last October the company secured 413 million dollars in new funds through a rights offering in which its US parent was the sole subscriber.

Following the rights issue, GM owns 70 percent of GM Daewoo, followed by KDB with 17 percent, Japan\’s Suzuki Motor Corp with 6.8 percent and China\’s Shanghai Automotive Industry Corp with 6 percent.

Arcamone said the company would sever ties with Daewoo Motor Sales Corp and introduce a multiple retailer system to increase domestic sales.

He said it would announce in May whether it would introduce the Chevrolet brand into the domestic market.

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