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Daewoo shoots for market share with new model

Korean car maker Daewoo has released a small and inexpensive new model - the Matiz - which it hopes will help the firm break Czech car-maker Škoda's stranglehold on top spot on the Slovak auto market. Although Škoda sells over three times as many cars as does Daewoo, its nearest competitor, the Korean manufacturer hopes the Matiz will catch the eye of the cost-conscious Slovak consumer.
Of the almost 70,000 cars sold in Slovakia in 1998, Škoda accounted for over 32,000, giving the company a commanding 42.2% of the market. Daewoo finished a distant second with a 12.3% share, representing under 10,000 units.


Daewoo's newest product, the 229,000 crown Matiz, has been launched with a view to the thin wallets of Slovak customers, the company says.
photo: Courtesy Daewoo

Korean car maker Daewoo has released a small and inexpensive new model - the Matiz - which it hopes will help the firm break Czech car-maker Škoda's stranglehold on top spot on the Slovak auto market. Although Škoda sells over three times as many cars as does Daewoo, its nearest competitor, the Korean manufacturer hopes the Matiz will catch the eye of the cost-conscious Slovak consumer.

Of the almost 70,000 cars sold in Slovakia in 1998, Škoda accounted for over 32,000, giving the company a commanding 42.2% of the market. Daewoo finished a distant second with a 12.3% share, representing under 10,000 units.

According to Pavol Závodný, Daewoo's Sales Department Manager, the 30% gap can be ascribed to Skoda's long tradition on the Slovak market. He added, however, that the Matiz carried with it his firm's hopes of dethroning the Czech automotive powerhouse.

"Skoda has been on the market for thirty, forty years," Závodný said. "They are very established here which makes it very difficult for us to catch up. But this car [the Matiz] really is the right car for Slovaks because of the low, great price [the Matiz starts at 229,000 Slovak crowns, or about $5,600]. It's much less expensive than even the cheapest Škoda model. So, during a time when almost everyone must think about price, this is very advantageous for Daewoo."

Jeff Jones, Editor-in-Chief of Central Europe Automotive Report, agreed with Zavodny that the Matiz could substantially reduce Škoda's lead.

"This kind of situation occurred in Poland a few years ago, where Fiat there is like Škoda here," said Jones. "Within a few years of Daewoo's entrance onto the [Polish] market, the sales gap between [Daewoo and Fiat] was closed to 2%. That's amazing for a newcomer."

"Daewoo knows what they are doing," Jones added. "They price their products low, although I can't really explain why the Matiz is this low - it's probably a play for market share."

Top brass at Skoda, however, laughed at the notion that Daewoo could present formidable competition on the Slovak market. Štefan Chudoba, Škoda Sales Director, told The Slovak Spectator that "we will certainly not change our philosophy simply because Daewoo came out with a new car. Look at the [automotive critics'] reviews of Škoda and compare them to the Matiz and you will see the difference."

The Matiz sales-pitch

Andrej Škultéty, sales manager of a Bratislava Daewoo dealership, said that he did not want to engage in a mudslinging battle with Škoda, and preferred instead to let customers speak on his behalf.

"We're not competing with Škoda," he said. "Maybe we cannot rival them yet, but we are definitely increasing our sales. It is not my job to judge the differences between Škoda and Daewoo, but why do people buy Daewoo [models]? Ask our customers."

Škultéty then said that Slovak customers buy Daewoo models for reasons more varied than the low cost alone. "It is a high quality car," he said. "We started selling it [in Slovakia] in September and it has already become our most popular model. The Matiz is produced in Korea, it has a German-developed motor and an Italian design."

The Matiz is a five-door auto with a six valve 0.8 litre SOHC engine, which uses a technology the company calls 'M-TEC' ("Magic and Maximum Power Technique"). It has an electronic automatic clutch system, a hatch-back trunk and a sun-roof. The Matiz comes in two models: the S (starting at 229,000 crowns) and the SE (starting at 245,000 crowns). Air conditioning, airbags, anti-lock braking system, automatic transmission and special Daewoo hubcaps are all extra.

Daewoo's Závodný admitted that the car cannot be considered luxurious, but maintained that the low price more than compensated for the car's modest quality.

"If I had to drive to Germany every other weekend, I wouldn't buy the Matiz, I'd buy a big, comfortable car," he said. "But Slovakia is a small country and most people don't drive to Germany very often. Over 90% of the population has to consider their financial means and that is exactly why we are now number two in Slovakia. We produce a powerful, low-priced, small car. People here just don't need big, expensive cars."

While Škoda may not exactly fall into the class of "big" and "expensive", Jones warned that the Czech car-maker should still take heed of the Matiz.

"Daewoo knows how to sell cars," Jones said. "They have done very well for a newcomer to central Europe, and the Matiz could certainly bring them up [in Slovak car sales]. It has a clean, fun design and it looks like a winner. I'm sure Škoda is keeping a wary eye on Daewoo right about now. And so they should - [the Matiz] is a heck of a deal."

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