Unique Korean Models in the Mexican MarketMon, 09/01/2014 - 12:52
Q: What have been the highlights since Daewoo Bus entered Mexico in 2010?
A: We saw a great opportunity in Mexico and are opening a plant in Hidalgo this year. We spoke with the chairman of Daewoo International about the strengths of the Mexican market and the opportunities that existed here before creating Daewoo Bus México as a 50-50 joint venture with American Coach. Daewoo had the financial resources to invest in Mexico but decided on the joint venture due to the experience American Coach offered us. Daewoo could have come to Mexico alone but preferred to enter with a partner that knew the market well, which is why the joint venture was the perfect solution for both sides. The plant is being built on around 60,000m2 in Ciudad Sahagun, Hidalgo. In the first stage, we will import most of the units to be sold in Mexico for 2014 and the beginning of 2015. Over that time, we will work on building our assembly line. Daewoo has eight different models of buses, but we are bringing one or two models to be built in Mexico. The sales for other models are not very high so we will continue to import them from China and South Korea. However, servicing and spare parts for these units will be done here.
Daewoo is known in Mexico for its line of electronics so we are almost entering the market as a new brand of cars, buses, and trucks. We need to position the brand and understand and feel what impression it makes on people. We have selected the products from our portfolio that are the most attractive for the Mexican market and will be producing the eight-meter long GDW6840K line in Mexico. As South Korea is a technologically advanced country and has an important automotive market, the quality of the products we are bringing is great. The most attractive characteristic is the number of people our buses can hold. Normally, buses exist for 45 people or for between 15 and 20, and there are virtually no options between those two. The GDW6840K can hold around 30 passengers, which is very useful for urban and short trips.
Q: What potential do you see for natural gas buses in Mexico?
A: The lack of natural gas infrastructure is an issue that affects us and many other industries. President Enrique Peña Nieto has declared that his administration will prioritize the use of natural gas so we are counting on that. Natural gas presents a great opportunity for everyone, including drivers who see diesel prices increase every month. Daewoo was looking for a profitable solution and settled on natural gas. We believe the government is willing to make a commitment to helping the environment. I am confident the infrastructure will improve, which is why we are bringing this model to the Mexican market.
Q: What is your strategy to develop your customer base as a new entrant in Mexico?
A: Urban buses will be our major focus, with 70% of our production being targeted to this market. We will also focus on tourism and interstate journeys. For this, we originally planned to sell 100 units in our first year of activity but given the interest we are seeing, that could well increase. We are hoping to make between 1,000 and 1,500 units for this segment once our production line is installed.
Q: How easy has it been to match the corporate cultures of American Coach and Daewoo?
A: Daewoo is very open and we respect American Coach’s production line. Our plant in Mexico is going to manufacture the models that American Coach would like to produce there. Daewoo does not have any bus models longer larger than 12m but American Coach has three models longer than 12m, so we hope to introduce them in Daewoo’s portfolio. Naturally, there needs to be a very clear process for this to happen so we are working to get this transition right.
Q: How have you been expanding your sales and distribution in Mexico?
A: According to the SCT, between 6% and 8% of journeys in Mexico are made by plane, between 11% and 14% are done in car, and the remaining journeys are made by bus. There is a huge opportunity for Daewoo to carve out an interesting market in this country. When we started analyzing the market, we realized that Korea has 46% of Mexico’s population, but its territory is 19 times smaller. Even though many brands already exist in the Mexican market, having a new option will certainly prove beneficial.