Daewoo sells cars ... by buying them itself

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The Independent Online
Daewoo, the South Korean car maker which recently launched a big assault on the British market, has apparently discovered a cast-iron way of boosting its sales: it is "buying" its own cars in vast numbers.

Data from within the motor trade shows Daewoo itself was responsible for almost one-fifth of its sales since it entered the UK market in spring last year.

From April 1995 to July this year the company sold 24,520 cars in the UK, of which no fewer than 4,567, or 19 per cent, were listed in the registration data as "captive" sales. This is a term used when car manufacturers buy their own stock.

Daewoo's marketing manager, Mark Carbery, admitted the statistics were accurate. "We are not surprised by the figures and we are not worried by them ... I wouldn't see this as extraordinary at all," he said yesterday.

Since its UK launch, Daewoo has grabbed more than 1 per cent of the British car market, outstripping established Far Eastern rivals such as Hyundai, Mitsubishi and Subaru. Its advertising campaign, with the slogan "that'll be the Daewoo", taunted other manufacturers who did not provide customer benefits such as free servicing and extended warranties.

Unlike other car makers, the company owns its own dealer network, with 28 showrooms in out-of-town shopping centres, including what it claims is Europe's biggest car showroom, and 136 "support centres" based in larger branches of the Halfords chain.

According to Daewoo, the large number of "captive" sales was accounted for by demonstrators, courtesy cars used when customers' own vehicles are being serviced, and cars given to firms to try out on an extended basis in the hope they will generate fleet sales.

In addition, large numbers of vehicles are used by the company's own staff. Daewoo employs around 1,000 people in its UK retail operations, plus a further 1,000 in its research and development office in Worthing, Sussex.

Another factor was a launch promotion, where the first 1,000 buyers were able to bring their car back five months later and exchange it for a new one. The original vehicles were registered to Daewoo, not the customers. On top of this, 200 customers were given free cars for a year.

However, even if such promotions are excluded, Daewoo has still "bought" 14.5 per cent of its cars.

One industry expert, Jay Nagley, the director of automotive consultants Marketing Systems, said: "No other manufacturer in this part of the market is doing this. Daewoo's captive sales are remarkably high."

Mr Carbery insisted the sales campaign was a success. "It's really going very well. We've definitely touched a nerve with the product. A lot of people like it," he explained.