Caution:
Our Don't Buy List -Read Why!

Daewoo

The Don't Buy List is based on our judgement and we only invite you to follow our logic.

Buying a car is one of the largest buying decisions you will make. We are only trying to help you make an intelligent decision.

At times, getting a low price is not enough. Take for example, the Daewoo. What seemed like a great price has only come back to haunt buyers. Many are losing an enormous amount in the resale, warrantee, parts, and insurance.

GM mistakes: Saturn was sacrificed for Oldsmobile. The Olds competed with the Buick and was phased out, GM bought into Daewoo it went bankrupt. GM bought into Isuzu, it has financial troubles, GM invested in Fiat it is verging on extremely serious trouble, GM competes with itself on too many levels: GMC trucks vs. Chevy, Buick vs. Pontiac, GM once controled 50% of US market now about 30%. Why? Poor decision making by management. Now GM has invested heavy into the troubled Saab -- just another mistake!

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Daewoo

Daewoo has filed bankrupty. As a result this car will no longer be sold in the US.

The Daewoo bankruptcy has created a nightmare for purchasers in the area of warrantee, servicing, and obtaining parts. There are several insurance companies that refuse to insure the Daewoo.

On top of all these adversities, is the dive in resale value. To clear their inventory dealers were practically giving away the troubled car.

The Daewoo tops our list of don't buy vehicles.

LOS ANGELES -- Daewoo's nightmare is getting even scarier as Halloween approaches: Some insurance companies are refusing to write policies on vehicles built by the beleaguered Korean automaker.

That means Daewoo buyers face higher rates from companies still offering collision coverage, and dealers will have an even tougher time selling the troubled brand.

Because insurers are required in most states to provide compulsory liability and personal-injury coverage, Daewoo owners still will be able to register their cars. But collision coverage will be harder to find, cost more and in many cases come with huge deductibles.

Several major carriers have declined to write collision policies on Daewoo cars because the scarcity of replacement parts makes damaged vehicles irreparable and a high risk for insurance providers, according to the Insurance Information Institute.

"Some companies aren't writing new coverage for Daewoos, and some are adjusting their rates accordingly" to factor in the higher risk, said Loretta Worters, spokeswoman for the trade group, which represents 350 of the nation's auto insurance providers. "Getting sheet-metal parts is a big issue."

Spokesmen for insurance giants Allstate and State Farm - which as the country's two largest carriers wrote a combined 28.6 percent of new auto policies in 2001 - said they still are covering Daewoo vehicles but are raising their rates.

Others, including Boston-based Liberty Mutual, the eighth-largest auto insurance carrier in the United States in 2001, say the risk of covering Daewoos is too high.

"We're not writing coverage on Daewoos for new customers," said Glenn Greenburg, a Liberty Mutual spokesman. "It's an industrywide issue, not specific to Liberty Mutual."

Daewoo Motor America Inc. is hoping the deal made Oct. 17 between its parent company and General Motors will ease the parts shortage central to the problem. GM and two of its partners, along with creditors of the bankrupt Daewoo Motor Co., have formed a company to take over Daewoo's manufacturing assets and selected sales networks in Europe.

The company, GM-Daewoo Auto Technologies, is expected to name a management team this week and will be responsible for supplier relations and the parts flow to U.S. dealers.

Signs of daylight

Daewoo's beleaguered U.S. sales arm sees the insurance problem as already in the clearing stages.

A contract between Daewoo Motor America and GM-Daewoo Auto Technologies, expected next week, should help stabilize the parts flow, which has gotten better in anticipation of the deal, said Ben Rainwater, Daewoo Motor America vice president of national parts and service.

"We're still a little light on the parts side, but we have some containers inbound right now," Rainwater said late last week. "With the new agreement, we only see things getting better."

Some dealers say parts have become more readily available since the summer.

"It's gotten better, for me anyway," said Marc Treiber, a Daewoo dealer in Monroe, N.Y. "There's no doubt about that. I can get parts."

Also changing is the source of warranty reimbursement for Daewoo's U.S. dealers.

Many dealers have claimed their reimbursements for repairs done under warranty have not been adequate. Some say they have received no reimbursement.

Now, the warranty funds come from a trust established by Daewoo Motor Co. The trust is monitored by the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, which is administrating Chapter 11 hearings for Daewoo Motor America.

The trust will be funded by GM-Daewoo Auto Technologies, which will use a holding company in the United Kingdom to administer the funds to all Daewoo subsidiaries that are not part of the new company. The holding company, Nexis Business Solutions, will maintain the trust monitored by the U.S. bankruptcy court.

Lawsuits pending

Dealers in Florida, Texas and Pennsylvania have filed lawsuits in their respective states, contending that GM manipulated Daewoo's U.S. subsidiary and hindered its growth before the agreement between GM and Daewoo Motor Co.'s creditors were signed.

The suits argue that GM has direct involvement with Daewoo's U.S. dealers through its role in providing them with warranty funds.

But GM staunchly denies having a role in providing warranty funds.

"The agreement that we just closed has a provision in it to establish this trust," said GM spokesman Jerry Dubrowski.

"It has been funded as per the agreement, but not by General Motors. General Motors is not responsible for these warranty claims even after the deal closes. We're not assuming these warranties in any way."