On Nov. 11, POSCO and Daewoo International agreed to use the name of Daewoo in their project for supplying vehicles to Saudi Arabia, a formal contract for which is scheduled to be signed this month. Under the circumstances, GM Korea, which is in possession of the brand name of Daewoo Motor, is strongly opposed to the use of the name, and litigation is expected to follow.
Back in February this year, Daewoo International asked GM Korea to return its rights to use the brand name, but the latter turned down the request. Then, POSCO and Daewoo International started legal examinations with regard to the matter and reached the conclusion that the use poses no problem at all, because Daewoo International is to get back the rights to use it from GM Korea according to their trademark contract signed in 2002.
The Public Investment Fund (PIF), which is the Saudi Arabian sovereign wealth fund that is the main investor in the project led by the Saudi Arabian government, is making a strong request for the use of the Daewoo brand as it is essential for the success of the project in the country where Daewoo has enjoyed a high level of brand recognition for years.
Daewoo International is to participate in the project as the third-largest shareholder by acquiring 15% of the shares of the new automobile company set up by the PIF at 60 billion won. POSCO is expecting that the project will lead to a greater supply of its automotive steel sheets to ensure a high level of profitability. GM Korea, in the meantime, is still claiming that it is the sole owner of the brand and will keep it to itself at any cost.