SEOUL, Feb 12: South Korean car maker Samsung Motors Inc, a unit of the Samsung Group, is desperate for a foreign partner in order to stay afloat, analysts said on Thursday.The company, whose recent entry into vehicle production has sparked concern about market oversupply, said on Thursday it was negotiating a strategic alliance with Ford Motor Co and other foreign concerns.
The alliance could include cooperation in parts supplies as well as capital participation, the company said.
``Samsung is in talks with Ford and others to discuss various ways of cooperation,'' said Samsung Motors spokesman Han Jae-yoon.He said details had yet to be worked out.Despite denials by all parties involved, speculation was rife that Ford and Samsung were discussing a deal to jointly buy a stake in Kia Motors Corp.
On Wednesday, Munhwa Broadcasting Corp (MBC) television said Samsung Motors would take a 30 per cent stake in Kia, while Ford would increase its stake in Kia to 40 per cent from a current 17 per cent.
``Itis not true that Samsung is seeking an equity stake in Kia along with Ford,'' said Han of Samsung.Eum Sung-yong, Kia's chief spokesman said: ``The news report is irresponsible and totally groundless.''
In October, creditors filed for court receivership for the embattled Kia Group, following the government's decision to nationalise Kia Motors by allowing state-run Korea Development Bank to become the largest shareholder in the car maker.
The group had amassed about 10 trillion won ($6.24 billion) in debts, about half of this owed by Kia Motors.The chairman Jin Nyum of the Kia Group, earlier said he was not considering a third-party takeover for Kia Motors.But analysts said those rumours, true or not, appeared designed to justify the existence of Samsung Motors.
Samsung Group has come under pressure to give up its carmaking ambitions altogether because of weak commercial viability.
``There is no future for Samsung Motors on its own given the over-capacity problems, its lack of sales network and thedepressed home market,'' said the head of research Richard Samuelson at SBC Warburg Securities. ``Samsung can do better in another business.''
Samsung Motors, which is set to begin selling its cars in March, was expected to emerge as a loss-making unit as a result of its inexperience and its knotty relations with Nissan Motor Co Ltd, analysts said.``Samsung's equity participation in Kia with Ford could help strengthen Kia's competitiveness,'' said president of Daewoo Economic Research Institute Lee Hahn-koo.Samsung could offer to write off some of Kia's huge debts, to attract the participation of Ford, which had so far refused to expand its stake in Kia because of Kia's debt problems, analysts said.
``But the deal appears to deviate too far from the business restructuring programme the incoming government has pledged to carry out which requires the demise of unprofitable companies,'' said Lee of Daewoo.
An analyst at a foreign securities firm said: ``South Korea's misstep in the auto deal could deal adeadly blow to national credibility.''Analyst at LG Securities, Ji Sung-chul said it was a little late for Samsung to buy into Kia because of Kia's badly battered brand-name.
``Because Kia has suffered from financial turmoil since the middle of last year, many good people have left the company and its reputation has fallen to the ground,'' Ji said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
