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Lestar to ease backlog in small buses

Baik Sung-hak, chairman of Daewoo Bus, is pictured beside Daewoo’s new Lestar during the Busan International Motor Show on May 24. Provided by the company

Private academies face a three-month backlog on small bus orders, but this is expected to ease next month with the launch of Daewoo Bus’ Lestar, a new entrant that aims to smash the monopoly Hyundai Motor enjoys with its County bus.

Small buses stretch around 7 meters (23 feet) in length and carry 15 to 20 adults or up to 30 children. They are popular among schools, hagwon (private academies), churches and kindergartens. Some companies operate them to help their employees commute.

They also occasionally pop up on the public transportation system for short-distance journeys.

More than 3,000 small buses are sold in Korea every year, but the current backlog of 1,000 units results in a long delay for impatient customers.

The country’s total bus market is worth 1.1 trillion won ($940 million), with 12,000 units sold every year. Of this, Hyundai and its affiliate Kia Motors command 80 percent.

Until now, Daewoo has only been making midsize to large buses, but it will establish a full lineup with the introduction of the Lestar.

“Hagwon, or private education institutes, are the biggest buyers of small buses as they make up over half of their sales,” said a spokesman for the company.

Daewoo Bus’ small-size Lestar will debut in July. Provided by the company

The Lestar can be modified to accommodate up to 39 children and comes equipped with a choice of two engines, 3.2 liter and 3.8 liter.

Daewoo has invested 92.1 billion won over four years to develop the bus. It also set up an assembly line at its Ulsan factory.

“We benchmarked Toyota Motor’s Coaster and made a lot of efforts to develop a high-quality rival,” the spokesman said.

The company outsourced the design to a Japanese company. Daewoo said that, while the County has a box-like exterior, the Lestar looks more aerodynamic. A 25-seat Lestar will retail for 54.2 million won.

The bus was unveiled to the public at the Busan International Motor Show in late May. It has not yet been released commercially.

Daewoo intends to sell 500 units in Korea this year, with the aim of ramping this up to between 1,200 and 1,500 when its plant reaches full capacity next year.

The bus maker intends to start exporting the Lestar to more than 60 countries in October.

It has seven assembly plants in Pakistan, Taiwan, Costa Rica, Vietnam, Kazakhstan and China, and will start exporting half-finished products to these countries. It will also set up sales operations in Mexico, Chile and Columbia.

“We plan to test every single vehicle in the beginning to make that there are no mechanical problems,” the spokesman said.

The Lestar will directly compete with the County, which costs from 46 million won to 65 million won depending on the model.

In response to the challenge from Daewoo, Hyundai unveiled its new County at the Busan motor show. The upgrade offers better suspension, an improved interior and a 3.9-liter engine that can deliver 170 horsepower.

Daewoo Bus dates back to 1955, when it was founded under the name Shinjin Motor. It was the first Korean company to make buses. After a series of mergers, it became part of Daewoo Motor in 1983.

Daewoo Motor’s bus manufacturing operation was acquired by Young An Hat in 2002 after it was spun off from the defunct carmaker.

Daewoo’s passenger car unit is now GM Korea, while its commercial truck manufacturing operation is now called Tata Daewoo Commercial Vehicle.

By Limb Jae-un [jbiz91@joongang.co.kr]

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