DAEWOO'S direct sales outlets are likely to be replaced with a network of franchised dealers following the signing of a take-over deal between General Motors and parent company Daewoo Motor.

A new Daewoo sales operation will be created in the UK based around franchised dealers rather than its existing direct sales outlets. The company had already begun adopting franchised dealers to supplement its existing sales network, and is now expected to transform its business to dealer only.

A statement from Daewoo's UK operation said the management of Daewoo Cars in the UK is working with a GM taskforce to develop the new business, and a spokesman added that customers should not be affected while the transformation takes place. The move has raised speculation that there could be a link in future between the fleet sales operations of Vauxhall and Daewoo in the UK, in the same way that Vauxhall fleet staff are currently offered incentives for selling Saab models.

A Vauxhall spokesmen said the situation with Daewoo in the UK was under review and would not comment further.

GM, some of its business partners and Daewoo Motor creditors will become shareholders in a new organisation developed from Daewoo Motor in South Korea.

GM will invest £173million in the new company, giving it a 42.1% stake, with Daewoo creditors holding a 33% stake and some GM business partners sharing the remaining 24.9%.

Former Vauxhall chief executive Nick Reilly will serve as president and chief executive of the new company, which is expected to acquire many of the existing sales subsidiaries elsewhere in Europe.