The South Korean unit of General Motors Corp. (GM) has asked for emergency funding from state-run Korea Development Bank as it faces a liquidity crunch.

GM Daewoo Auto & Technology Co. has already reached its credit limit of 1.3 trillion won (US$865 million) from KDB and commercial banks and has KRW125 billion in loans coming due in October, a KDB official told Dow Jones Newswires Friday.

The KDB official declined to say how much the Korean automaker was seeking in aid noting an amount hasn't been discussed yet, but Yonhap News Agency reported Friday the company has asked for KRW1 trillion.

GM Daewoo owes KDB KRW1.055 trillion.

"We will decide whether to offer financial aid to GM Daewoo after reviewing documents about the company's financial status," the official said.

GM Daewoo's request underscores the severity of the crisis in the U.S. auto industry and its ripple effect.

GM and GM's affiliated companies own a 72% stake in GM Daewoo, while KDB has the remaining 28%.

The comments came as Saab Automobile AB, GM's loss-making Swedish unit, said Friday it is applying for reorganization with a Swedish court. Earlier in the week, GM approached five foreign governments for a total of $6 billion in financial support. The U.S. automaker said it is in talks with authorities in Germany, the U.K., Sweden, Canada, and Thailand.

However, Thai Prime Minister Abhisit Vejjajiva has already said that his government has no plans to assist struggling foreign automakers in Thailand.

Last week, GM Daewoo's president and chief executive Michael Grimaldi met South Korea's Knowledge Economy Minister Lee Youn-ho to ask for financial aid but the government turned down the request.

The outcome of the latest request to KDB is uncertain.

The state-run bank has bailed out other distressed South Korean companies, including Hynix Semiconductor Inc., in the past.

GM Daewoo confirmed the request made to KDB and said it will submit formal documents for financial help.

"We are in discussions with the Korean government and KDB to secure credit lines during the current global credit market liquidity shortage in order to fund new product development plans and new plant investment projects," spokesman Park Hae-ho said.

GM Daewoo was set up in 2002 when GM and its partners bought a majority stake in the automobile unit of bankrupt South Korean conglomerate Daewoo Group, which collapsed in 1998 under mountains of debt.

GM Daewoo was one of the few profitable overseas units under GM, but the U.S. company's own financial problems have added to the South Korean unit's problems.

In January, GM Daewoo's total sales fell 51% from a year earlier to 45,842 units, compared with the industry's 35% drop.

GM Daewoo has adjusted production at its three South Korean plants in Bupyeong, Gunsan and Changwon to keep inventory low amid lower demand.

-By Kyong-Ae Choi and Jin-Young Yook, Dow Jones Newswires; 822-2198-2236; kyong-ae.choi@dowjones.com