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12 May 2004
STUTTGART – DaimlerChrysler AG announced Wednesday it aims to sell its nearly 10.5 percent stake in South Korean automotive group Hyundai Motor Company in a realignment of the companies’ strategic alliance.
A statement issued by the company did not say when the sale would take place. The development poses the second major reshuffling of DaimlerChrysler’s activities in Asia after it stopped its financial support for ailing Japanese carmaker Mitsubishi Motors in late April.
In the realignment of their activities, DaimlerChrysler and Hyundai are to end their commercial vehicle joint venture but are to continue with their four-cylinder engine project.
In a statement appearing on the DaimlerChrysler website, the company said that Hyundai Motor will acquire DaimlerChryslers 50 percent stake in Daimler Hyundai Truck Corporation.
“The parties have also agreed to terminate certain associated licensing and other commercial arrangements, including the talks regarding a comprehensive commercial vehicle joint venture in Korea,” the statement said.
But the two sides will continue their strategic alliance in the joint development and manufacture of a family of four cylinder gasoline engines between DaimlerChrysler, Hyundai Motor and Mitsubishi Motors Corporation under the so-called “World Engine Project”.
Also, DaimlerChrysler’s affiliate in Mexico will continue the distribution of Hyundai Motors Atos and Verna (Accent) passenger car models in the Mexican market. In addition, there would continue to be joint procurement activities, while DaimlerChrysler will also deliver medium-duty OM 906 engines to Hyundai Motor for medium-sized buses.
“It is anticipated that these projects will have substantial benefits for both parties,” the statement said.
DaimlerChrysler said that there had been “significant changes” in the global commercial vehicle and automotive markets since the two companies set up their alliance in September 2000, making it necessary for the companies to realign their alliance.
Hyundai Motor vice chairman Kim Dong Jin stated: “We have been partners with DaimlerChrysler for nearly four years now and believe that the realignment of the strategic alliance is an important step forward to better position both companies to capitalize on opportunities in the changed market environment now facing us”.
Eckhard Cordes, Member of the DaimlerChrysler Board of Management and Head of Commercial Vehicles Division, said that his company was pursuing “multiple strategic options” for its Asian business.
“In light of these developments, DaimlerChrysler and Hyundai Motor have agreed to primarily focus on a collaborative relationship on a per-project basis in the future,” he said.
The two companies agreed that such cooperation did not require a shareholding relationship. As to the sale of DaimlerChrysler’s 10.5 percent stake, the statement said that “DaimlerChrysler may sell such shares at any time and under some circumstances will do so within certain specified periods of time.”
The development comes amid reports of friction between the two companies amid DaimlerChrysler’s increasing business activities in China, in particular a production tie-up with the BAIC company which Hyundai felt infringed on its own partnership with the Chinese firm.
But in remarks to Deutsche Presse-Agentur dpa, Cordes denied any bad feelings between the two companies and said the realignment comes amid the changing conditions in the Asian automotive market.
“We are not on unfriendly terms with Hyundai,” Cordes said. The South Korean company had repeatedly made it clear it was not interested in seeing DaimlerChrysler increase its stake further in Hyundai.
Since last September the German-American concern has had an option to boost its share to 15 percent, but Cordes said that no strategic necessity for such a move was seen.
As to the changed Asian conditions, Cordes said that at the time in September 2000 when DaimlerChrysler began its strategic linkup with Hyundai “we could not assume that we could have a stake in Mitsubishi Fuso”.
Now, DaimlerChrysler holds a 65 percent stake in that profit- making commercial vehicles manufacturer which is the market leader in Japan and holds a more than 20 percent stake in Asia.
While DaimlerChrysler is now eyeing possible commercial vehicle production in China, it regards South Korea as being more of a local market, one which is now also opening up and posing prospects for the Fuso and for vehicles from China, Cordes told dpa.
DPA
Subject: German news