DaimlerChrysler's Asian goals 'in ruins'

By Bret Okeson
Bloomberg News Service

DaimlerChrysler AG, the world's fifth-biggest automaker, needs a new strategy in Asia after its $4 billion expansion plan unraveled with the sale of its Hyundai Motor Co. stake and the decision to halt investment in Mitsubishi Motors Corp., analysts said.

DaimlerChrysler, formed in a $36 billion merger in 1998, said yesterday it would sell its 10.5 percent stake in Hyundai Motor and exit a venture to make trucks in South Korea. The Stuttgart, Germany-based automaker this month received permission to build Mercedes-Benz luxury cars in China after rejecting an appeal for as much as $3 billion to help bail out Tokyo-based Mitsubishi Motors.

"Their Asian strategy is in ruins," said Michael Raab, an analyst at Bank Sal Oppenheim in Frankfurt. "The decision not to give further support to Mitsubishi Motors and get out of Hyundai essentially buried the idea of a global carmaker."

DaimlerChrysler CEO Juergen Schrempp, bought stakes in Mitsubishi and Hyundai in 2000 to grab more of the fastest growing markets. The effort collapsed over management squabbles with Hyundai and losses at Mitsubishi. The company's shares lost about half their market value since 1998.

DaimlerChrysler says the most important ventures with its Asian partners will continue, including plans to make 1.8-liter and 2.4-liter engines for small and midsize cars with Hyundai Motor.