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Hyundai and DaimlerChrysler in crisis talks

FT.com claims crisis talks are under way between DaimlerChrysler and Hyundai Motor about the future of their alliance, amid doubts about plans to build commercial vehicles and engines together.

Tensions have been rising between the German and South Korean carmakers since last autumn, when the pair put their commercial vehicle plans on ice and publicly clashed over competing operations in China.

The Financial Times says high-level talks about the future of the alliance have been going on for months and that Hyundai last year appointed investment bankers to consider the company's options - including severing ties with Daimler. A collapse of its partnership with South Korea's largest carmaker would deal a further blow to Daimler's strategy in Asia, where it is already struggling to rescue its alliance with Japan's debt-laden Mitsubishi Motors.

People close to Hyundai and Daimler say the alliance is approaching a "critical juncture" and a "significant announcement" could come soon. Analysts say that possibilities ranged from cancelling the truck joint venture to a sale of Daimler's 10 per cent stake in Hyundai.

Daimler has grown increasingly frustrated at the delays to the truck joint venture, as well as the departure of most of the senior Hyundai executives with whom it was working. It has also been distracted by Mitsubishi's problems.

Eckhard Cordes, head of Daimler's truck operations, has stopped pushing for the completion of the Korean project, according to FT.com sources. They say Hyundai felt it no longer needed its German partner after its emergence as one of the world's fastest-growing carmakers.

Daimler paid about $400m in September 2000 for its 10 per cent stake in Hyundai. The stake is now valued at nearly $1bn.

Hyundai declined to comment.



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