DaimlerChrysler and Hyundai Motor Company have agreed to form an alliance under the terms of which DaimlerChrysler will acquire through today’s agreement, a 10% stake in Hyundai for $428 million. A letter of intent and stock purchase agreement will be signed today in Seoul by President Lee Kye-Ahn and President Kim Dong-Jin of Hyundai, and Dr. Eckhard Cordes and Dr. Dieter Zetsche, Members of the Board of Management of DaimlerChrysler AG.
The letter of intent will specify three key areas of cooperation: a 50/50 joint venture for the development, production and marketing of commercial vehicles; an alliance for the development and production of passenger cars; to submit a non-binding bid for Daewoo Motor Company to investigate the merits for the alliance between Hyundai Motor Company and DaimlerChrysler.
Under the terms of the commercial vehicle joint venture, Hyundai will contribute its Korean production facilities and distribution network. DaimlerChrysler for its part will primarily contribute ‘state-of-the-art’ technology. Hyundai anticipates annual sales of commercial vehicles in the year 2000 of more than 60,000 units, for a major market share in this sector in South Korea. The joint venture, based on Hyundai’s Chonju plant built in 1997, will have an initial capacity of 80,000 to 100,000 vehicles annually. This will enable the company to expand beyond the Korean market and increase sales and market share of Korean made commercial vehicles in the Asian markets, while at the same time improving the productivity and profitability of the Korean operation.
The joint venture will involve the production in Korea of DaimlerChrysler’s commercial vehicles for marketing and sale by the joint venture, and use the companies’ respective global distribution capabilities to increase market share. It will also involve the sharing of technical systems such as fuel injection, braking and safety systems, plus the exchange of drive train components and selected engines.
Together with Mitsubishi Motor Company, DaimlerChrysler and Hyundai plan to develop and produce a range of small cars to compete in all key global markets, such as Asia, the North America, Latin America and Europe.
To achieve cost efficiencies, DaimlerChrysler and Hyundai will also cooperate in the areas of future research, product development and global supply chain management. Additional joint ventures are under consideration in areas such as financial services. As well, further component production for application in products of both companies is being investigated.