DaimlerChrysler Exec Changes Story

Rolf Eckrodt, the DaimlerChrysler executive placed at Mitsubishi Motors as COO, denies he told Automotive News that DCX would walk away from its planned relationship with Hyundai Motors to build commercial vehicles. DCX representatives in Germany yesterday confirmed that the company has plans to move ahead with the Korean automaker, contradicting reports that DCX would abandon plans to create an alliance with Hyundai following its decision last week to acquire Volvo's stake in Mitsubishi and pursue a commercial vehicle program with the Japanese maker.

DaimlerChrysler's decision signals its strong interest in becoming a global force in the truck business. What's more, DCX and Mitsubishi are moving at lightning speed to organize their own alliance in regards to commercial vehicles with plans to begin meetings next week that will establish a framework for model line-up, manufacturing with part sharing, and, of course sales and distribution.

At this time, DaimlerChrysler and Mitsubishi hold a combined 14.86% stake in Hyundai, with 10.5% owned directly by DCX. Originally, DCX was looking at the possibility of an alliance with Hyundai to build small cars and commercial vehicles. Chances of collaboration on small cars resulting from the relationship are virtually nil at this point as such an arrangement would hamper Mitsu s return to profitability. But Mitsubishi and Hyundai already have some collaborative work in place on commercial vehicles and that is likely to be strengthened and expanded.

One last note on DCX: despite depressed sales in North America, the company says its rehabilitation program at Chrysler is going according to plan and is actually ahead of schedule. The same cannot be said for curing Mitsubishi s problems. That situation is worse than was anticipated with the Japanese maker recently slashing its earnings forecasts to $2.2 billion, nearly double what it forecast six months ago. The main problem for Mitsu is its home market. Japanese are avoiding the marque like the plague since it announced last summer that it covered up defects and complaints about its cars.