Daimler's Mercedes to Emulate BMW Strategy

FRANKFURT May 20, 2007; Reuters reportede that Daimler burned by its failed merger with Chrysler it has decided to forgo all acquisitions for its luxury brand Mercedes-Benz, emulating the go-it-alone strategy of rival BMW (BMWG.DE) after it sold off Rover.

"There are no acquisition targets I can recognize that could strengthen Mercedes," Chief Executive Dieter Zetsche told German Sunday newspaper Welt am Sonntag.

The Daimler chief, who just days ago sealed a deal to sell its loss-making U.S. unit Chrysler to private equity firm Cerberus, sees little to gain from trying to diversify risks by balancing its brand portfolio with another leading marque.

"We are at the top of the industry with the Mercedes car brand - any integration of another brand would tend to drag us down ... There is nothing to win from it either for the (Mercedes) brand or for the profitability," Zetsche said in another Sunday paper, the Frankfurter Allgemeine Sonntagszeitung.

"The Daimler AG will be a company that offers exciting vehicles in the premium segment, remains highly profitable, is the most attractive employer, and greatly pleases its customers and shareholders with top products and services," he told the Welt am Sonntag.

Ever since BMW sold its UK unit Rover in 2000 for a pittance after pumping billions into the company, Daimler's archrival has charted a fiercely independent path, propagating a philosophy that close mergers and alliances only weaken a brand's profile.