Beijing Benz-DaimlerChrysler Delays Board Vote on Chrysler Departure

SHANGHAI - October 13, 2008:

Beijing Benz-DaimlerChrysler Automotive Co., Ltd. (BBDC) has postponed its first board meeting with new members to the end of this year to allow more time for distribution of assets, Chinese media the Economic Observer reported today.

Though detailed information is not available yet, a source familiar with the case told the newspaper that Chrysler is set to quit its Chinese venture with Daimler AG and its company name will also be formally dropped from the venture during the board meeting at the year end.

The source further revealed that according to their initial agreement reached so far, Daimler AG will pay some 650,000 yuan to BBDC to compensate for the losses caused by its separation with Chrysler, and Chrysler will also get hundreds of BBDC dealers in China.

The compensation is really modest for the Chinese partner of the joint venture considering its large-scale investment in building sales networks for the brand in recent years, the source added.

Despite the separation, production of Chrysler 300C and Chrysler Sebring models at BBDC will not be suspended in China for the time being, according to a six-year contract reached between BBDC and Chrysler, as confirmed by a senior official of Chrysler's Asian operations.

Under the contract, the two car models, which have been marketed in the Chinese market since November 2006 and March 2008, will be produced in BBDC till 2012 and 2013, respectively. And the departure of Chrysler from Daimler as well as the sales of both car models will have no impact on the contract.

Though negotiations with Chery Automobile Co reached an impasse, Chrysler's talks with another Chinese automaker are making progress. Great Wall Motor Co and Chrysler are reported to be jointly developing an A-class car at the present.

Since mid-August this year, Chrysler has sent dozens of technicians to assist Great Wall Motor in developing the new car model. The latter's former designs have been given up or totally changed.

The A-class car designed with the help of Chrysler is very likely to be branded with the latter's trademark, produced in Baoding City of Hebei Province, headquarters of Great Wall Motor, and sold around the globe within just one or two years.