DaimlerChrysler to take advantage of present Asian alliances

by and

MAKUHARI, Chiba Pref. — After establishing a strong foothold in the European and North American markets, DaimlerChrysler AG is ready to increase its presence in Asia by taking advantage of its alliance with Japanese and South Korean partners, according to executives of the German-American auto giant.

“We are looking for a global approach,” said Juergen Hubbert, a board member and head of DaimlerChrysler’s Mercedes-Benz division, who is here to attend the 35th Tokyo Motor Show. “(The alliance) gives us a chance to have a balanced product program and income flow in all these regions. And with these cooperations and mergers, we are better positioned than anybody else.”

In 2000, DaimlerChrysler formed a capital alliance in Asia with Mitsubishi Motors Corp. and now owns a 37.3 percent stake in the Japanese carmaker. It also holds a 10 percent stake in Hyundai Motor Co. of South Korea. U.S.-based Chrysler Corp. merged with German automaker Daimler-Benz AG in 1998 to create DaimlerChrysler.

Its alliance with MMC has led to greater efficiency both in production and marketing, Hubbert said, citing the joint development of a new small car that will be produced using the same platform but marketed under each company’s respective brand.

While Hyundai plays no part in DaimlerChrysler’s small-car business, the two companies are cooperating in the area of commercial vehicles, he said.

DaimlerChrysler is counting on its alliance with MMC to expand its truck business in the Asian market, Hubbert said.

“Mitsubishi is very successful in truck operation in Asia, where we are weak,” he said. “Through these cooperations we will be able to exchange technologies and truck components and take part in the market.”

In the Japanese market, Mercedes-Benz has maintained a strong presence thanks partly to its prestigious brand image. In the first nine months of this year, sales of Mercedes-Benz brand cars rose 6.4 percent from a year earlier.

Chrysler Group’s three brands — Chrysler, Jeep and Dodge — are less popular among Japanese consumers.

To change that, the company is working with MMC to increase opportunities for Chrysler vehicles, including the possibility of sharing dealer networks, said John Tangeman, representative director and vice president at DaimlerChrysler Japan Co.

According to the Japan Automobile Importers Association, sales of Mercedes-Benz vehicles reached 52,947 units in Japan in fiscal 2000, while the volume for Chrysler-brand cars remained at 8,432 units.

Tangeman said sharing technology, components and information would make MMC and Chrysler more competitive. However, a joint plan of action for the Japanese market has yet to be drawn up.

“We are studying small front-wheel drive and all-wheel drive programs in C (compact) and D (midsize) segments,” said Trevor Creed, a senior vice president at DaimlerChrysler in charge of design for Chrysler’s three brands. “Two of us can shorten the time to bring these products to market.”

Although the partners would cooperate in technological development and components procurement, each brand of the DaimlerChrysler group should stand alone to increase the attractiveness of the products, said Thomas Marinelli, a vice president at DaimlerChrysler in charge of global brand marketing for the Chrysler/Jeep division.

“In the last two years . . . we fully defined and explained the essences of each brand and what each brand should stand for,” he said. “We will use that in our future guidance, in other words, marketing programs, communications and product development.”

These efforts have seen sales of Chrysler vehicles in Japan post a 18.5 percent year-on-year increase to 7,047 units during the January-September period.

However, the Chrysler division is still facing a difficult time at home — like MMC in the Japanese market. While most carmakers with operations in the U.S. enjoyed thriving business last year, Chrysler Group was in the red in the second half of last year.

As both the Chrysler division and MMC are undergoing restructuring programs, Hubbert said, DaimlerChrysler’s alliance with MMC is bringing about a synergetic effect.

“There’s an intense exchange of experience, and that might help,” he said. “If we discuss what you can do, such as how to organize business, how to reduce costs coming from suppliers, how to look for higher efficiency in the brand . . . there is something we can learn.”