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News > International
Daimler scraps Nissan deal
March 10, 1999: 5:48 p.m. ET

Auto giant ends Nissan talks, paving road for Renault; may eye Mitsubishi
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LONDON (CNNfn) - DaimlerChrysler abandoned attempts Wednesday to take an equity stake in struggling Japanese car maker Nissan, leaving the way clear for France's Renault to step in with an offer.
     But the U.S.-German car giant said it is still aiming to accelerate its Asian sales -- and that, analysts say, puts Mitsubishi Motors and its commercial vehicle unit at the top of the list of potential partners.
     The timing of the pullout by DaimlerChrysler (DCX) came as a surprise. The company's co-chairman, Robert Eaton, said as late as Tuesday he expected to reach a decision on an investment in Nissan before the end of March.
     "We discussed our options of a potential partnership very openly and in a very friendly atmosphere, but finally decided not to pursue a participation," DaimlerChrysler chairman Jürgen Schrempp said in a statement.
     The two sides also have ended talks about a stake in Nissan Diesel, Nissan's commercial vehicle arm, but both parties agreed to continue to pursue on-going projects and those in development in the commercial vehicle area.
     Schrempp added that the priority for the group was the integration of the Daimler and Chrysler businesses.
    
Door opens for Renault

     The decision leaves the way clear for French car maker Renault, which earlier this month confirmed it was exploring the possibility of taking up to a 40 percent stake in Nissan.
     "We're pursuing a thorough study" of Nissan, Renault chairman Louis Schweitzer told Reuters Wednesday. He stressed, however, that there were plenty of hurdles ahead. "We've always said that this would represent an opportunity but is also something that wasn't easy to do," he said.
     Schweitzer refused to be drawn out on any timetable for the talks, but Reuters reported that company officials indicated a decision was likely before the end of March.
     Analysts said Nissan's high debt levels were probably what put DaimlerChrysler off any equity participation.
    
Turning sights to Mitsubishi?

     Executives at DaimlerChrysler, the world's fifth-largest automaker, on Wednesday repeated their long-term goal of tripling the percentage of sales generated in Asia to 25 percent from the current 8 percent.
     That has not changed with its decision to end negotiations with Nissan, they said. Still, they revealed little about how they might accomplish their goal with Nissan out of the picture.
     "We are of course investigating all options, but beyond that we're not elaborating," spokesman Roland Klein said.
     Thomas Stallkamp, a DaimlerChrysler management board member and the company's North American president, said Tuesday the company's Asian expansion strategy was not confined to Japan, pointing to China, Southeast Asia and India.
     "Everyone is equating an Asian strategy with a Japanese strategy," he told Reuters at the Geneva International Motor Show in Switzerland. "The Japanese market is a very large market, but there may be more than one way to get into Asia."
     That may be true, but the options in the region are few, according to GVA Research analyst David Garrity. "Mitsubishi would be the next most likely candidate to come to mind," he said.
     One reason is that debt-laden Mitsubishi Motors Corp. has a history of dealing with the former Chrysler Corp., which merged last year with Daimler-Benz AG to form DaimlerChrysler. In 1993, Chrysler sold the last of a stake in Mitsubishi it had held for nearly two decades. And the Japanese-based company still supplies DaimlerChrysler with V6 engines and builds Chrysler Sebring and Dodge Avenger coupes at its Normal, Ill., assembly plant.
     Mitsubishi spokesman Kyle Bazemore said officials at the No. 4 Japanese automaker have not talked with their counterparts at DaimlerChrysler about an equity investment. But he said Mitsubishi had not changed its position since President Katsuhiko Kawasoe said in January the company was shopping around for cooperative deals with other automakers.
     Mitsubishi's truck affiliate, which is smaller than Nissan Diesel's, has a history of cooperation with Sweden's AB Volvo, Garrity said.
     The only other attractive heavy-truck maker in Asia is Japan's Hino Motors Ltd., but it is aligned with Japan's largest automaker, Toyota Motor Corp., he said.
     To be sure, analysts generally welcomed the news that DaimlerChrysler had abandoned its talks with Nissan. Many of them would prefer the automaker concentrate on integrating the former Daimler and Chrysler operations before embarking on another big deal.
     "The integration of Daimler and Chrysler is a big challenge and the integration of a third partner would have been extremely difficult," Morgan Stanley Dean Witter's Stephen Girsky said.
     Shares in DaimlerChrysler closed down 5/16 at 88 in trading Wednesday on the New York Stock Exchange.Back to top
     -- from staff and wire reports

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.