Hyundai Motor - DaimlerChrysler Joint Venture

Hyundai Motor - DaimlerChrysler Joint Commercial Vehicle Venture Starts With Engines

Hyundai Motor and DaimlerChrysler have signed an agreement to form a new company to jointly produce commercial vehicle diesel engines in Korea as part of two companies’ joint commercial vehicle venture.

Hyundai and DaimlerChrysler will own the new company equally. Joint initial investment in plant and equipment will amount to US $ 180 million. The company will immediately begin the industrialisation to produce DaimlerChrysler’s 900 series commercial vehicle diesel engine.

This move marks the first step in the commercial vehicle joint development outlined following the agreement of a strategic alliance between the two companies last year.

Vehicle Manufacture Under the agreement DaimlerChrysler and Hyundai Motor will expand investment in the new company to include all the commercial vehicle manufacturing activities currently operated by Hyundai Motor in Korea before the end of 2002.

As part of the deal the two companies will immediately establish a strategic co-ordination committee to finalise matters relating to the new company’s activities and to explore other possible joint developments.

Hyundai’s Commercial Vehicle President, Dr Dong-Jin Kim said: “We are delighted with the conclusion of our discussions with our friends at DaimlerChrysler. This decision to begin production of advanced diesel engines here in Korea will considerably advance our relationship and will allow us to develop market opportunities for our products in Asia and worldwide”.

Dr Eckhard Cordes, DaimlerChrysler Board of Management member responsible for commercial vehicles said: “We decided to launch our commercial vehicle project with Hyundai in the strategically important engine sector because advanced diesel engines are a key competitive factor for success in the global commercial vehicle market”.

The 900 series engine will be used in more than 75 per cent of HMC’s commercial product line-up and represents a major transfer of innovative engine technology to the Korean commercial vehicle industry. Currently the 900 series is only produced in Germany and Brazil.

Advanced engine The 900 series engine is a state-of-the-art unit meeting the Euro III environmental standards and can be modified to meet the forthcoming Euro IV regulations. Korea will apply Euro III regulations from 2004 and the timing of the arrangement to build the 900 series in the country was made in order to allow HMC to meet domestic time frames on environmental regulations as well as export market demands.

The 900 series, with 4.3 litre, 6.5 litre and 7.2 litre capacities is 10 per cent more fuel efficient than other engines in its class and provides 12 per cent better performance. The engine series has not previously been licensed to any company outside DaimlerChrsyler AG.

The engines will be built at HMC’s Chonju commercial vehicle plant in newly constructed production facilities capable of manufacturing up to 120,000 units per year. All costs relating to the development and production of the engine (including typical licence and technical assistance fees) will be shared equally by the two companies through the newly formed company.

Enhancement of capabilities Prior to the planned development of the agreement the two companies have agreed a number of co-operations to enhance HMC’s capabilities in product development, production and marketing.

Although both companies have agreed specific terms for the second stage of the agreement, including anticipated investment levels, they have agreed to maintain confidentiality on these matters until next year.

DaimlerChrysler currently owns 10.46 per cent of Hyundai Motor’s common stock and the agreement on engine manufacture and future potential commercial vehicle manufacture further develops the strategic alliance.

It illustrates DaimlerChrysler’s view of the importance of its relationship with Hyundai Motor and HMC’s role as a dynamic and successful partner.

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