Saw this last week, but didn't really think about the significance of it all.


DC cash withdrawal could spell end for Mitsubishi - 23 Apr 04

DaimlerChrysler stated yesterday that it would not be rescuing ailing Japanese carmaker Mitsubishi after all. The announcement was seen as a volte-face; several reports last week claimed that an enormous capital injection was planned for Mitsubishi, with DC infusing up to $7bn to revive the company. These appear to have been over-confident; a DC spokesman ominously told Reuters that when talks broke down over the amount to be raised for a bail-out, it "clearly mean[t] separation." DaimlerChrysler's 37 percent stake in Mitsubishi, Japan's only loss-making automaker, is now being tendered. Just-auto reports an industry insider as saying, "This could be the end for Mitsubishi if nobody else injects fresh capital."

Mitsubishi has not recovered from the dire effects of poorly-judged loans in the States and an ageing product line-up. Daimler has been partner to Mitsubishi and Chrysler since 1998; both companies have proved difficult bedfellows, bleeding $billions from the company coffers. One industry analyst has called the partnership with Mitsubishi a 'financial black hole'. Many insiders are now worried how the move will affect a joint four-cylinder "world engine" development program between Chrysler and Mitsubishi.

Meanwhile, a question mark is held over the future of DC's relationship with Hyundai. Another Just-auto report claimed that the Korean firm 'felt it no longer needed its German partner after its emergence as one of the world's fastest-growing carmakers.' Plans to build engines together may be scrapped. DaimlerChrysler owns 10 percent of Hyundai. (just-auto.com/ANE)