Daimler's Zetsche ready for another alliance, 3 years after Chrysler Read more: http
03-28-10, 03:01 PM
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Daimler's Zetsche ready for another alliance, 3 years after Chrysler Read more: http
http://www.autonews.com/apps/pbcs.dl...303289998/1179
FRANKFURT (Reuters) -- In the hunt for vital cost savings in the small car segment, Daimler AG is willing to blur a line in the sand it has drawn since its 2007 Chrysler divorce. The luxury producer is ready to acquire equity in a volume carmaker again.
Days after selling its 5 percent stake in India's Tata Motors, CEO Dieter Zetsche is reversing course and plans to acquire shares in Renault SA, whose recent appeal has been driven by small runabouts like its top-selling Clio and cheap Romanian-built Logan sedan.
Sources familiar with the talks say Daimler plans to acquire a tiny stake of around 3 percent in Renault next month. Those sources say he will use treasury shares as currency to avoid spending cash, in acknowledgment of investor anger over Daimler's lack of a dividend for 2009.
Daimler aims to manufacture a new four-seat Smart car that could share underpinnings with the pint-sized Renault Twingo and potentially roll off the same assembly line in the French carmaker's Slovenian production site in Novo Mesto.
"They don't make any real profit with Smart. ... The development costs are too high to justify its own architecture, so they need to find a partner to increase overall production volume," said Henner Lehne from industry forecaster CSM.
Daimler also would procure components or larger modules such as small four-cylinder engines from its French partner, whose biggest shareholder is the French state.
These could then be perfected by Mercedes engineers for A- and B-Class compacts.
Economies of scale
Daimler would profit from a partnership with Renault in the same way that premium rival Audi gains by building A3 hatchbacks or A1 subcompacts on Volkswagen platforms to save development costs and achieve economies of scale.
CSM's Lehne believes the new four-seat Smart would benefit if built on Renault's B-Platform it shares with alliance partner Nissan. It underpins a combined volume of 3.4 million vehicles across their group brands annually.
"That would offer Smart tremendous scale effects," he said.
Daimler at one stage mulled ditching Smart after years of heavy losses, but salvaged the brand with severe pruning that included scrapping its old four seat model, a re-engineered more expensive version of the Mitsubishi Colt, which flopped.
Premium brands can no longer afford to ignore the imperative of greater scale. They need small cars to cut their marque's carbon footprint ahead of a highly ambitious emissions target set for the European industry by 2020.
Daimler and to a lesser degree BMW lack the volume to build the Mercedes A-Class or BMW 1 Series cost-effectively, so Zetsche tried to persuade BMW to forge a strategic partnership where only a handful of areas would remain taboo.
Analysts applauded closer ties between the two, but BMW felt the rivalry was a key to driving innovation. One banker close to the talks acknowledged Daimler's efforts "were going nowhere."
As other carmakers like Volkswagen allied themselves with Porsche and Suzuki during last year's industry crisis, options began to dwindle fast for Daimler.
A former head of Chrysler, Zetsche has flatly conceded the 1998 merger failed to generate any meaningful savings between the U.S. mass carmaker and German luxury sibling Mercedes. Ever since, he has sworn off acquiring car brands in favor of limited deals with technology providers like Tesla.
Message to engineers
Economic reality in the small car segment, however, means Zetsche is ready to form a mini-alliance using equity as a mortar, more as a political signal to tell standoffish Mercedes engineers that Renault colleagues are friends, not enemies.
"There is no absolute need for cross-shareholding to achieve the cost savings within a partnership, but it could be an internal signal to staff at both carmakers that they have to work together to make this succeed," Fitch Ratings analyst Emmanuel Bulle said.
One auto analyst cautioned against over-interpreting the cost savings potential since common projects would only start to yield results years down the road and the depth of the partnership does not come anything near Renault's alliance with Nissan.
"A 3 percent stake? At that level no one is obligated to do anything really, so I would try and dampen expectations before the market starts to estimate billions in synergy potential," he said.
Read more: http://www.autonews.com/apps/pbcs.dl...#ixzz0jVkwmkyP
FRANKFURT (Reuters) -- In the hunt for vital cost savings in the small car segment, Daimler AG is willing to blur a line in the sand it has drawn since its 2007 Chrysler divorce. The luxury producer is ready to acquire equity in a volume carmaker again.
Days after selling its 5 percent stake in India's Tata Motors, CEO Dieter Zetsche is reversing course and plans to acquire shares in Renault SA, whose recent appeal has been driven by small runabouts like its top-selling Clio and cheap Romanian-built Logan sedan.
Sources familiar with the talks say Daimler plans to acquire a tiny stake of around 3 percent in Renault next month. Those sources say he will use treasury shares as currency to avoid spending cash, in acknowledgment of investor anger over Daimler's lack of a dividend for 2009.
Daimler aims to manufacture a new four-seat Smart car that could share underpinnings with the pint-sized Renault Twingo and potentially roll off the same assembly line in the French carmaker's Slovenian production site in Novo Mesto.
"They don't make any real profit with Smart. ... The development costs are too high to justify its own architecture, so they need to find a partner to increase overall production volume," said Henner Lehne from industry forecaster CSM.
Daimler also would procure components or larger modules such as small four-cylinder engines from its French partner, whose biggest shareholder is the French state.
These could then be perfected by Mercedes engineers for A- and B-Class compacts.
Economies of scale
Daimler would profit from a partnership with Renault in the same way that premium rival Audi gains by building A3 hatchbacks or A1 subcompacts on Volkswagen platforms to save development costs and achieve economies of scale.
CSM's Lehne believes the new four-seat Smart would benefit if built on Renault's B-Platform it shares with alliance partner Nissan. It underpins a combined volume of 3.4 million vehicles across their group brands annually.
"That would offer Smart tremendous scale effects," he said.
Daimler at one stage mulled ditching Smart after years of heavy losses, but salvaged the brand with severe pruning that included scrapping its old four seat model, a re-engineered more expensive version of the Mitsubishi Colt, which flopped.
Premium brands can no longer afford to ignore the imperative of greater scale. They need small cars to cut their marque's carbon footprint ahead of a highly ambitious emissions target set for the European industry by 2020.
Daimler and to a lesser degree BMW lack the volume to build the Mercedes A-Class or BMW 1 Series cost-effectively, so Zetsche tried to persuade BMW to forge a strategic partnership where only a handful of areas would remain taboo.
Analysts applauded closer ties between the two, but BMW felt the rivalry was a key to driving innovation. One banker close to the talks acknowledged Daimler's efforts "were going nowhere."
As other carmakers like Volkswagen allied themselves with Porsche and Suzuki during last year's industry crisis, options began to dwindle fast for Daimler.
A former head of Chrysler, Zetsche has flatly conceded the 1998 merger failed to generate any meaningful savings between the U.S. mass carmaker and German luxury sibling Mercedes. Ever since, he has sworn off acquiring car brands in favor of limited deals with technology providers like Tesla.
Message to engineers
Economic reality in the small car segment, however, means Zetsche is ready to form a mini-alliance using equity as a mortar, more as a political signal to tell standoffish Mercedes engineers that Renault colleagues are friends, not enemies.
"There is no absolute need for cross-shareholding to achieve the cost savings within a partnership, but it could be an internal signal to staff at both carmakers that they have to work together to make this succeed," Fitch Ratings analyst Emmanuel Bulle said.
One auto analyst cautioned against over-interpreting the cost savings potential since common projects would only start to yield results years down the road and the depth of the partnership does not come anything near Renault's alliance with Nissan.
"A 3 percent stake? At that level no one is obligated to do anything really, so I would try and dampen expectations before the market starts to estimate billions in synergy potential," he said.
Read more: http://www.autonews.com/apps/pbcs.dl...#ixzz0jVkwmkyP
03-28-10, 06:48 PM
#2
Lexus Fanatic
Days after selling its 5 percent stake in India's Tata Motors, CEO Dieter Zetsche is reversing course and plans to acquire shares in Renault SA, whose recent appeal has been driven by small runabouts like its top-selling Clio and cheap Romanian-built Logan sedan.
Last edited by mmarshall; 03-28-10 at 06:53 PM.
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