DaimlerChrysler, Hyundai may settle argument over China JV

Stuttgart. The dispute between DaimlerChrysler and Hyundai over DaimlerChrysler's alliance with Beijing Automotive Industry Holding Company (BAIC) is nearly resolved, says the German automaker.

"The whole thing is a misunderstanding. We are optimistic that the disputed points will soon be settled," DaimlerChrysler announced.

If that happens, negotiations between DaimlerChrysler and Hyundai over a commercial vehicle joint venture, which the Koreans had frozen, would then be finalized. "Provided that the conditions are right," DaimlerChrysler said.

A contract DaimlerChrysler signed with BAIC in September is the core of the problem between the German and Korean carmakers. According to the agreement, the Stuttgart-based company will obtain shares in BAIC and will manufacture C- and E-class models in China starting in 2005.

Five weeks after the contract was signed, Hyundai demanded that DaimlerChrysler abandon the alliance, claiming that it had an exclusive contract with BAIC.

At the same time the Korean company stopped the planned commercial vehicle joint venture with DaimlerChrysler, which was on track to be finalized in October. According to DaimlerChrysler, there is no exclusive clause for Hyundai.

Industry observers think that the real reason for Hyundai's actions was a to protect the company. Since September DaimlerChrysler has held the right to increase its share in Hyundai from 10 percent to approximately 15 percent.

The Koreans are worried that the Germans want to take control, much like they did with Mitsubishi, industry observers speculate. Some experts believe Hyundai used the disagreement to demonstrate that it is and will remain an independent manufacturer.

According to a DaimlerChrysler manager this demonstration of power was unnecessary: "We have absolutely no plans to obtain the majority at Hyundai."

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