Daimler Forges Engines Joint Venture with Mitsubishi, Hyundai

DaimlerChrysler is to set up a joint venture with Mitsubishi Motors and Hyundai Motor for the development of a common family of engines, board member Jürgen Hubbert has told the German business journal Handelsblatt.

Hubbert said final details of the new firm still have to be negotiated, such as the shareholding breakdown. But he said the joint venture could still be set up within the next few weeks.

For DaimlerChrysler the venture will represent a further move towards globalization. The group aims to be equally well represented in America, Europe and Asia.

To this end, it already holds stakes of 37 percent in Japanese MMC and 10 percent in Korean Hyundai. The three participants expect the venture to allow them to share technology but also assembly capacity.

The aim is to develop a globally adaptable engine, in other words one that can be used in Asia, America or Europe. By pooling their efforts, the three car makers expect to reduce development costs and improve the margins on medium-class passenger cars.

It looks likely that the new family of engines will fall within the 1.8–2.4 liter range. This is the class in which there is the greatest convergence between MMC, Hyundai and DaimlerChrysler's US unit, Chrysler.

The new engines will not be used for Mercedes-Benz or Smart cars. The collaboration in engines could just be the start of something more extensive.

The three car makers are discussing the development of components such as gears or axles – parts that don't have any bearing on brand image. Hyundai said there was a strong likelihood that something would come of these discussions.