DaimlerChrysler to Maintain Stake in Mitsubishi Motors

New Mitsubishi CEO States Revival Plan to be Announced at End of May

The recent news of DaimlerChrysler AG (DCX) pulling back on any future funding of Mitsubishi Motors Corp. (MMC) stunned the auto world. Creating more

Putting the speculation to rest, CEO Juergen Schrempp announced DaimlerChrysler would maintain its stake in struggling Mitsubishi. (Photo: Trevor Hofmann, Canadian Auto Press)

instability, a spokesman for the German automaker stated it wasn't sure what it would do with its 37.3 percent holdings in the Japanese brand.

The comment caused concern among analysts, due to the fact that much of Chrysler Group's future core product lineup is being developed in conjunction with MMC.

Such fears were quelled Thursday, after DCX CEO Juergen Schrempp announced in a letter to staff that the automaker would maintain its stake in MMC. Schrempp added that DCX will stay committed to its Asian strategy.

"None of the management or supervisory board took this decision

The DCX announcement brings a huge sigh of relief to Mitsubishi, who would have faced serious hardship without their component sharing partner. (Photo: Trevor Hofmann, Canadian Auto Press)

lightly -- the Japanese market is too important, and our relations to our Mitsubishi partners too close and good," stated Schrempp in the letter.

This should bring a sigh of relief to MMC execs, which, without platform and component sharing opportunities with DCX stood to lose substantial production cost reductions through economies of scale, as well as forfeit some future product plans of its own.

"The crucial factor in the end was that we could not see an acceptable return for our investors in the foreseeable future on the financial burden we would have had to accept," added Schrempp.