Hyundai Motor, South Korea’s top carmaker, may need to find a new partner to achieve its goal of a top five industry ranking after the collapse of its tie-up with DaimlerChrysler AG, analysts told the Reuters news agency.
Hyundai must decide whether it can sustain booming foreign demand and a jump in vehicle quality on its own after DaimlerChrysler decided to sell its 10.5% stake, they reportedly said.
“A capital alliance with other global players is unavoidable for Hyundai’s survival in an increasingly harsh business environment,” Kim Hag-ju, a Samsung Securities analyst, told Reuters.
The report noted that officials at both companies said on Monday DaimlerChrysler would sell its stake, worth nearly $1 billion, while sources on DaimlerChrysler’s supervisory board told Reuters the German-based group would also drop plans to form a truck joint venture with Hyundai.
The two companies reportedly had been in talks to produce commercial vehicles and engines in South Korea and make the country an Asian production base for trucks before the four-year-old relationship soured.
Trucks and buses account for 6% to 7% of Hyundai’s sales and are sold mostly in South Korea. But Hyundai had planned to use the alliance to sell commercial vehicles in the vast China market, capitalising on good sales of its passenger cars, Kim told the news agency.
Analysts reportedly said the end of the tie-up could also make it difficult for Hyundai to use Daimler’s advanced diesel engine technologies, which Hyundai needs to meet global emission rules effective from July.
“With Hyundai’s current technology in the commercial vehicle segment, it’s difficult to make inroads into the global market,” Suh Sung-moon, an analyst at Dongwon Securities, told Reuters, adding: “A strategic alliance with world truck makers that could lend both technology and a brand will help facilitate Hyundai’s foray into the global market.”.
According to Reuters, many analysts, however, reckoned Hyundai’s improved global brand image, product quality and stronger balance sheet meant it could stand on its own.
Analysts reportedly said the end of the alliance could even help Hyundai, giving it a chance to take market share from Mitsubishi Motors when DaimlerChrysler cuts off financial support for the ailing Japanese company.