The DaimlerChrysler–Mitsubishi alliance refers to the 69-month period during which U.S.-German

automaker The automotive industry comprises a wide range of companies and organizations involved in the design, development, manufacturing, marketing, selling, repairing, and modification of motor vehicles. It is one of the world's largest industries ...

DaimlerChrysler AG Mercedes-Benz Group AG (formerly Daimler-Benz, DaimlerChrysler, and Daimler) is a Germany, German Multinational corporation, multinational Automotive industry, automotive company headquartered in Stuttgart, Baden-Württemberg, Germany. It is o ...

(DCX) held a controlling stake in

Mitsubishi Motors Corporation is a Japanese Multinational corporation, multinational Automotive industry, automobile manufacturer headquartered in Minato, Tokyo, Japan.

(MMC). First established on March 27, 2000, with the signing of a

letter of intent A letter of intent (LOI or LoI, or Letter of Intent) is a document outlining the understanding between two or more parties which they intend to formalize in a legally binding agreement. The concept is similar to a heads of agreement, term she ...

,"For Daimler, Mitsubishi Opens the Door to Asia"
John Schmid, ''

International Herald Tribune The ''International Herald Tribune'' (''IHT'') was a daily English-language newspaper published in Paris, France, for international English-speaking readers. It published under the name ''International Herald Tribune'' starting in 1967, but its ...

'', March 28, 2000 it was initiated by Jürgen E. Schrempp, the chairman of DCX, who was attempting to build what he called a ''"Welt AG"'' (global corporation) which would have as widespread a presence across worldwide automotive markets as its rivals."Commercial Vehicles Feature: Truck business data – OEMs"
, Michael Hinks-Edwards, ''Automotive world'', June 8, 2004 (subscription required)
Orf.at The merger with the

Chrysler Corporation FCA US, LLC, doing business as Stellantis North America and known historically as Chrysler ( ), is one of the " Big Three" automobile manufacturers in the United States, headquartered in Auburn Hills, Michigan. It is the American subsidiary of ...

had increased

Daimler-Benz Mercedes-Benz Group AG (formerly Daimler-Benz, DaimlerChrysler, and Daimler) is a Germany, German Multinational corporation, multinational Automotive industry, automotive company headquartered in Stuttgart, Baden-Württemberg, Germany. It is o ...

's share of the North American market, and Mitsubishi Motors offered a gateway to Asia. The deal was to prove costly for both DaimlerChrysler

shareholder A shareholder (in the United States often referred to as stockholder) of corporate stock refers to an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the ...

s and for Schrempp personally, whose part in the deal contributed to his eventual replacement at the helm of DCX in 2006."Daimler Chief Schrempp to Be Replaced by Zetsche"
''

Bloomberg News Bloomberg News (originally Bloomberg Business News) is an international news agency headquartered in New York City and a division of Bloomberg L.P. Content produced by Bloomberg News is disseminated through Bloomberg Terminals, Bloomberg T ...

'', July 28, 2005

Background

Jürgen Schrempp was one of the primary architects of the ''"Welt AG"'' plan, developed by Daimler-Benz to increase its presence in the American and Asian markets, and to improve its profitability. Schrempp believed that a modern

needed a full range of products beyond the

luxury vehicle A luxury car is a passenger automobile providing superior comfort levels, features, and equipment. More expensive materials and surface finishes are used, and buyers expect a correspondingly high quality (business), build quality. The term is ...

market in which

Mercedes-Benz Mercedes-Benz (), commonly referred to simply as Mercedes and occasionally as Benz, is a German automotive brand that was founded in 1926. Mercedes-Benz AG (a subsidiary of the Mercedes-Benz Group, established in 2019) is based in Stuttgart, ...

competed, and began looking for a partner as soon as he became chairman in 1994."Jurgen Schrempp: The Auto Baron"
Karen Lowry Miller & Joann Muller, ''

BusinessWeek ''Bloomberg Businessweek'', previously known as ''BusinessWeek'' (and before that ''Business Week'' and ''The Business Week''), is an American monthly business magazine published 12 times a year. The magazine debuted in New York City in Septembe ...

'', November 5, 1998 The

was targeted in 1995,"DaimlerChrysler 'merger of equals' put on trial"
Ed Garsten, ''

The Detroit News ''The Detroit News'' is one of the two major newspapers in the U.S. city of Detroit, Michigan Michigan ( ) is a peninsular U.S. state, state in the Great Lakes region, Great Lakes region of the Upper Midwest, Upper Midwestern United S ...

'', November 26, 2003 and on January 12, 1998, he met with Chrysler chairman Bob Eaton with the intent of negotiating a merger/takeover."Projekt Welt AG"
Henrik Böhme, DW-World.de, May 7, 2003 Following its completion in May that year, Schrempp then turned to Asia. However, DaimlerChrysler's first steps came to nothing. It considered but ultimately declined to invest in

Nissan is a Japanese multinational Automotive industry, automobile manufacturer headquartered in Yokohama, Kanagawa, Japan. The company sells its vehicles under the ''Nissan'' and ''Infiniti'' brands, and formerly the ''Datsun'' brand, with in-house ...

prior to the Japanese company's alliance with

Renault Renault S.A., commonly referred to as Groupe Renault ( , , , also known as the Renault Group in English), is a French Multinational corporation, multinational Automotive industry, automobile manufacturer established in 1899. The company curr ...

,"DaimlerChrysler: Desperately Seeking an Ally"
Jack Ewing, Emily Thornton & Moon Ihlwan, '' BusinessWeek International'', December 13, 1999 and it was rumoured that they also courted

Honda commonly known as just Honda, is a Japanese multinational corporation, multinational Conglomerate (company), conglomerate automotive manufacturer headquartered in Minato, Tokyo, Japan. Founded in October 1946 by Soichiro Honda, Honda has bee ...

that same year. Schrempp, who had given a speech in Tokyo in early 1999 where he predicted DCX's market share in Asia would increase from 1.3 to over 10 percent, began to come under pressure to deliver on his promises. Mitsubishi Motors was DaimlerChrysler's third choice partner, but in 1999 MMC chairman Katsuhiko Kawasoe rebuffed their initial approach. However, in the aftermath of the 1997 East Asian financial crisis MMC was saddled with ¥1.7 trillion of debt,"Mitsubishi: Fall of a Keiretsu"
Brian Bremner, Emily Thornton, and Irene M. Kunii, ''

'', March 15, 1999History of Mitsubishi
Funding Universe.com and some outside analysts were suggesting that the company should give priority to becoming a takeover or merger target."Mitsubishi Coy On Partnership"
Gerry Kobe, ''Automotive Industries'', August 1999 Kawasoe rejected this, preferring to present Mitsubishi as an equal partner to potential suitors, adding that Mitsubishi would continue to follow their longstanding approach of establishing ventures without capital tie-ups. But eventually a deal was struck: DCX would purchase a controlling 34 percent stake in the company for ¥450 billion (

€ The euro sign () is the currency sign used for the euro, the official currency of the eurozone. The design was presented to the public by the European Commission on 12 December 1996. It consists of a stylized letter E (or epsilon), crossed by t ...

2.1 billion)."Daimler grabs Mitsubishi"
''

CNN Money CNN Business (formerly CNN Money) is a financial news and information website, operated by CNN. The website was originally formed as a joint venture between CNN.com and Time Warner's '' Fortune'' and '' Money'' magazines. Since the spin-off of ...

'', March 27, 2000"Don't Wait For More" (boxout)
Murakami Mutsuko, ''

Asiaweek ''Asiaweek'' was an English-language news magazine focusing on Asia, published weekly by Asiaweek Limited, a subsidiary of Time Inc. Based in Hong Kong, it was established in 1975, and ceased publication with its 7 December 2001 issue due to a ...

'' vol.26, no.13, April 7, 2000, This would ostensibly preserve Mitsubishi's "independence", as only three out of the company's ten board members would be elected by the new largest shareholder, although DaimlerChrysler did now possess a

veto power A veto is a legal power to unilaterally stop an official action. In the most typical case, a president or monarch vetoes a bill to stop it from becoming law. In many countries, veto powers are established in the country's constitution. Veto p ...

over boardroom decisions."Daimler Gets Closer To Mitsubishi Deal"
John Schmid, ''

'', March 23, 2000 For DCX, the benefit would come from increased market share without MMC's debts appearing on their

balance sheet In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business ...

Recall cover up

Shortly after the deal was finalised, Mitsubishi became embroiled in accusations that it had covered up complaints from customers about defects in their vehicles."Mitsubishi recalls 514,000 vehicles"

BBC News BBC News is an operational business division of the British Broadcasting Corporation (BBC) responsible for the gathering and broadcasting of news and current affairs in the UK and around the world. The department is the world's largest broad ...

, July 19, 2000 A police raid on its headquarters in July 2000 uncovered hidden documents stashed in a locker, and soon after over 500,000 vehicles were

recall Recall may refer to: * Recall (baseball), a baseball term * Recall (bugle call), a signal to stop * Recall (information retrieval), a statistical measure * ReCALL (journal), ''ReCALL'' (journal), an academic journal about computer-assisted langua ...

ed for repairs. Mitsubishi's shares fell by 13 percent as these revelations became public, and over the summer, further investigations took a similar toll on the company's stock. By the end of August, following a second police raid, the total number of vehicles recalled had reached one million, while the share price had fallen by almost 30 percent."Mitsubishi extends recall"

, August 13, 2000"Police raid Mitsubishi headquarters"

, August 28, 2000 As a result of the collapse in the value of Mitsubishi, DaimlerChrysler renegotiated a €200 million reduction price of its stock purchase, while Kawasoe was forced to step down as chairman."Cover-up forces Mitsubishi boss out"

, September 8, 2000" The Light and Shadow of Corporate Reconstruction"
Takuya Ito, Electronic Journal of Contemporary Japanese Studies, April 15, 2006

Increasing control

Mitsubishi's difficulties contributed to a sharp fall in the DaimlerChrysler group's profits, and following the recall of a further 1.5 million cars in February 2001, including almost a million in the U.S.,"Mitsubishi recalls 1.5 million cars"

, February 15, 2001 the German parent moved quickly to restructure; approximately 10,000 Mitsubishi employees would be axed and one of its four assembly plants would be closed."DaimlerChrysler axes Mitsubishi jobs"

, February 26, 2001 The following month, DaimlerChrysler approached

Volvo The Volvo Group (; legally Aktiebolaget Volvo, shortened to AB Volvo, stylized as VOLVO) is a Swedish multinational manufacturing corporation headquartered in Gothenburg. While its core activity is the production, distribution and sale of truck ...

about acquiring the Swedish

's 3.3 percent stake in Mitsubishi. Volvo had planned on forming a joint venture with MMC for bus and truck manufacturing as part of a deal originally negotiated in 1999, until the involvement of DaimlerChrysler, a rival in the

commercial vehicle A commercial vehicle is any type of motor vehicle used for transporting goods or paying passengers. Depending on laws and designations, a commercial vehicle can be any broad type of motor vehicle used commercially or for business purposes. Classi ...

marketplace, led Volvo to ultimately withdraw."DaimlerChrysler targets bigger slice of Mitsubishi"

, March 8, 2001 The €760 million sale was concluded in April 2001, taking DCX's share to 37.3 percent."MMC-DaimlerChrysler commercial vehicle strategy to expand"
, Mitsubishi Motors press release, April 11, 2001 Olivier Boulay, then the head of DaimlerChrysler's Japanese

design studio A studio is a space set aside for creative work of any kind, including art, dance, music and theater. The word ''studio'' is derived from the , from , from ''studere'', meaning to study or zeal. Types Art The studio of any artist, esp ...

Yokohama is the List of cities in Japan, second-largest city in Japan by population as well as by area, and the country's most populous Municipalities of Japan, municipality. It is the capital and most populous city in Kanagawa Prefecture, with a popu ...

, was recruited by Mitsubishi in May 2001."MMC recruits Olivier Boulay from DaimlerChrysler"
, Mitsubishi Motors press release, April 25, 2001 Answering directly to Rolf Eckrodt, the DCX-appointed

Chief Operating Officer A chief operating officer (COO), also called chief operations officer, is an executive in charge of the daily operations of an organization (i.e. personnel, resources, and logistics). COOs are usually second-in-command immediately after the C ...

, Boulay's appointment was part of the "Turnaround Plan" initiated by Eckrodt and new Chief Executive Takashi Sonobe, where Mitsubishi tried to move away from an

engineering Engineering is the practice of using natural science, mathematics, and the engineering design process to Problem solving#Engineering, solve problems within technology, increase efficiency and productivity, and improve Systems engineering, s ...

-led approach to

development Development or developing may refer to: Arts *Development (music), the process by which thematic material is reshaped * Photographic development *Filmmaking, development phase, including finance and budgeting * Development hell, when a proje ...

."MMC Announces New Management Organization, Details Major Progress in"
, Mitsubishi Motors press release, March 28, 2001 Despite the new initiatives and increased investment, Mitsubishi Motors announced a revised profit forecast in April 2001,
, Mitsubishi Motors press release, March 28, 2001 and their downward projections were confirmed in May when the company reported a net loss for the year of ¥278 billion.
, Mitsubishi Motors press release, May 18, 2001 During 2001 and 2002 DaimlerChrysler and Mitsubishi began to co-operate more closely on longer-term ventures. A €244 million plant would be built at Kölleda in Germany to manufacture engines for the new Z-car platform,"DaimlerChrysler AG and Mitsubishi Motors Corporation to Build Engine Plant in Thuringia, Germany"
, Mitsubishi Motors press release, December 20, 2001 while in concert with Hyundai they established the Global Engine Manufacturing Alliance, a joint venture with an annual capacity of two million powerplants in five factories across the globe."DaimlerChrysler, Hyundai, and Mitsubishi Motors to Form Global Engine Alliance"
, Mitsubishi Motors press release, May 6, 2002"DCX kicks off Global Engine Manufacturing Alliance with Hyundai and Mitsubishi"
GEMA press release, October 4, 2005 There was also extensive platform sharing,"DC and Mitsubishi Learn to Share"
'' Ward's AutoWorld'', November 1, 2001 cross-supply agreements,"DaimlerChrysler, Mitsubishi Sign Cross-Supply Commercial Engine Agreement"
Autoparts Report, April 20, 2002 and manufacturing

subcontract A subcontractor is a person or business which undertakes to perform part or all of the obligations of another's contract, and a subcontract is a contract which assigns part of an existing contract to a subcontractor. A general contractor, prime ...

s,"New Colt lifts Mitsubishi's gloom"
Jorn Madslien,

, March 11, 2004 which were reflected in the 2002-2013 Colt and first-generation Smart Forfour.

Unravelling ties

Despite DaimlerChrysler's involvement, debts at Mitsubishi continued to accumulate. A torpid economy in Japan dragged down the company's domestic performance in 2003, while the same year the after effects of a disastrous credit scheme in the U.S. saw Mitsubishi Motors North America suffer a US$454 million loss."Mitsubishi racks up huge losses"

, November 11, 2003 By 2004 the automaker owed ¥1.14 trillion, and a ¥700 billion rescue plan was put to shareholders in April."DaimlerChrysler dumps Mitsubishi"

, April 23, 2004 Other companies within the ''

keiretsu A is a set of companies with interlocking business relationships and shareholdings that dominated the Japanese economy in the second half of the 20th century. In the legal sense, it is a type of business group that is in a loosely organized al ...

'' of Mitsubishi which owned 23 percent of MMC were committed to the plan, and the Japan Development Bank had also been approached for support."Mitsubishi ditches sales chief"

, April 2, 2004 However, at DaimlerChrysler there was dissent against the idea of further investment; only weeks before Schrempp had endured calls for his resignation from shareholders."DaimlerChrysler pulls plug on Mitsubishi Motors"
Alexander Huebner and Chang-Ran Kim, ''

Forbes ''Forbes'' () is an American business magazine founded by B. C. Forbes in 1917. It has been owned by the Hong Kong–based investment group Integrated Whale Media Investments since 2014. Its chairman and editor-in-chief is Steve Forbes. The co ...

'', April 23, 2004 In the face of this and his boardroom's opposition, DCX refused to pledge further funds, and formally stated that it would no longer financially support its partner."Remodelling Japan Inc"
Sarah Buckley,

, October 13, 2004 Japan's

finance minister A ministry of finance is a ministry or other government agency in charge of government finance, fiscal policy, and financial regulation. It is headed by a finance minister, an executive or cabinet position . A ministry of finance's portfoli ...

Nobuteru Ishihara is a Japanese politician, who served as the Secretary-General of the Liberal Democratic Party from 2010 to 2012. Previously, he also served in the House of Representatives as representative from 1990 to 2021. Early life and career Ishihara was ...

, commented that the decision "could affect the future of the company", while corporate analysts were more forthright, calling it "a disaster" and claiming that " itsubishiwill vanish if it continues this way." An alternative rescue package was formulated by May 2004, involving a ¥450 billion investment in newly issued stock by U.S. bank

JPMorgan Chase JPMorgan Chase & Co. (stylized as JPMorganChase) is an American multinational financial services, finance corporation headquartered in New York City and incorporated in Delaware. It is List of largest banks in the United States, the largest ba ...

, Tokyo-based private investment fund Phoenix Capital and other

Mitsubishi Group The is a group of autonomous Japanese multinational companies in a variety of industries. Founded by Yatarō Iwasaki in 1870, the Mitsubishi Group traces its origins to the Mitsubishi zaibatsu, a unified company that existed from 1870 to 1946 ...

companies. The deal was announced as MMC reported a loss for the year of ¥215 billion."Mitsubishi wins $4bn bailout deal"

, May 21, 2004 Further negotiations, and the involvement of the China Motor Corporation, boosted this figure to ¥546 billion by June, in return for 11,000 redundancies and cuts to corporate pensions, salaries and bonuses."Mitsubishi boosts rescue package"

, June 29, 2004 As a result of the new investment, DaimlerChrysler's own stake was diluted. Profitability remained out of reach for Mitsubishi, and enlarged losses in 2005 were forecast by the company. The company's stock price slid 41 percent in 2004 to approximately one quarter the value of when DaimlerChrysler first became involved."Mitsubishi crashes into the red"

, November 8, 2004

Divorce

Following DaimlerChrysler's decision to cease further investment in its Japanese partner, Rolf Eckrodt stepped down as chairman and CEO of Mitsubishi, and retired from DCX in April 2004."News: Mitsubishi CEO resigns"
4Car, April 27, 2004 Soon after, Chrysler's Chief Operating Officer Wolfgang Bernhard also parted ways with the German parent over its continuing troubles and falling profits,, Dean Slavnich, Automotive Engineer-Plus, July 30, 2004 while the merger with MMC was now routinely being referred to by the media as a "debacle"."A New Driver For Mercedes-Benz?"
Gail Edmondson, ''

'', August 2, 2004"Daimler pulls support on Mitsubishi"
Leonie Wood, ''

The Age ''The Age'' is a daily newspaper in Melbourne, Australia, that has been published since 1854. Owned and published by Nine Entertainment, ''The Age'' primarily serves Victoria (Australia), Victoria, but copies also sell in Tasmania, the Austral ...

'', April 27, 2004 A third attempt to recapitalize Mitsubishi in January 2005 led to ¥540 billion of further investment,"Mitsubishi seeks $5.2bn bail out"

, January 28, 2005 and DaimlerChrysler's now owned only a 12.4 percent stake. Finally, on November 11, 2005, the remaining stock was sold for US$1.1 billion."Daimler sells stake in Mitsubishi"

, November 11, 2005 Three days later the buyer, investment bank

Goldman Sachs The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...

sold the shares on for US$80 million profit."Mitsubishi shares make Goldman Sachs $80 million in a day"
''Automotive Business Review'', November 18, 2005 New major stockholder Phoenix Capital followed suit the following month, selling all but 50 million of its 575 million shares to

JPMorgan JPMorgan Chase & Co. (stylized as JPMorganChase) is an American multinational finance corporation headquartered in New York City and incorporated in Delaware. It is the largest bank in the United States, and the world's largest bank by mar ...

on December 9, 2005, and once again the investment bank offloaded their purchase within a few days for tens of millions of dollars in profit. In both cases, the eventual buyers were part of the

Mitsubishi The is a group of autonomous Japanese multinational companies in a variety of industries. Founded by Yatarō Iwasaki in 1870, the Mitsubishi Group traces its origins to the Mitsubishi zaibatsu, a unified company that existed from 1870 to 194 ...

''keiretsu'', returning MMC to Japanese ownership. By 2007, DaimlerChrysler had also found themselves in a divorce on their own when Daimler sold Chrysler to

Cerberus Capital Management Cerberus Capital Management, L.P. is an American global alternative investment firm with assets across credit, private equity, and real estate strategies.Leaders Magazine"Providing Economic Opportunity: An Interview with The Honorable Dan Qua ...

for US$6 billion.

Corporate performance

Mitsubishi Motors'

revenue In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business. Commercial revenue may also be referred to as sales or as turnover. Some compan ...

, net profit/loss, and

asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...

s before, during, and immediately after the period when DaimlerChrysler held a share.

References

{{DEFAULTSORT:Daimlerchrysler-Mitsubishi Alliance Mitsubishi Motors Mercedes-Benz Group DaimlerChrysler Chrysler