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STUTTGART/TOKYO - DaimlerChrysler AG will no longer bankroll Mitsubishi Motors and may sell its stake, leaving the German auto giant's global strategy in disarray and the future of the ailing Japanese firm in doubt.

CFO Manfred Gentz said on Friday that the Stuttgart-based company failed to agree with other Mitsubishi group shareholders on a bailout plan for Mitsubishi Motors Corp. and would not provide any new funds.

DaimlerChrysler shares shot higher as investors expressed relief at what appeared to be the end of its costly entanglement with Japan's only unprofitable carmaker.

Several brokers upgraded the stock.

"It's a great news that they've stopped pumping money into Mitsubishi. They are fighting on so many fronts already, and it was never an important focus," said Gerald Roessel, a fund manager at Invesco Asset Management in Frankfurt. "It was high time that they stepped on the emergency brakes."

Gentz said DaimlerChrysler would not decide on the fate of its 37 percent stake until the details of a restructuring plan led by three other Mitsubishi group firms -- who own 23 percent of Mitsubishi Motors -- were clear, but a sale was possible.

"We may reclassify our participation from at equity to available for sale," he said in a conference call held to explain the strategy U-turn agreed by management and supervisory boards late on Thursday.

Anticipation of a bailout had lifted Mitsubishi Motors' shares by 34 percent this month.

DaimlerChrysler bought the Mitsubishi stake for 405 yen per share in 2000, with a view to expanding in Asia. The deal was engineered by Chief Executive Juergen Schrempp, who dreamt of building a global automaker.

Schrempp, who has presided over the loss of some 37 billion euros ($43.97 billion) in market capitalization since Daimler merged with Chrysler in 1998 and faced calls to resign at a shareholder meeting two weeks ago, was not available to comment.

ASIA STRATEGY UNDER REVIEW

His finance chief said he saw no reason for an immediate writedown of the Mitsubishi stake, whose market value is roughly equivalent to book value at the end of 2003, but could not specify the decision's impact on 2004 results.

Group strategy in Asia would be reviewed, he added, but cooperation between Mitsubishi and the group's U.S. Chrysler unit on new vehicle development and production would continue.

"As far as our Asian strategy is concerned -- in which MMC was a major cornerstone -- we'll reconsider what has to be changed and what can or cannot be adjusted," he said.

"Chrysler can continue with its product plans and also with its production facilities as before. There is no reason why we should change that."

DaimlerChrysler sources played down suggestions of a boardroom rebellion against Schrempp, saying he had initiated the move to walk away from Mitsubishi Motors after failing to win enough support from fellow shareholders for a capital hike.

The news took the three main Mitsubishi group firms -- Mitsubishi Corp., Mitsubishi Heavy Industries and Mitsubishi Tokyo Financial Group -- by surprise but they vowed to continue their support for Mitsubishi Motors, the main flagbearer of the group's 120-year-old three-diamond logo.



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That's pretty sad, and I feel bad for Mitsubishi. They could've done well under DCX's wing and I was looking forward to a new Eclipse.
 

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with the new Eclipse coming before too long, a fairly decent looking new Galant, 2 pretty good crossover SUVs, and without a doubt the fire-breathing compact Lancer Evo VIII, they could have made a little bit of a turnaround. looks like that's been thrown in the pot now..... interesting. if Mitsu folds, or backs out of the U.S., there will be no competition for the Subie STi. wow. incredible.
 

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Writing was on the wall a long time ago. GM needs to pull the plug on Isuzu USA now. Canada is already gone, may as well finish it up.

No big loss on Mitsu. Feel sorry for the people who will have orphans though.
 

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Originally posted by Erunion+Apr 24 2004, 05:01 AM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Erunion @ Apr 24 2004, 05:01 AM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-AmericanREV@Apr 23 2004, 10:03 PM
That's DCX's only rice market, right?
They have part of Hyundai, i believe. [/b][/quote]
Ya, they own a small stake in Hyundia/Kia.
 
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