Hyundai Motor and Daimler/Chrysler Announce Realignment of Strategic Alliance

Seoul/Stuttgart - Hyundai Motor Company and DaimlerChrysler AG announced yesterday that they have agreed to realign their strategic alliance to better reflect their respective companies’ current business and strategic objectives.

Under the agreement Hyundai Motor will acquire DaimlerChrysler’s 50 percent stake in Daimler Hyundai Truck Corporation, an existing commercial vehicle engine joint venture in Korea. The parties have also agreed to terminate certain associated licensing and other commercial arrangements, including the talks regarding a comprehensive commercial vehicle joint venture in Korea.

Going forward, the companies’ strategic alliance will include the following:

• Joint development and manufacture of a family of four cylinder petrol engines between Hyundai Motor, DaimlerChrysler and Mitsubishi Motors Corporation (the “World Engine Project”)
• Distribution of Hyundai Motor’s Atos and Verna (Accent) passenger car models into the Mexican market through DaimlerChrysler’s affiliate
• Joint procurement activities
• Supply by DaimlerChrysler of medium duty engines (OM906) to Hyundai Motor for medium buses

It is anticipated that these projects will have substantial benefits for both parties.

Since commencement of the strategic alliance in September 2000, there have been significant changes in the global commercial vehicle and automotive markets, which have resulted in a re-prioritization of both companies’ respective strategic objectives. To better address these conditions, the companies determined it was mutually beneficial to realign the alliance in order to reflect more realistically current market conditions. The companies expect that these measures will better position the strategic alliance to deliver value and to pursue additional projects going forward.

Commenting on the agreement, Hyundai Motor Vice Chairman Kim Dong Jin said, “We have been partners with DaimlerChrysler for nearly four years now and believe that the realignment of the strategic alliance is an important step forward to better position both companies to capitalize on opportunities in the changed market environment now facing us.”

Dr. Eckhard Cordes, Member of the DaimlerChrysler Board of Management and Head of Commercial Vehicles Division commented, “Over the last few years, we created multiple strategic options for sustainable and profitable growth of our business in Asia. We are now implementing the strategy with good progress. In light of these developments, DaimlerChrysler and Hyundai Motor have agreed to primarily focus on a collaborative relationship on a per-project basis in the future.”

Both companies have agreed that successful cooperation on a per-project basis is possible without a shareholding relationship. Therefore, as part of the realignment of the Alliance, DaimlerChrysler has decided to sell its 10.5% stake in Hyundai Motor. DaimlerChrysler may sell such shares at any time and under some circumstances will do so within certain specified periods of time.