• DaimlerChrysler to acquire 34 % of Mitsubishi Motors
• Alliance gives DaimlerChrysler greatly expanded access to growth markets in Asia
• Jurgen E. Schrempp: "This alliance strengthens DaimlerChrysler's global reach with the right product mix for growth markets"
• Katsuhiko Kawasoe: "For Mitsubishi Motors this is a great opportunity to enhance our position outside Asia"

Stuttgart/Tokyo - DaimlerChrysler Chairman Jurgen E. Schrempp and Mitsubishi Motors (MMC) President Katsuhiko Kawasoe signed a Letter of Intent in Stuttgart to form an alliance regarding the design, development, production and distribution of passenger cars and light commercial vehicles. The final contracts will be signed within the next few months.

It has been agreed that DaimlerChrysler will acquire a 34% equity stake for 2.1 bn Euro(Yen 450 per share) in MMC through a capital increase. The combined unit sales and revenues of the allies ranks them among the top three automotive companies worldwide.

With this alliance DaimlerChrysler will strengthen its presence in Japan and the Asian region. DaimlerChrysler Chairman Jurgen E. Schrempp said: "Mitsubishi Motors is the ideal partner to increase DaimlerChrysler's presence in all parts of Asia. This is a milestone for DaimlerChrysler's Asian strategy."

Mitsubishi Motors President Katsuhiko Kawasoe emphasized the significance of the deal: "With this alliance, we will get access to additional resources. DaimlerChrysler will add potential economies of scale which will enhance the future of our business. We will be able to intensify our activities outside Asia, primarily in Europe and North America. While Mitsubishi Motors will essentially remain an independently managed company, we will be able to combine our strengths in many areas and benefit from this alliance."

Mitsubishi Motors has an excellent distribution network throughout Asia and some of the highest market shares in the region. In the fast growing ASEAN countries Mitsubishi Motors' 26 % market share is the highest among all competitors. DaimlerChrysler and MMC will have a combined market share of about 10.8 % in Japan and 9.4 % in the other parts of Asia Pacific.

DaimlerChrysler Chairman Jurgen E. Schrempp stressed the importance of this partnership for profitably expanding DaimlerChrysler's share of the global small car segment, including the Smart brand. According to the agreement, the two companies will cooperate on the development of a small car. Schrempp continued: "The new alliance helps us to expand the Smart brand in the near future. In addition it gives us access to growth markets in Asia and beyond, such as Latin America or Eastern Europe, where DaimlerChrysler will in future have the optimum product mix."

Relating to the development of a small car, MMC President Katsuhiko Kawasoe stated: "Mitsubishi Motors' European manufacturing operation, Netherlands Car B.V., NedCar, will become a 50/50 joint venture and the development and production site for our future small cars for the European market based on a common platform and GDI engine technology . We see a lot of further opportunities especially in development of new products, engines, and environmental technology, and we will start working on joint projects at full speed."

According to the Letter of Intent, DaimlerChrysler and Mitsubishi Motors plan to cooperate closely in the areas of development and design, purchasing, manufacturing, and sales of passenger cars and light commercial vehicles, such as pick-up trucks. However, the agreement excludes medium and heavy trucks and other commercial vehicles.

DaimlerChrysler will give Mitsubishi Motors access to its worldwide financial services network. This will enable MMC, in addition to its own activities, to offer financing and leasing of its products through the network of debis Financial Services.

It has been agreed that the representation of DaimlerChrysler on the Board of Management of MMC is in line with the equity participation. The board members, who have not yet been nominated, will serve as regular board members. Together with the influence associated with the 34% equity stake, this will enable DaimlerChrysler to be part of the decision making process at Mitsubishi Motors.