Daimler ready to acquire equity in a volume carmaker again

Article by Christian Andrei, on August 29, 2010

In order to have cost savings in the small car segment, Daimler AG is preparing to take on the task of acquiring equity in a volume carmaker again. Just days after selling a 5.34% stake in Tata Motors, CEO Dieter Zetsche appears to change course and now plans to acquire shares in Renault SA.

This French carmaker has upped its appeal lately due to the popularity of its small cars, including the Clio subcompact and low cost Romanian-built Logan sedan.

According to insider sources, Daimler intends to acquire a stake of about 3% in Renault this April. In addition, Daimler is believed to use treasury shares as currency to avoid spending cash.

This could also be perceived to be its recognition of the investors's dislike of Daimler's lack of a dividend for 2009.

Daimler has a goal to make a new four-seat Smart car that would share underpinnings with the pint-sized Renault Twingo. It's also expected for this Smart car to be produced at the same assembly line in Renault's Slovenian production site in Novo Mesto.

Henner Lehne, who is from industry forecaster CSM, said that since the development costs for the Smart car are too high, the company doesn't really make any profit and that is why it needs a partner to raise overall production volume.

Daimler also wants to obtain components or larger modules such as small four-cylinder engines from its French partner, whose biggest shareholder is the French state.

Topics: daimler, germany

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