Hyundai has the muscle to go it alone, analysts say

The German car maker is to sell its 10.5% stake in Hyundai Motor, and plans to set up a joint-venture engine plant and truck maker have been shelved.

Hyundai said the aim was to "readjust their relationship to react to the rapidly changing global auto market."

The decision ends weeks of speculation about the four-year-old relationship.

Chorus of complaint

The divorce is symptomatic of DaimlerChrysler's current strategic difficulties.

For some time now, the car maker - and particularly its chief executive, Juergen Schrempp - has faced a barrage of criticism over its international strategy.

The complaints date back to the 1998 merger between Mercedes-Benz and US Chrysler, which many shareholders claimed was a mistake on the part of the German company.

In recent months, criticism has focused on Asia, where DaimlerChrysler last month said it would not bail out loss-making Japanese unit Mitsubishi.

Going it alone

Hyundai is far more financially secure than Mitsubishi, and is the leader in the South Korean market, as well as increasingly successful abroad.

But it has fallen out with DaimlerChrysler over the German company's plans to invest in China in concert with a Beijing-based firm.

The disagreement has raised questions over whether such alliances - a common feature of the car business - are a viable strategy in an increasingly globalised industry.

Hyundai is reckoned unlikely to find an equivalent strategic partner, as most of the likely US and European firms are already established in the region.

Instead, however, analysts say the firm - which also produces the Kia brand - has the muscle to stand alone.