Hyundai Says No Interest in Chrysler

Hyundai Motor Co. Ltd. says it is not one of the potential suitors for DaimlerChrysler AG’s U.S. Chrysler Group.

“We are not considering the acquisition of Chrysler because our hands are full,” the spokesman tells Ward’s.

While he does not elaborate, analysts say Hyundai Automotive Group, which includes Kia Motors Corp., is in a global expansion phase and not financially able to handle such a major acquisition.

Some U.S. industry analysts have said Chrysler is worth between $5 billion and $14 billion. The auto maker lost $1.6 billion in 2006, primarily due to a drop in sales of its fullsize trucks and SUVs, and German parent DaimlerChrysler has said it is considering selling the company.

The Sunday Times, a British publication, reported this week that investment banker JP Morgan was planning to send an information memorandum on the feasibility of a Chrysler acquisition to several potential suitors, including Hyundai.

Chrysler and Hyundai, along with Mitsubishi Motors Corp., are partners in the Global Engineering Mfg. Alliance, a joint venture that builds 4-cyl. World Engines at three plants located in the U.S., South Korea and Japan. The engine can be produced in three variants at dramatically reduced cost.

Hyundai uses World Engine in Sonata.

Hyundai currently employs a World Engine in its Sonata sedan.

The Korean auto maker previously had a global alliance with DaimlerChrysler under which the two companies were to develop vehicles and use each other’s product-development and marketing resources. DC acquired 10% of Hyundai’s stock when the alliance was struck, but Hyundai repurchased it when the partnership deal fell apart.

The two auto makers also formed a commercial-vehicle JV, with DC contributing cash and engine technology and Hyundai contributing its huge truck and bus plants and research center in Jeonju. That deal also has been disbanded.

Meanwhile, Hyundai is just beginning work on new plants in Europe, China and India, and Kia has new plants under way in China and the U.S.

Hyundai also is discussing setting up a commercial vehicle plant in China in partnership with the Guangzhou Automotive Group. “We are in close talks with Guangzhou but have not come up with anything concrete as yet,” the Hyundai spokesman confirms.

Additionally, subsidiary Hyundai Steel, a major unit of the Group has just launched a $7 billion blast furnace and integrated steel mill project at its Dangjin Mills in South Korea.

Another reason Hyundai is not in a position to bargain for Chrysler may have to do with Group Chairman Chung Mong-koo, who recently was given a 3-year prison sentence by a Seoul district court for his role in a corporate embezzlement scheme. He is free on bond while appealing the ruling.