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Daimler & BMW Focus on Engine Collaboration

January 18, 2008

FRANKFURT – Daimler AG and German rival BMW are focusing on engines rather than complete auto platforms as areas for possible cooperation, Daimler Chief Executive Dieter Zetsche told a German newspaper, according to Reuters.

In an interview with the Sueddeutsche Zeitung, Zetsche said BMW was the most logical partner for Daimler because it offered the greatest potential cost savings given their similar activities.

"We speak Bavarian and Swabian but basically the same language. It depends on the factual issues whether something comes of this in the end," he said. He disputed the suggestion that talks on joint development of engines were running into difficulty.

"That is not true of the engines. What has turned out to be difficult is to think immediately of entire platforms. Components would be easier and engines and components are absolutely possibilities (for cooperation). Here we are looking first at smaller vehicles," Zetsche said.

The world's two biggest premium carmakers were not discussing collaboration on fuel cell technology, he added.

Zetsche said Daimler was continuing to work with Chrysler on some areas started before Daimler sold a majority stake in its U.S. arm to private equity firm Cerberus last year, but he ruled out helping Chrysler sell small cars in Europe.

"Chrysler cannot achieve premium prices and has to attain low costs via high volumes," he said.

He also played down prospects for finding a partner whose output of small cars would help Daimler reduce the average carbon dioxide emissions from its fleet, a key issue given penalties on CO2 output proposed by the European Commission.

"This would only be of use if the manufacturer of small cars produced (vehicles with) consumption below the levels demanded by the EU. I don't see any such producer," he said.

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