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Daimler-Benz, Chrysler Merger Raise Eyebrows In Japan

7 May 1998

Nikkei news of Japan has reported that the merger between
Daimler-Benz AG and Chrysler Corporation gives Japanese carmakers
something to worry about.  The merger of the two large western
automobile manufacturers raises the possibility of increased increased
price competition in the global auto market, which could put a lot of
pressure on Japanese automakers. 

Japanese auto industry watchers note that the merger may strengthen
DaimlerChrysler's position in the subcompact car market, which has
traditionally been dominated by Japanese automakers.  Observers say
the merger will allow the new company to reduce the price of making
subcompact cars through sharing production costs.

Japanese carmakers have taken steps and/or made concrete plans to
reduce the development and production costs associated with subcompact
carmaking, but predicted gains are not likely to match the kind of
economic advantage DaimlerChrysler will reap from its formation.

In order to cut production costs, Nissan Motor Company plans to cut
the number of different chassis styles it makes from 15 to 5 by the
year 2,000, while Mitsubishi will cut the number of platforms it makes
in half.  Mazda and Ford will produce a jointly developed
sports-utility vehicle.