Unhappy investors

Daimler shareholders have expressed skepticism over whether the company's partnership with Renault and Nissan, announced last week, will reap the long term rewards promised by Daimler chief Dieter Zetsche.

"We have grave doubts that the new partnership will be successful," Union Investment Group's Ingo Speich told 5,000 Daimler shareholders at their annual meeting in Berlin on Wednesday. He argued that failed alliances were a "recurring theme" in Daimler's corporate history, referring to past deals with Chrysler, Mitsubishi and Hyundai.

The new strategic partnership between Daimler, Renault and Nissan was announced in the wake of a bribery scandal that cost Daimler hundred of millions of dollars in fines. The new agreement quickly shifted attention away from the settlement, but Speich said Wednesday that the deal appears to be “a sudden reaction after missing chances in the past.”

Concerns about duplication of technology

When the deal was announced last week, Daimler chief Zetsche said the partnership with Renault and Nissan would allow the company to develop a new generation of smart cars. Under the terms of the deal, the Franco-Japanese alliance will each acquire a 3.1 percent stake in Daimler, while the Stuttgart-based company will buy a 3.1 percent stake in Renault-Nissan.

Daimler said last week that it expects the partnership to save the company $2.7 billion over the next five years after it lost $3.5 billion in 2009.

Critics of the deal, however, say that it will be difficult to make technology from each of the three companies compatible and argue the manufacturers already possess competing technologies.

For instance, Daimler and Renault are already working on separate electric car battery systems. The terms of the deal do not require the companies to coordinate battery technology, but Zetsche and Renault CEO Carlos Ghosn have already traded barbs about whose technology should be used in the smart cars made under the partnership.

In an effort to ease shareholders' concerns over the deal, Zetsche downplayed any potential conflicts between the two companies and urged investors to remain optimistic as the partnership moves forward.

“We are well positioned in the race to build the automobile of the future,” he said.

Author: David Francis
Editor: Sam Edmonds