DaimlerChrysler dumps stake in Mitusbishi Motors

DaimlerChrysler sold its remaining stake in Japan's loss-making Mitsubishi Motors yesterday, bringing an end to a disastrous attempt at empire-building which contributed to the downfall of the head of the German-American car maker, Jürgen Schrempp.

DaimlerChrysler, is selling its 12 per cent stake in Mitsubishi's car business, known as MMC, to Goldman Sachs, which will place the shares with institutional investors around the world. The move marks the end of the world's fifth-biggest car maker's efforts to turn itself into a global company and comes after General Motors unravelled its ties with Italy's Fiat and sold its stake in Fuji Heavy Industries to concentrate on reviving its core business in the US.

Mr Schrempp, who will be succeeded as chief executive by Dieter Zetsche at the end of the year, engineered in 2000 the company's acquisition of one-third of the Japanese car maker for nearly $2bn (£1.1bn).

The investment was not profitable for DaimlerChrysler and it has had to swallow mounting losses. The fate of DaimlerChrysler's stake in Japan's only unprofitable car maker had been the subject of speculation after the Stuttgart-based company cut off its financial lifeline to its affiliate in April 2004.

Mr Schrempp led DaimlerChrysler in negotiating a $7.6bn investment in MMC, but was thwarted because the company's board did not support the move. At the time, it supported its chief executive, though Mr Schrempp said in July he would step aside, boosting DaimlerChrysler shares.

The divestment of the MMC stake will result in a capital gain of about €500m (£336m) for DaimlerChrysler, which may use the money to invest in its Smart car division.