BMW Daimler talks breakdown

May 11, 2009

, FRANKFURT, May 11 – Shares in the German luxury auto makers BMW and Daimler slumped in early trading on Monday after a press report said they had abandoned various attempts to boost a limited partnership.

BMW shares were down by 2.10 percent at 26.10 euros, and Daimer had lost 1.43 percent to 27.26 euros in morning trading, while the DAX index of German blue-chips was off by 0.94 percent overall.

The business daily Handelsblatt said talks between the German rivals had been completely broken off, whether regarding joint production of engines, cooperation in the financial services sector, or a cross shareholding.

Analysts at Merck Finck kept both stocks on hold, saying the report was "negative news for both, as both are under pressure from Audi, are too small and demand for their luxury cars in the current economic crisis tends to be low."

The automakers already purchase some parts together to cut costs, but analysts had hoped they would go further to boost profitability amid growing pressure in the sector.

Both have been hit hard by the collapse in global automobile markets, and have posted losses in the first three months of 2009.

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