Hyundai and DaimlerChrysler are expected to launch a new range of light and heavy commercial vehicles under an all-new brand name, likely to be an amalgam of the alliance partners' names.

The European market will be targeted initially, with a long-term objective to build on sales in China and the Far East. The alliance between DaimlerChrysler and Hyundai has been operating since June 2000.

President Kim Dong-Jin, the Hyundai man credited with masterminded the alliance, said: "We have accomplished a lot in the first few months, particularly in terms of gaining an understanding of the culture of the two companies.

"DaimlerChrysler is aware of the position Hyundai holds in the Korean and Asian markets in terms of marketing and price while it can bring improved production techniques, cost efficiencies and quality to the equation."

Mr Kim said there was no possibility of Hyundai producing Mercedes-Benz vehicles at its Chonju commercial vehicle plant in South Korea.

"What we will see is a new brand emerging which takes something from both the Hyundai and DaimlerChrysler names," he added.

Hyundai is, however, likely to build Mercedes-Benz diesel engines under licence. The Korean company has just developed its 13-litre Powertech diesel engine for the larger vehicles, which meets all current emissions legislation. It also has a four cylinder 1.5-litre under development.

To meet interim requirements, Hyundai is discussing the possibility of building four and six cylinder Mercedes engines in Korea.

"We have had discussions with a number of possible partners about engines but the best solution would be to licence production. We expect to be able to achieve this as one of the synergies of our alliance," said Mr Kim.

Hyundai currently builds light commercial vans, trucks from 3.5 tonnes to 20 tonnes plus shuttle, city and express buses. It holds 63% of the domestic Korean commercial vehicle market with 50,000 vehicles a year while major export markets are the Middle East, Latin America, South East Asia and North Africa.

Mr Kim said: "For the immediate future Europe is a major target. It is a market we have not been able to tap because of emissions regulations, but with new technology from DaimlerChrysler we expect to build our presence both in Europe and the NAFTA region. We believe we can achieve sales of between 15,000 and 25,000 over the next few years in Europe with the right product at the right price."

These would not be targeted at existing Mercedes-Benz commercial vehicle sales, he added, but at companies such as Ford, Iveco and Japanese makers.