DaimlerChrysler and Mitsubishi Motors Corp are reported to have reached a final settlement in a row over defect cover-ups at the Mitsubishi Fuso trucks unit.
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According to Reuters, the deal calls for Mitsubishi to give DaimlerChrysler an unspecified cash payment plus another 20% stake in Mitsubishi Fuso Truck and Bus Corp, giving it 85% of Fuso.
A source familiar with the negotiations told the news agency the settlement was worth around €500 million ($US670 million) while a DaimlerChrysler spokesman reportedly said the company would have no comment on the scope of the deal pending a review by internal auditors.
Reuters said a €500 million payoff would be more than enough to compensate Daimler for the €475 million in charges it took last year for costs from the scandal at its Fuso unit.
The news agency said the settlement caps months of negotiations over how struggling Mitsubishi would compensate DaimlerChrysler for the recall costs, disruptions and image damage caused by years of deliberate cover-ups under previous Fuso management.
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By GlobalDataUnlisted Fuso, spun off from Mitsubishi in 2003, has had to recall more than 950,000 vehicles since admitting it hid information on defects from authorities for years in what Daimler has condemned as a “corporate culture of concealment”, Reuters noted.
The report said Mitsubishi will keep 100% control of Dutch factory NedCar, which makes both the Mitsubishi Colt and Smart ForFour models – the partners had been in talks on Daimler getting a stake in NedCar, but these have come to nothing.
The move means Daimler is not saddled with excess manufacturing capacity and assets that could weigh on its return on capital, Reuters noted, adding that analysts think Daimler’s distance from NedCar also keeps open the possibility for it to exit the loss-making Smart minicar business, which is undergoing a strategic review.
