DaimlerChrysler is to purchase 43% of the spun-off commercial vehicle business of Mitsubishi Motors for approximately 760 million euros.
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The company is also exercising its option, as contractually agreed with Hyundai Motor, to purchase a 50% share of the spun-off commercial vehicle business of HMC by the end of the year for around 400 million euros).
DaimlerChrysler expects that its 43% share participation in the Mitsubishi commercial vehicle business will be completed at the beginning of 2003. The exercising of its call option in the Hyundai commercial vehicles division will be transacted by the end of 2002.
Asia is the fastest growing market for commercial vehicles in the world, and is projected to account for over 50% of the world market during the next decade. Currently, some 43% of all commercial vehicles are sold in this region.
“The proposed investments will ensure that DaimlerChrysler’s commercial vehicles division can leverage the potential growth of these key Asian markets for further growth,” DC said in a statement.
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By GlobalData
“We already laid the foundation for a leading position in Asia in the year 2000 with our MMC alliance and our partnership with HMC. Our joint ventures with such strong and profitable partners will enable us to enhance our position as the world’s leading commercial vehicle manufacturer,” said Dr. Eckhard Cordes, member of Board of Management of DaimlerChrysler AG responsible for the commercial vehicle division.
“By expanding in Asia, we can implement our strategy of ‘turning scale into profit’ – in other words reaping the benefits of economies of scale – even more rigorously,”
Cordes said DC would “thoroughly exploit the advantages we gain from our high unit sales figures and our global presence” by collaborating closely in vehicle development, using shared components and major assemblies and utilizing common parts world-wide.
The agreement with Mitsubishi Motors assumes MMC’s demerger of its current commercial vehicle division by early 2003 to form a separate company, which will be called Mitsubishi Fuso Truck and Bus Corporation (MFTBC).
DaimlerChrysler will purchase 43% of the shares in MFTBC for 760 million euros. The Mitsubishi Group companies (primarily Mitsubishi Corporation, Mitsubishi Heavy Industries and Bank of Tokyo) will acquire a total of 15% of the shares for around 265 million euros. The remaining 42% will be held by MMC.
MFTBC is run by a nine-member board of directors. DaimlerChrysler will nominate four members, to include the president and CEO of the new company, Wilfried Porth. Chairman will be Takashi Usami, currently head of MMC’s commercial vehicles business. This transaction is subject to the approval of an extraordinary general meeting of MMC planned for the end of November.
By exercising the option contractually agreed in June 2001 for DaimlerChrysler to take a 50% share in the commercial vehicle business of HMC, DaimlerChrysler will purchase this share for around 400 million euros. The new venture incorporated in the previously established Daimler Hyundai Truck Corporation (DHTC) – which includes the engine joint venture – will also produce trucks, buses and components.
DHTC will be headed up by an eight-member board and DaimlerChrysler will appoint four of these including the chief operating officer (COO) and the chief financial officer (CFO).
“The joint venture with HMC will increase our access to the important Korean market as well as a very cost efficient production base. Again our joint product and component concepts afford us considerable potential for synergies,” Cordes said.
DaimlerChrysler’s commercial vehicle division will thus gain direct access to a commercial vehicle producer which occupies the top position in the third largest market in Asia. DHTC is the clear market leader by a substantial margin, in the domestic Korean commercial vehicle sector. Additionally, both partners are already building an engine plant together in Chonju, which will commence production of the Mercedes-Benz 900 series in 2004.
