Japanese automaker Mitsubishi – part-owned by DaimlerChrysler – has failed to agree financial terms in relation to it selling a 19.9 per cent stake of its commercial vehicle operations to Sweden’s Volvo, writes the UK’s Financial Times (15/01/01). According to the FT, although the proposal between Volvo and Mitsubishi (MMC) was unveiled in October 1999, senior DaimlerChrysler executives said that the purchase price for the stake has still yet to be negotiated.
Citing Eckhard Cordes, President of DaimlerChrysler’s commercial vehicles operations, the FT says that the contract between Mitsubishi and Volvo obliged the Japanese company to create a new business covering both its truck and bus operations. Volvo was set to acquire a 19.9 per cent of this new operation later this year.
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Mr Cordes said that the purchase price had yet to be negotiated and that the legal process cannot be opposed, “but is the only thing the contract provides for.”
Although having vowed to honour the Volvo-MMC joint venture in commercial vehicles, senior executives at DaimlerChrysler are reported to be formulating plans to gain control of the bus and truck operations.
DaimlerChrysler is also reported to be keen on expanding commercial vehicle activities in the Asian market, in an effort to partly offset its reliance on the slowing European and North American markets.
The president of Volvo Global Truck Corporation, Tryggve Sthen, said that the company – which has itself acquired the heavy truck operations of Renault, including both its Mack and RVI brands – wants a stronger foothold in Asia, but said that this is a difficult situation.
Under the MMC-DaimlerChrysler deal, the German-US automotive group can – after three years – increase its stake to 100 per cent, which could see DaimlerChrysler control 80.1 per cent of the venture with Volvo, says the FT.
