Mitsubishi Motors has started talks over the sale of its 42% stake in truck manufacturer Mitsubishi Fuso Truck & Bus to DaimlerChrysler and others. Following huge losses in the US market, Mitsubishi desperately needs cash to restructure its business.

Mitsubishi Motors, Japan's fourth largest vehicle manufacturer, is looking for ways to raise funds quickly. It is in discussions with DaimlerChrysler to reach an agreement to sell all or most of its 42% stake in Mitsubishi Fuso Truck to DaimlerChrysler and others for about Y100 billion. The company intends to sell a 22% stake in Fuso to its top shareholder, DaimlerChrysler, and a 20% holding to Mitsubishi Group companies early next year.

DaimlerChrysler is the world's biggest truck manufacturer and already owns 43% of Fuso, whose profitability has improved rapidly since it started cooperating with the German company. Both companies are currently developing new trucks and expanding the use of common parts. DaimlerChrysler could strengthen its position as a global truck manufacturer as its stake in Fuso could increase to as much as 65%.

Following a sharp decline in the US market, Mitsubishi Motors is desperately seeking cash to cover big losses. For the current year to March 2004, the company is expected to make a net loss of Y11 billion, reversing a previous forecast for a Y10 billion profit.

The market in the US has been turbulent over the past year, where not only have sales plunged, but the president of Mitsubishi's North American operations departed, 20% of the staff at its sales unit were made redundant and the expansion of its assembly plant in one state has been halted.

The financial losses in the US were triggered by an over reliance on easy financing deals to sell cars. Many customers were unable to start paying when the no payment periods ended, which led to problems at the company's credit arm.

Mitsubishi Motors should use the earnings from the share sale to improve its business and develop new vehicle models, particularly in Japan and the US.