Allied Holdings subsidiary Allied Systems has reached an agreement in principle to renew its vehicle delivery agreement with Toyota Motor Sales USA for vehicles delivered in the United States but has lost about 30% of the business.
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The agreement will extend the contract to 31 March, 2007.
The agreement provides that Allied will continue to provide vehicle delivery services for Toyota in the United States at locations which generated approximately 60% of the company’s 2005 revenues associated with the Toyota account.
During the first quarter of 2006, Allied will cease performing vehicle delivery services at locations which generated approximately 32% of the company’s 2005 Toyota revenues.
The contract renewal allows for an increase in rates paid by Toyota from 1 February 2006 and continuing until March 31, 2007. The current fuel surcharge programme and payment terms remain in place until 31 March, 2007.
In a statement, Allied system said it did not anticipate there would be a material impact to its operating income as a result of the renewed agreement, as it expects the positive impact of the price increase to substantially offset the adverse impact of lost business.
The contract renewal does not affect business handled by Allied for Toyota in Canada, which is covered by a separate agreement.
