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Thursday, 8 March, 2001, 21:18 GMT
DaimlerChrysler targets bigger slice of Mitsubishi
Juergen Schrempp, chairman of the management board of DaimlerChrysler
Jurgen Schrempp is trying to build global truck domination
By BBC News Online's North America business reporter, David Schepp

DaimlerChrysler has reportedly approached Volvo about acquiring the Swedish truck maker's stake in Mitsubishi Motors Corp (MMC), possibly securing the Japanese car maker as a partner in trucks as well as cars.

DaimlerChrysler is making the move to further broaden its position as the world's largest truck maker, while Volvo seeks to end its current agreement with MMC.

The move would increase DaimlerChrysler's ownership in MMC to 37% from its current 34%.

World domination

"DaimlerChrysler is in the box seat in terms of [Mitsubishi] trucks," says Adam Collins, an analyst at Schroder Salomon Smith Barney.

It is a complicated deal that could possibly result in Volvo's teaming up with Nissan Diesel to manufacture trucks.

Volvo could be seeking to end its agreement with MMC following DaimlerChrysler's 34% acquisition last year.

Volvo had planned to invest $335 million later this year in a joint venture with MMC for bus and truck activities in which Volvo's equity stake would be 20%, based on an agreement dating from October 1999.

Volvo unease

But Volvo is now uneasy about that deal following DaimlerChrysler's spring purchase.

Volvo's jitters surround the possibility that DaimlerChrysler could then assert its control over the Volvo-MMC project if it exercises its right to purchase MMC outright after 3 years.

The acquisition of MMC would help DaimlerChrysler make inroads into the Asian truck market.

As part of that strategy, DaimlerChrysler last year bought a 9% stake in South Korea's Hyundai.

Further acquisition of MMC might cause DaimlerChrysler to reconsider its 50-50 joint venture with Hyundai to manufacture trucks and buses.

Keeping mum

Analysts have said the deal is merely a matter of time and price.

Despite these murmurings, DaimlerChrysler has refused to comment on the possibility of the deal.

DaimlerChrysler Chief Executive Juergen Schrempp told reporters last week that his company was standing pat.

"If there is a desire to make changes on the part of Volvo, we would of course talk about it," he said.

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See also:

26 Feb 01 | Business
Daimler's Chrysler mistakes
11 Jan 01 | Business
DaimlerChrysler's cash flow problem
31 Jan 01 | Business
US motor industry applies brakes
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