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DaimlerChrysler/Hyundai Deal Puts Pressure on Mitsubishi/Volvo

June 27, 2000

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Mitsubishi Motors continues to insist that its truck union with Volvo is not in jeopardy, but DaimlerChrysler's recent announcment that it will partner with Hyundai has reportedly increased pressure on its fragile three-way relationship.

Mitsubishi and Volvo had already signed their deal when DaimlerChrysler agreed to buy 34% of the Japanese auto and truck maker early this year. Plans call for Mitsubishi to spin off its truck business and Volvo will own 20% of the new company. DaimlerChrysler, which has veto power over Mitsubishi board decisions, has said it won't stand in the way.
But according to Reuters news service, industry analysts don't think it will happen. There were conflicts of interests before, and the DaimlerChrysler/Hyundai pact adds more. DaimlerChrysler will acquire a 10% stake in Hyundai and the two companies will form a 50/50 joint venture to build trucks at Hyundai's South Korea plant.
Mitsubishi has supplied truck transmission technology to Hyundai in the past. It also builds a vehicle based on Mitsubishi's Canter truck, which belongs to the truck operations to be shared with Volvo. On the car side, Hyundai will join DaimlerChrysler and Mitsubishi in developing a compact auto for global markets.
Mitsubishi President Katsuhiko Kawasoe recently told reporters that they were informed of the DaimlerChrysler/Mitsubishi deal in advance and that it doesn't change anything. "DaimlerChrysler will be our competitor in trucks," he said.

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