Motors Corp. has until March 31 to decide whether it wants to buy out Volvo Car's 50% interest in NedCar BV, a Dutch assembly joint venture that builds cars for both companies.
Under the terms of the JV, if the ownership of either partner changes during the life of the contract, the other partner has the right to a call option on the remaining 50% of the stock at a fixed priced. Ingmar Hesslefors, a spokesman for Volvo Cars says that there have been no talks between the two companies for the last fortnight, but he believes's board is considering such action in Tokyo.
Mr. Hesslefors says Volvo, now underMotor Co. ownership, would like to continue its cooperation with Mitsubishi even though it will discontinue sharing a platform with the Japanese carmaker at the end of 2004, when the current NedCar deal is set to expire. The next-generation S/V 40 will be built on a new platform using Ford technology. But the Volvo spokesman says the two companies could still share the plant, finding synergies in back office operations, sharing the paint shop, and in joint procurement of components.
It is unclear how the buy-out option would be affected by a DaimlerChrysler AG acquisition of a controlling stake (at least 33.4%) in MMC, which reportedly could happen as early as this week. DC Chief Executive Juergen Schrempp and MMC President Katsuhiko Kawasoe were expected to hold weekend talks aimed at sealing the deal.
A DC acquisition of MMC could make it easier for MMC to take over NedCar. DC is strapped for capacity in Europe and potentially could make use of the plant, whilehas too much and may prefer to move Volvo production to one of its own facilities.