Skip navigation
Newswire

UPDATE 1-DaimlerChrysler extends trucks presence in Asia

(Adds analyst, company comment, share price, background)

By Madeline Chambers, European Auto Correspondent

FRANKFURT, Sept 20 (Reuters) - DaimlerChrysler AG said on Friday it would spend over a billion euros to take direct stakes in two of its partners' trucks units, boosting its presence in the important Asian commercial vehicles market.

The world's biggest truckmaker said it would take a 43 percent stake in Japanese partner's Mitsubishi Motors Corp's spun-off Fuso trucks unit for about 760 million euros ($747 million) early next year.

It also said it would exercise an option to buy 50 percent of the spun-off trucks unit of South Korea's Hyundai Motor Co by the end of the year for roughly 400 million euros. The deals represent a further step in the German group's strategy of boosting its presence in the fast-growing Asian trucks market, which accounts for nearly half of all global commercial vehicles sales, and will enable it to cut costs in expensive truck development and by sharing components. "Through our expansion in Asia we can execute our strategy of 'turning scale into profit' through cost advantages derived from higher volumes," DaimlerChrysler trucks head Eckhard Cordes said in a statement.

DaimlerChrysler shares were down 0.1 percent soon after the open at 0707 GMT, roughly in line with the DJ Stoxx European auto index , down 0.3 percent.

"In terms of financial impact for the company it is not that big of a deal -- they are spending about 1.1 billion in total. But strategically it solves a problem for DaimlerChrysler in Asia," said JP Morgan auto analyst Himanshu Patel.

DaimlerChrysler already owns 37 percent of Mitsubishi, Japan's number four carmaker, and holds a roughly 10 percent minority stake in Hyundai with whom it founded a diesel truck engines joint venture last year.

GERMANS PROMOTED

Fuso currently has 17,000 employees and in 2001 it had revenues of 5.9 billion euros.

Mitsubishi will hold 42 percent of the new company, which will be called Mitsubishi Fuso Truck and Bus Corporation, while other Mitsubishi companies will pay 265 million euros for a 15 percent stake.

DaimlerChrysler executive Wilfried Porth will head the new company and the German group said it would name a further three of the nine board members.

Some analysts say investors in Mitsubishi could lose out because the division is widely considered the jewel in its crown despite being battered by a decade-long slump in Japanese domestic truck demand.

Hyndai's truck operations are smaller, with 5,000 employees, and 2001 revenues of 1.2 billion euros.

DCX will name four board members, including Chief Operating Officer and Chief Financial Officer at the new Daimler Hyundai Truck Corporation.

Currently, the two businesses will be run separately, but some experts have speculated that ultimately, DaimlerChrysler may merge them.

(Additional reporting by Michael Steen)