Volvo has gained control of the AutoNova plant in Sweden where it builds the C70 coupe (above) and cabrioletVolvo Car Corp. is undoing its two joint manufacturing ventures in Europe by taking a controlling stake in one and agreeing to sell all its shares in the other.
The deals put Volvo in control of the AutoNova plant in Uddevalla, Sweden, and will leave Mitsubishi Motors with ownership of the NedCar joint venture in Born, the Netherlands.
Even though it has agreed to sell its 50 percent shareholding in the NedCar assembly plant to Mitsubishi, Volvo has decided to buy more capacity at the plant. Volvo will raise its output at NedCar from 150,000 units in 1999 to 160,000 this year because of increasing demand for the S40 sedan and V40 wagon in North America.
Although Volvo's stake in the plant will end when the deal is completed this summer, Volvo and Mitsubishi will continue making cars at Born until 2004 under terms of their original agreement. After that, Volvo will make the next-generation S40 and V40 utilizing Ford technology and platforms - although no new production location has yet been announced. Mitsubishi makes the Carisma and Space Star at the plant.
Under terms of their joint venture at NedCar, which began in 1991, either party was given the freedom to exercise a call option on the shares if there was a change in ownership of the other. When Ford bought Volvo in 1999, Mitsubishi had a year to exercise its option to buy Volvo's shares in NedCar.
That option was exercised shortly after DaimlerChrysler took a 34 percent stake in Mitsubishi last month.
With regard to the AutoNova joint venture, Volvo has also ended a disagreement with TWR Group Ltd., its British partner at the Uddevalla, factory where the Volvo C70 coupe and cabriolet models are made. The companies jointly made the two cars at AutoNova.
Volvo named Lars-Goran Möberg as director of AutoNova. He succeeds Mike Flewitt.
Production ceased at Uddevalla for several weeks in March as a result of a dispute between Volvo and Tom Walkinshaw, TWR owner.
Under terms of the agreement, Volvo has taken control by increasing its stake in the factory to 75 percent. TWR will have no board representation and will sell the remaining 25 percent of its stake to Volvo in 2003.
The two companies had been in a dispute about accumulated losses and overall ownership.
At NedCar, Volvo has begun manufacturing what it is calling Phase II of the S40 and V40 - mid-life freshenings of the small Volvo range. The redesigned cars will feature as standard several Volvo safety features including the WHIPS whiplash protection system, dual stage airbags and side curtain airbags.
The cars will also get two new diesel engines, a five-speed automatic transmission and new comfort and handling features.
Reuters News Service contributed