Increasing Control
Mitsubishi's difficulties contributed to a sharp fall in the DaimlerChrysler group's profits, and following the recall of a further 1.5 million cars in February 2001, including almost a million in the U.S., the German parent moved quickly to restructure; approximately 10,000 Mitsubishi employees would be axed and one of its four assembly plants would be closed.
The following month, DaimlerChrysler approached Volvo about acquiring the Swedish automaker's 3.3 percent stake in Mitsubishi. Volvo had planned on forming a joint venture with MMC for bus and truck manufacturing as part of a deal originally negotiated in 1999, until the involvement of DaimlerChrysler, a rival in the commercial vehicle marketplace, led Volvo to ultimately withdraw. The €760 million sale was concluded in April 2001, taking DCX's share to 37.3 percent.
Olivier Boulay, then the head of DaimlerChrysler's Japanese design studio in Yokohama, was recruited by Mitsubishi in May 2001. Answering directly to Rolf Eckrodt, the DCX-appointed Chief Operating Officer, Boulay's appointment was part of the "Turnaround Plan" initiated by Eckrodt and new Chief Executive Takashi Sonobe, where Mitsubishi tried to move away from an engineering-led approach to development. Despite the new initiatives and increased investment, Mitsubishi Motors announced a revised profit forecast in April 2001, and their downward projections were confirmed in May when the company reported a net loss for the year of ¥278 billion.
During 2001 and 2002 DaimlerChrysler and Mitsubishi began to co-operate more closely on longer-term ventures. A €244 million plant would be built at Kölleda in Germany to manufacture engines for the new Z-car platform, while in concert with Hyundai they established the Global Engine Manufacturing Alliance, a joint venture with an annual capacity of two million powerplants in five factories across the globe. There was also extensive platform sharing, cross-supply agreements, and manufacturing subcontracts.
Read more about this topic: Daimler Chrysler-Mitsubishi Alliance
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