JV Truck - Vario "Buh Bye"

TOKYO, June 17 Reuters repeated a story that appeared in the newspaper, Nihon Keizai Shimbun, DaimlerChrysler AG will stop making its Vario small trucks as early as next year and consolidate small truck operations with partner Mitsubishi Motors Corp <7211.T> to combat weak demand worldwide, a Japanese daily reported on Tuesday.

A Mitsubishi spokeswoman said it and DaimlerChrysler were discussing options for cooperation in trucks but could not comment further.

The report in the paper helped push up shares in Japan's fourth-largest automaker by 8.62 percent in morning trade to 353 yen, outperforming other domestic auto stocks and a 1.61 percent rise in the Nikkei benchmark average.

Mitsubishi, which unveils a new model of the two-tonne Canter truck on Tuesday, plans to spin off its commercial vehicle division as early as this year and make it a joint venture to be 30 percent owned by DaimlerChrysler, the paper said.

DaimlerChrysler, which has a 37 percent stake in Mitsubishi, will focus on production of larger commercial vehicles and sell Mitsubishi's under the Japanese brand, the paper said. No one at DaimlerChrysler was immediately available to comment.

DaimlerChrysler hopes to cut development costs in its small truck division, which only produced an annual 16,000 units of the Vario model, compared with Mitsubishi's 80,000 unit Canter model output, the paper said.

The German-U.S. auto group is working to strengthen its influence over Mitsubishi's truck division after the companies extended their partnership in the passenger car business to commercial vehicles last year.

DaimlerChrysler began selling small to medium-sized Mitsubishi trucks in Europe and South Africa late last year and is due to begin using Mitsubishi's two-litre diesel engines in its large vans by 2005, the paper said.

DaimlerChrysler in turn will supply its 20-litre engine for use in Mitsubishi's large trucks as part of its plan to efficiently utilise each other's resources, the report said.