Fleet News

Volkswagen set to move in as LDV partner

VOLKSWAGEN has emerged as the favourite to replace stricken Daewoo as the British specialist van maker's partner in developing a new range of light commercial vehicles and a deal could be signed before Christmas.

Following Daewoo's application for receivership in South Korea, LDV said this week the move would have no impact on its business. In a statement, the Birmingham-based company said: 'LDV remains financially secure with a robust business forecast. We are trading profitably, backed by a strong order book.'

This LDV said: 'LDV's long-term future is not dependent upon Daewoo. The LDV board continues its discussions to establish a new strategic alliance in order to agree distribution arrangements which will secure our long-term plans and deliver the Gemini new model programme.'

Fleet News understands that while LDV has been talking to a number of manufacturers, Volkswagen is the favourite following six months of talks. It is understood that the company hopes to sign a deal with Volkswagen this year.

An LDV spokesman said: 'We have not denied that Volkswagen is one of the companies we are talking to.' However, a Volkswagen spokesman in the UK said: 'We are not making any comment. It is pure speculation.'

LDV said this week work on the project was continuing to the timetable originally announced which would see new models joining the LDV range next year.

In 1998 LDV said Project Gemini would see a quadrupling of LDV's output to 80,000 units a year from its Birmingham factory. It would also see the plant transformed into a world class manufacturing centre, creating up to 2,000 extra jobs by 2005 and opening up new export markets.

LDV is expected to plough £160 million into the project, while Daewoo's cash investment was scheduled to be £25 million, matching the £25 million in regional Selective Assistance funding approved by the Department of Trade and Industry.

A deal is important for LDV as its seeks to modernise its vehicle line-up - currently Cub, Convoy and Pilot with a variety of body options. Production is presently limited to around 20,000 units a year and this year UK sales total 12,072 after 10 months compared with 11,148 over the same period last year.

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