Japan's Mitsubishi Motors Corp. and Sweden's AB Volvo announced an alliance today that is expected to accelerate consolidation in Japan's once-mighty auto industry.

The deal calls for Volvo, Sweden's largest truckmaker, to assume a 5 percent stake in Mitsubishi Motors, the fourth-largest automobile manufacturer in Japan. Executives said Mitsubishi Motors will acquire 1 percent of Volvo this year and up to an additional 4 percent by the end of 2002.

Mitsubishi also announced that by the end of 2001, it plans to spin off its truck and bus manufacturing operations into a separate firm. Volvo will purchase a 20 percent stake in that new entity.

Mitsubishi Motors' share price surged in afternoon trading Friday before the Tokyo Stock Exchange suspended trading. Volvo's stock closed 0.9 percent lower in Stockholm trading.

Some analysts hailed the deal as a boon for both companies. For Volvo, the deal will provide production and marketing operations in Asia. For Mitsubishi, the arrangement means increased access to markets in Europe and the Americas and, most important, an immediate infusion of much-needed capital.

Several auto industry experts warned, however, that the agreement, because it applies only to truck and bus operations, leaves Mitsubishi Motors' biggest problems unresolved.

The truck and bus segment is by far the most profitable in Mitsubishi's overall operation. But that accounts for only 17 percent of the company's total sales, according to Noriaki Hirakata, an auto industry analyst for Morgan Stanley Dean Witter in Japan. Hirakata said today's deal did not persuade him to upgrade his bearish assessment of the company's stock.

"Today's announcement is a big plus for Mitsubishi's trucking operation, but that won't be enough for the company as a whole. Mitsubishi has a black hole in its passenger car division," Hirakata said. "Going forward, we are waiting for more announcements of alliances or restructuring there."

Indeed, some analysts interpreted today's announcement as bad news for the ailing Japanese manufacturer, because it seemed to indicate that Volvo was interested only in Mitsubishi's truck operations and is unwilling to lend support on the passenger car side. But Volvo executives said that they have not ruled out a broader relationship.

"The agreement to acquire 5 percent of Mitsubishi and the strategic alliance opens up possibilities for further cooperation with Mitsubishi," Volvo President and chief executive Leif Johansson said in a statement.

Today's announcement makes Mitsubishi the latest Japanese carmaker to seek financial and management assistance from a foreign competitor. In the opinion of many analysts, Japan's protracted economic slump has separated the nation's auto industry into two distinct camps of strong and weak players. The former includes Toyota and Honda. The later includes pretty much everyone else.

Over the past several years, Ford Motor Co. has boosted its stake in Mazda Motors Corp. Earlier this year, Renault SA of France took a 37 percent stake in Nissan Motor Co.

"The general view is that Toyota and Honda are just fine, but the other carmakers are all going to be in trouble unless they can strike deals with non-Japanese partners," said Koji Endo, an auto analyst with Schroeders Japan.

Special correspondent Akiko Kashiwagi in Tokyo contributed to this report.