Mitsubishi And DaimlerChrysler to Build Minicar

TOKYO, July 8, 2003; Reuters reported that Japan's fourth-biggest carmaker, Mitsubishi Motors Corp, and its parent DaimlerChrysler AG will jointly develop a minicar for sale in Japan and Europe by 2006, the Nihon Keizai Shimbun reported on Tuesday.

The newspaper said the two carmakers plan to use Mitsubishi's 660 cc minicar "Minica" as a prototype in developing a fuel-efficient new model.

The Japanese automaker said it had no such plans at present.

"We are looking into various areas to increase the positive effects of our alliance with DaimlerChrysler," it said in a statement. "However, there are currently no plans to jointly develop and produce a minicar with DaimlerChrysler."

Mitsubishi Motors shares gained 5.21 percent to 303 yen by the end of morning trade, outperforming a 1.96 percent rise in the Nikkei stock average.

In an attempt to reduce costs, the two firms have already jointly developed Mitsubishi's subcompact Colt, on sale in Japan since November. The model, which has an engine displacement of 1.3 to 1.5 litres, will be sold in Europe starting next year.

The Nihon Keizai said DaimlerChrysler and Mitsubishi will each manufacture car bodies for their respective markets, using engines provided by Mitsubishi. The total development cost is estimated at 30-50 billion yen ($254-423 million), it said.

The group aims to sell 5,000 units a month in Europe and Japan. The car will be sold for about one million yen ($8,500).

Minicars are currently sold mostly in Japan, but are likely to be accepted in European markets due to their fuel efficiency and low maintenance costs.

The vehicles are 20-30 percent more fuel efficient than subcompact cars with an engine displacement of 1,300 cc, while emitting less carbon dioxide.

Starting in 2008, European carmakers will be required to reduce their passenger cars' carbon dioxide emissions. ($1=118.10 yen)