Mitsubishi Motors To Suspend US Output Capacity Increase

TOKYO October 30, 2003; Yoshio Takahashi writing for Dow Jones reported that Mitsubishi Motors Corp. has decided to suspend a plan to increase production capacity in the U.S. as the Japanese automaker focuses on restoring sales volumes in the world's largest automarket.

Mitsubishi Motors said today that it will suspend an increase in capacity at a plant in Illinois, its only assembly plant in North America, until "market conditions and product needs change."

Mitsubishi Motors' sales in the U.S. are slumping, while rival automakers such as Toyota Motor Corp. are strengthening market share.

Mitsubishi said in March that it planned to increase output capacity at the Illinois plant to 300,000 vehicles from 240,000 by the autumn of 2004. It decided four months after the announcement to postpone the completion of the output increase by six months from the initial plan.

The fourth biggest Japanese automaker in terms of sales said it will focus on strengthening the brand and launching successful new models in the U.S.

At the Illinois plant, the DaimlerChrysler AG affiliate produces the Mitsubishi Eclipse, Eclipse Spyder, Galant, Endeavor, Chrysler Sebring and Dodge Stratus.

In July, the Japanese automaker revised down its earnings outlook for the first half to September and full year to March, citing a sharp decline in sales and a growing problem with bad car loans in the U.S. It expects a net loss of Y80 billion for the six months to September due to tough price competition and a planned Y50 billion write-down for bad car loans in the U.S.

The automaker also slashed its unit sales target for the North American market for this fiscal year to 340,000 vehicles from a previous target of 370,000. It sold 347,000 vehicles last fiscal year.

Its vehicle sales volume in the U.S. dropped 22% for the first nine months of the year.