Mitsubishi Motors May Raise U.S. Output by Up to 30%

March 2, 2005; Naoko Fujimura writing for Bloomberg reported that Mitsubishi Motors Corp., which is aiming to release two new models this year to stem its U.S. sales decline, said it is aiming to increase production in Illinois factory by up to 30 percent.

Mitsubishi Motors, Japan's fifth-largest carmaker, said it can make up to 130,000 cars a year in Normal, Illinois, compared with its current output of 100,000 units, said President Osamu Masuko, at an interview in Tokyo.

Mitsubishi Motors, Japan's sole unprofitable carmaker, is using the 540 billion yen ($5.16 billion) of financial aid from shareholders and banks to pare debt, develop new models and reverse sales slumps in the U.S. and at home. The carmaker will release the Eclipse coupe in July and the Raider pickup trucks in September in the U.S., the world's largest vehicle market.

``Our first goal is to operate our Illinois plant at full capacity,'' said Masuko, 56, without saying when he expects to reach that goal. ``We aim to rebuild our U.S. operations by ourselves and don't plan to sell our plant, even in the future.''

Japan's fifth-largest automaker expects North American operating profit of 8 billion yen in the year ending March 2007. The company plans to release the Eclipse coupes in July and Raider pickup trucks in September, Masuko said.

Mitsubishi Motors' shares rose 1.4 percent to 143 yen at the 11 a.m. trading pause in Tokyo, before Masuko's comments were published.

U.S. Sales

The maker of the Colt compact cars and Pajero sport-utility vehicles expects to sell 184,000 vehicles in North America for the year ending March 2006, 8.2 percent more than the current year ending March.

The U.S. unit plans to start exporting 15,000 Galant sedans annually in June 2006 to Eastern Europe and the Middle East from Illinois, Masuko said. Mitsubishi Motors will make the Eclipse in Illinois.

Mitsubishi Motors' sales in Japan fell 30 percent last month. The carmaker may sell 220,000 vehicles in the year ending March, 39 percent fewer than last year.

``I'm confident to meet this target,'' Masuko said.

The carmaker's brand image has suffered after former executives were found to have covered up production defects for a second time since 2000, leading to the recall of more than 200,000 cars in Japan last year.

In the U.S., the problems began in 2002 with a surge in loan defaults by customers. That was made worse by the carmaker's slower pace of releasing new models and a decline in advertising spending.

Mitsubishi Motors is forecasting a record 472 billion yen loss in the year ending March 31, compared with a loss of 215.4 billion yen last year.

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