Mitsubishi Motors to announce restructuring

(story to be published in tomorrow’s issue, March 29)

Mitsubishi Motors Corp was to announce restructuring steps yesterday, a day after joining forces with German-U.S. giant DaimlerChrysler to form the world’s third-largest automaking group, an industry source said. The measures were not expected to include any significant job cuts and were unveiled at a news conference in Tokyo on its capital alliance with DaimlerChrsyler AG. Mitsubishi Motors and DaimlerChrysler announced on Monday that the German-U.S. automotive giant would pay $2.1 billion for a 34 percent minority-controlling stake in the ailing Japanese automaker. DaimlerChrysler and Mitsubishi together make 6.5 million vehicles annually and the combination catapults them past Toyota Motor Corp and Volkswagen AG into the third-place spot among global automotive groups, trailing only U.S. giants General Motors Corp and Ford Motor. The deal substantially expands DaimlerChrysler’s presence in Asia and will help it develop its small car strategy, as well as providing financial help to heavily indebted Mitsubishi Motors, Japan’s fourth-largest automaker. Mitsubishi announced a three-year restructuring plan in 1998 to cut debt, trim payrolls and reorganise production lines. The plan has been updated several times since, most recently last December when Mitsubishi said it aimed to cut group interest bearing debt to one trillion yen ($9.38 billion) from 1.75 trillion yen over the next three years. Analysts have said in the past that Mitsubishi’s debt reduction target is as much as it could do without a foreign partner with deep pockets to help. Others have criticised the company for not moving aggressively enough to reduce excess capacity. Mitsubishi Motors, which managed to turn around a deficit in 1998 thanks to restructuring, expects to save money by sharing development, production and distribution costs worldwide with DaimlerChrysler. Mitsubishi President Katsuhiko Kawasoe said said in Frankfurt on Monday that he planned no further job losses as part of the DaimlerChrysler alliance. The deal is a major coup for DaimlerChrysler chief Juergen Schrempp, 16 months after spearheading the merger of Germany’s Daimler-Benz AG and Chrysler Corp of the United States. It will allow his company to tap a widely expected surge in demand for cars in Asia. Reuters