Mitsubishi Motors is to shut its car factory in Australia, a move that will not come as an unentirely unexpected shock ‘down under’.
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Reuters, citing an earlier Bloomberg News report, said on Monday the move that would end years of speculation as the plant utilisation rate dwindled to 30%.
Mitsubishi Australia was once an export hub for locally developed front-drive Toyota Camry-sized (and rivalling) mid-size cars with I4 and V6 engines called a variety of names (mainly Magna locally) which, from the early 1990s, were exported throughout the Asia/Pacific, to the UK and, in left-hand drive form, to Europe, North America and the Middle East.
Most of the export business wound down earlier this decade after Mitsubishi in the US developed an in-house replacement for the cars imported from Australia; the new US model eventually was also built down under.
Reuters said the Japanese automaker had been studying what to do with the unprofitable Adelaide, South Australia state, factory, but said on Monday nothing had been decided – it is due to unveil a new midterm business plan in March.
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By GlobalDataCiting three unnamed company officials, Bloomberg had said the timing of the closure had not yet been decided while [usually well informed] Japanese business daily Nikkei said the factory, which builds the large 380 sedan [a derivative of e US-built model], could halt production as early as March.
Mitsubishi Motors built just over 10,000 cars at the South Australian factory last year, against a capacity of 30,000 vehicles a year, Reuters said.
The news agency noted that Australian and other media have repeatedly reported over the past few years the imminent closure of the factory as Mitsubishi Motors sought to return to profitability. The government has granted Mitsubishi Motors more than A$100 million this decade to help with its restructuring.
The company has previously closed its engine factory there.
Reuters said Mitsubishi Motors employs more than 1,100 workers in Australia, including its sales units, but locally made vehicles now make up a shrinking share of sales in Australia as a stronger currency makes imports cheaper. Tariffs on imported vehicles are due to be halved in 2010 to 5% from 10%, giving automakers even less reason to build in Australia.
Mitsubishi closed its CKD kit assembly plant in neighbouring New Zealand in 1998 after a government reduction of import tariffs made the operation unprofitable. It now serves that market with fully-imported vehicles, mostly from Japan and Australia.
Reuters added that the Australian dollar’s recent rise has also hit Toyota, General Motors’ Holden, and Ford – the three other carmakers in Australia – which export a chunk of their vehicles [Holden sends left-hookers to the Middle East and the US; Toyota a large no. of LHD Camrys to the Middle East].
Ford late last year announced the closure of an engine plant in favour of imports, following Mitsubishi Motors’ lead a few years earlier, the news agency added.
Tellingly, local media recently quoted a senior Japan-based Toyota executive as refusing to give any commitment to expand Australian Camry production to include the hybrid version, hinting that it was cheaper to build it elsewhere in the Asia-Pacific region. Toyota has a Camry plant in China and also assembles the Prius hybrid there.
