Mitsubishi Motors’ Australian unit on Thursday played down speculation that its manufacturing operations in South Australia state are in danger of closing.
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A local spokesman told Dow Jones Newswires that Mitsubishi’s recent investment in plant equipment in Adelaide shows the group is committed to its local operations.
He reportedly said comments by Mitsubishi chief executive Rolf Eckrodt at this week’s Geneva motor show were blown out of context by some Australian newspaper reporters who attended the event.
“He basically said Australia’s part of a global review of Mitsubishi’s business, but that there was a commitment to manufacturing in Australia,” the local spokesman told Dow Jones.
The report said The Australian newspaper on Thursday quoted Eckrodt as saying the future of the Adelaide operations are “on the edge,” with its model plans and export strategy both under a cloud.
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By GlobalDataWhen pressed about the fate of Mitsubishi’s local unit, Eckrodt reportedly said plans were up in the air until after a meeting of the Japanese company’s shareholders.
“On April 30, we will announce our mid-term business plan and we will also elaborate on Australia,” Eckrodt was quoted as saying. “We cannot accept any loss-making operations,” he reportedly added.
Asked if the Australian operation is profitable, the local Mitsubishi spokesman told Dow Jones: “We have been profitable in previous years but at the moment things are obviously not easy.”
“Exchange rates are having an impact on the one hand and obviously sales revenue is a bit of an issue at the moment, because obviously in January and February we didn’t meet our sales targets as we would have liked.
“But at the same time we are still exporting vehicles; we shipped about 1,300 oversees last month,” he reportedly said.
Dow Jones noted that Australia’s $A17 billion car industry is dominated by local units of four overseas manufacturers: Mitsubishi, Ford, General Motors and Toyota.
The report added that, earlier on Thursday, Australian government treasurer Peter Costello urged Mitsubishi to keep its manufacturing operations in South Australia.
“No one would like to see Mitsubishi to close,” Costello reportedly said. “I would urge Mitsubishi to do whatever it can to keep its operations in Australia,” he told Australian Broadcasting Corp. radio, according to Dow Jones.
Mitsubishi Australia announced a $A230 million investment in R&D facilities for Australia last July. The move was seen as a vote of confidence in the South Australian operation and came about 18 months after Eckrodt made it clear the Adelaide factory had to remain profitable to survive Mitsubishi Motors’ then-current drive to reduce costs and recovery from a warranty and recall cover-up scandal in Japan.
Mitsubishi has since been hit by further defect cover-up scandals in Japan, police raids on its Tokyo headquarters, a Japanese lawsuit over a wheel shed by one of its trucks (which led to a recall in some markets) and severe financial losses due to bad loans made by its US finance arm.
The Australian operation, which makes large Magna/Diamante/Verada cars for its home market and export, particularly the US and Middle East, has also been hit by Mitsubishi US’s reported intention to build the next Diamante, currently bought from Australia, in its Illinois plant, basing it on the platform of the recently-launched US-only Galant. This would leave Mitsubishi Australia dependent on the Middle East only for the bulk of its export sales.
