Mitsubishi Motors Australia managing director Tom Phillips has presented his first business plan to his new DaimlerChrysler superiors in Japan, writes Mike Duffy.

He gave a crucial presentation to Mitsubishi Motors Corporation’s newly appointed German chief operating officer Rolf Eckrodt.

DaimlerChrysler hopes Eckrodt will do the same for the troubled Mitsubishi group as Carlos Ghosn – known as “le cost killer” – has done for Nissan.

That is to turn massive losses into handy profits and the promise of even greater return on funds to follow.

Mitsubishi Australia‘s plan is designed to illustrate how the record loss-making Down Under affiliate is well on the way to staging a dramatic turnaround in fiscal year 2001, following two years of record losses.

Nothing short of break-even this year with the promise of a black-ink result in 2002 will be sufficient to sustain the Australian company’s future as a local assembly operation.

In a bid to strengthen the company’s viability, Phillips hopes the numbers which underpin the business plan will convince MMC to award its Australian subsidiary one or even two additional models – possibly popular Chrysler vehicles with good sales potential in South East Asia – as well as Mitsubishi Sigma vehicles currently produced in Japan.

Mitsubishi Australia lost a record $A130 million ($US69 million) in 1999 and is expected to announce a $A190 million ($US101 million) loss for 2000 when it reports in March.

The car maker is already achieving the first signs of a strong comeback so far this year, sealing, on the eve of Phillips’ trip to Japan, a 1500 vehicle a year contract – worth $A50 million ($US26.5 million) – to supply rental car giant Budget.

The car maker is already achieving the first signs of a strong comeback so far this year

Phillips said that lucrative deal will be followed by other significant fleet contracts which will make easier the company’s task of achieving a minimum domestic sales volume this year of 30,000 units.

As soon as he returns to Australia, Phillips will be leading the company’s assault on the United States and Middle Eastern markets to grow exports to 30,000 cars a year.

These are the numbers which make up the foundation of the survival plan – plus an Aussie dollar exchange base rate of 58 yen.

Since the plan was penned the dollar has recovered to around the 64 yen mark, putting the company in good shape to make a profit on CBU (completely built up) cars and commercials imported from Japan along with components for its locally produced Magna/Verada/Diamante line-up.

Before leaving Adelaide for Tokyo on Sunday, Phillips said he was confident MMC would see the value of maintaining the Australian assembly and engine plants.

“MMC did not inject $A172 million ($US91 million) in new investment late last year to close [us] down this year,” he said.

“This visit is to present our financial results for last year, together with our targets for this year, 2002 and beyond.

“On the basis of these numbers, MMC will decide whether Mitsubishi Australia is to be given a second or even third car to produce.”

He said Mitsubishi Australia’s assembly facility was the ideal size to produce two or three different models on the same line at the same time using current single-shift working.

However, Mitsubishi Australia hosted two other DaimlerChrysler executive directors in December.

They are believed to have asked how long it would take to introduce a second shift to boost production significantly – a question which generated widespread optimism at the Australian facility.

Mitsubishi Australia is deeply aware that the problems facing DaimlerChrysler in the United States could frustrate an early decision on its own future.

Analysts believe that to secure Chrysler vehicles right now could be the kiss of death for Mitsubishi Australia’s long-term viability – if there is any move to split the US-German car giant into its two base companies, as a precursor to a sell-off of Chrysler’s loss-making operations.

Phillips is not expecting anything definitive in an announcement on MMC’s future that Eckrodt is expected to make some time in March or April.

The former Toyota Australia sales and marketing director is only too aware that any plans the top D-C man at MMC may harbour must first be approved in Stuttgart.

And as Mercedes-Benz continues to make record profits which Chrysler is immediately losng, head office could have more pressing business on its agenda.

The timing of D-C’s 34 percent buy-in of MMC – a stake which, under Japanese law, gives it day-to-day control – is mystifying those who understand fully the complexity of the problems plaguing the car giant.

Phillips made further submissions to MMC executives on Tuesday before returning to Australia on Wednesday to carry on the tough task of steering the troubled company into calmer waters.

Author Mike Duffy is the motoring editor of The Advertiser and the Sunday Mail, in Adelaide, South Australia.

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