Mitsubishi Motors Corporation chief Rolf Eckrodt is to visit Australia for a second meeting with Prime Minister John Howard in the lead-up to a crucial decision on the Japanese company’s local affiliate, writes Mike Duffy.

The MMC chief operating officer, speaking exclusively to at the Frankfurt Motor show, revealed that a final decision on the next generation Magna – to be built from 2005 – would be made within a month.

“I don’t want to speculate on Australia’s chances (of surviving as a manufacturer),” Eckrodt said. “But it doesn’t look so bad – and that means a lot.”

He confirmed MMC was looking at additional products to build on the Adelaide assembly line to boost annual output.

“Australia is a very important market,” he said. “We have just designed a new car for Australia and we want to export to strengthen [the plant] in respect of volume.

“Currently, it’s a small operation and normally it doesn’t make much sense to run a business based on the volume they are currently doing. So we have to design the conditions to increase volume. And there is a chance.

“We are looking for opportunities to find additional products for this factory. Otherwise it will struggle all the time with 40,000 or so units [per year].”

Eckrodt recently signed off a facelifted version of the current Australian-built Magna, which is also exported to the USA (as the Diamante) and, from last month, the Middle East. The $A70 million investment in the facelifted model followed an earlier meeting with PM Howard a month ago.

“The real business case to make Australia successful in the long term will be confirmed by the end of September,” Eckrodt said.

“We are examining the business case. I met the Prime Minister in Tokyo and we’ll meet again at the end of September.”

Eckrodt added that the optimum annual production for a profitable assembly plant was 200,000 units.

“That’s the golden rule in the automotive industry. That’s normal, and then it comes to local conditions, special conditions, subsidies, things like this,” he said.

Asked if a second car could be produced on the Magna line, he said: “It’s possible. There is no concrete plan.”

Eckrodt delivered Mitsubishi Australia’s managing director Tom Phillips and his management team a strong vote of confidence.

“The management in Australia is OK. Their only problem is volume. They are fighting hard. They are very good. Very good. I have to give that management a big compliment.”

Eckrodt said Tokyo-based MMC would return a break-even result in the year ending March 2002 following massive losses sparked by the vehicle fault rectification scandal.

The former management was caught hiding tens of thousands of customer complaints – a shock finding which caused sales to nosedive.

The return to profit of the parent company will increase Mitsubishi Australia’s chances of new investment for new products.


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Automotive regional report: Asia

The world’s car manufacturers: A financial and operating review (download)