Mitsubishi Motors Australia's chances of surviving as a local car maker have been rated as "quite good" by the boss of its Japanese parent, writes Mike Duffy.

But Mitsubishi Motors Corp. Chief Operating Officer Rolf Eckrodt warned that a profit for the year ending December 31 - following record losses in 2000 - was "a strict imperative" for the Adelaide manufacturing operation to have a future.

"For a non-profitable arm of our company to be allowed to continue, would not be acceptable to our shareholders," Eckrodt said.

MMC is involved in its own struggle to return to profit following massive losses caused, in part, by the former management ignoring tens of thousands of warranty claims in Japan.

Eckrodt told a J. D. Powers symposium for auto company CEOs during last week's Tokyo Motor Show that MMC faced a long battle to win back lost reputation and lost customers.

In this environment, it is hardly surprising that the man who will eventually have the task of deciding the Australian company's future, is both optimistic and cautious.

"If Mitsubishi Australia is not successful in turning the company around, then we have a problem.

"But if you ask me to assess the company's chances of making it, I'd say quite good.

"So the challenge is there for the local management - and I must say they are responding to that challenge."

Mitsubishi Motors Australia Ltd lost a record $A186 million (about $US94 million) last year following a $A130 million deficit in 1999.

MMAL Managing Director Tom Phillips has budgeted for a turnaround in the fortunes of the company and to deliver to its parent a $A10 million profit for 2001.

If Mitsubishi can turn in a profit, it will be a milestone turnaround in the car maker's affairs and would earn Phillips - a former sales and marketing director with Toyota Australia - widespread respect throughout the industry.

Phillips says Mitsubishi Australia is still on track to record a profit in his first year as MD. However, he will have to use every one of his skills as a marketer to boost domestic sales in the final two months of the year.

General Motors' subsidiary Holden, the clear market leader Down Under, is the only other Australian car producer with a chance of booking a profit for 2001. Ford Australia boss Geoff Polites says his company will lose money.

Toyota Australia's senior executive vice president John Conomos says currency losses have robbed the company of a chance of a positive result.

Eckrodt said MMC had an obligation to help its Australian company build on its recovery.

"If Australia is to survive we must create more export opportunities - that is one of the critical elements for Mitsubishi Australia to continue as a local car maker," he said.

"That is what we are checking on right now. Australia is an important market for us and we want to be a strong player there."

Eckrodt said MMC had put on hold discussions with the Australian government about the future of its local subsidiary until after the federal election - to be held in early November.

"We have had very fruitful discussions with the Prime Minister John Howard and the Opposition Leader. So we have a clear understanding of the situation, independent of the results of the election.

"As soon as the election is decided we will re-open discussions with the new government and then do our business case as soon as possible.

"Our decision on the future of Mitsubishi Australia could be this year; it could be a little bit later in respect of the factory."

Neither Eckrodt nor MMC's senior vice president in charge of international car operations, Steve Torok, would say what form of assistance MMC is looking for from the Australian government.

"I wouldn't say we have asked for anything specific," Torok said.

"What we have asked for is that an environment conducive to profitable industrial production be maintained.

"Now, there are lots of different ways to get there."

To view related research reports, please follow the links below:-

Light vehicle niche markets 2000

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

To view related research reports, please follow the links below:-

Light vehicle niche markets 2000

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