Mitsubishi Motors is set to announce the closure of its Pajero SUV plant in Sakahogi, in Gifu Prefecture Japan, early next week in response to falling demand, according to local reports citing unnamed sources with knowledge of the matter.

The plant is operated by MMC’s Pajero Manufacturing Company subsidiary and also makes the Outlander SUV and Delica van.

The reports suggest the company will close the plant in 2023 with its 900 workers reassigned to other factories in the country.

Pajero production is expected to cease in 2021.

It will be Mitsubishi’s first plant closure in Japan since it pulled the plug on the Ooe factory in Aichi Prefecture in 2001.

The Pajero Manufacturing facility has a production capacity of 130,000 units per year but output was less than half that in the last fiscal year.

Mitsubishi Motors is expected to make a formal announcement on the closure on Monday 27 July, during the presentation of a new medium term business plan aimed at readjusting its operations to match global vehicle demand.

MMC is understood to be looking to cut fixed costs by around JPY100bn (US$933m) following a 31% drop in global vehicle production to 391,000 units in the first five months of 2020. 

The automaker was struggling with falling volume well before the COVID-19 crisis with sales affected in recent years by the fuel economy cover up scandal that erupted in 2016.

Global output in the last fiscal year, ended 31 March 2020, was down by 7.4% at 1,337,399 units.

As part of the Renault-Nissan-Mitsubishi alliance, the automaker is increasingly looking at opportunities to cut costs by sharing production capacity with its partners both in Japan and overseas.