Mitsubishi Motors in Japan, which suffered huge losses in the late 1990s, seriously considered whether it would continue to sell cars in Europe, according to Stefan Jacoby, president and chief executive officer of Mitsubishi Motor Sales Europe.

Such were its problems, some tough decisions had to be made but the decision to stay in Europe is starting to reap benefits.

A round of cost, overhead and headcount reductions has seen a swing in the company’s fortunes and, while sales in Europe are still around 10% down on 2001, there are some very positive signs, said Jacoby.

“We have not had a full model line up for the past year,” he said. “We have not had [the] Lancer [saloon, apart from low-volume sports Evo versions], for example, and the sales figures only show Western Europe and do not take account of gains we have been making in Eastern Europe.”

He added: “Europe is a key element for the company. Over the past year we have cut our losses in half and our strategy to be profitable and we have short and mid term plans in place to achieve this.”

In the short term Mitsubishi plans to sell 200,000 cars a year in west and east Europe achieving a 1% market share, largely through growth in eastern countries.

“Our mid-term strategy is based on three pillars: The renewal of the product range, optimisation of our distribution and our organisation,” said Jacoby.

“We plan to introduce 14 new models over the next five years in a wide range of segments, not so much in the mainstream but in niche segments and with cross-over vehicles, focusing on sport utilities, passenger cars and MPVs [minivans].”

Within two to three years he said Mitsubishi wanted to be closer to 300,000 vehicles a year in the region with an eventual target of up to 600,000.

“We will not be in the luxury segment. Galant will be our largest passenger car while we will not have a true sports car. Our sporty models will have to contain practicality with a sporty approach.”

New introductions start next year with the European version of the Outlander crossover estate/sport utility and the new Lancer based on the current model sold in Japan and the USA.

In 2004 Mitsubishi’s new compact car -– the Colt — goes into production at Born in the Netherlands. Again this will not be a classic B-segment car but a cross-over with a mini MPV. The Spacewagon successor, another MPV, will be more sporty next time around.

In 2005 there will be an additional version of the Colt, again a more sporty three-door, and this will be followed by redesigned Pajero, Galant and Lancer models.

“Our marketing will be much more focused on the needs of the customers and the markets,” added Jacoby.

Synergies with DaimlerChrysler, which has a 37.4% stake in Mitsubishi includes building the four-seat Smart model in the Netherlands and a 50/50 engine joint venture in Germany, MDC, with Mitsubishi development and DaimlerChrysler production techniques.

Jacoby also sees the new European block exemption rules as an opportunity rather than a threat. “I see it as very positive. You cannot protect things by regulation because this leads to an unhealthy and uneconomical situation. Distribution costs in Europe are still too high and I think we can reduce them by up to 5%.”

Mitsubishi currently has 2,950 dealers across Europe and Jacoby said: “while we might optimise them I do not see the need for any reduction – we need better coverage in some urban areas for example.”

The UK network will grow from 136 to 150 dealers by the end of 2003.

“I am not a friend of artificially rationalising our dealer network. We rely on it to build up loyalty among our customers. We will take the opportunity under new block exemption rules to harmonise and upgrade our dealers in terms of standards and contracts and this can only strengthen the network,” Jacoby said.