Mitsubishi may close Oz plant

Mitsubishi Motors Corp, Japan's fastest-growing car exporter, will shut a factory in Australia after the plant's models failed to attract buyers, said three company officials who declined to be named.

The carmaker will still meet its profit goal of 20 billion yen ($188 million) for the year ending March 31, even with the cost of the plant closure, said the people, who declined to be named before a public announcement. The timing of the closure has not yet been decided, the people said.

The Australian factory in the southern city of Adelaide uses only a third of its production capacity.

"This is a rational decision since the carmaker can meet demand with imports from Japan," said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co in Tokyo. "It's also good timing since the Australian economy is doing very well and people can find other jobs."

Mitsubishi Motors rose 2.8 percent to 182 yen at the 3 pm close on the Tokyo Stock Exchange.

"We're considering the mid- and long-term plans for our Australian business, but nothing has been decided," the Tokyo-based company said.

Slumping production

Production at the plant has slumped to an annual 10,744 vehicles from 59,000 vehicles over ten years as the Australian government has reduced tariffs for imported cars. In July, Ford Motor Co said it would close a car engine factory in Victoria state.

Sales of Mitsubishi Motors-brand vehicles in the country rose 21 percent to about 65,400 units last year, on demand for imported models including the Outlander SUV. To stem the slide in sales of locally built models, Mitsubishi Motors in 2005 introduced the 380 sedan, its first new Australian-built car in nine years. The model failed to win customers.

"They didn't see the high cost of petrol and people have just moved away from large vehicles," said John Camillo, state secretary of the South Australian branch of the Australian Manufacturing Workers Union in Adelaide, which represents car workers. "If the situation is that Mitsubishi has pulled the pin, our main aim is to see that these people get their entitlements."

Mitsubishi Motors has 1,140 employees in Australia, including sales units, according to its latest annual report. The company does not break out the number of workers at the factory. The company built 1.41 million vehicles worldwide in 2007.

Mitsubishi Motors is preparing to open a factory in Russia and in December the government cut import duties for car parts for the company. The carmaker's sales in Russia topped 100,000 units last year, accounting for a third of its total European sales.

Mitsubishi Motors almost collapsed four years ago after it recalled more than 2 million vehicles and admitted covering up defects. Losses totaled 782 billion yen in the three years ended March 2005, forcing the company to get about 780 billion yen from shareholders and investors in cash and debt waivers in two bailouts in 2004 and 2005.

Agencies

(China Daily 02/05/2008 page17)