Mitsubishi 2001 Annual Report Download - page 4

[2] MITSUBISHI MOTORS CORPORATION Annual Report 2001
PRESIDENT’S MESSAGE
Fiscal 2000, ended March 31, 2001, was a tumultu-
ous year for Mitsubishi Motors Corporation (MMC).
A large recall badly dented our brand image and
highlighted the need for deep-seated structural
change. Since my appointment as CEO in November
2000, we have initiated a radical restructuring
program in full cooperation with our strategic alli-
ance partner, DaimlerChrysler (DC). This promises
to transform our company over the next three years.
In this letter, I want to outline the nature of the
changes taking place at MMC.
Results for year ended March 2001
Although wholesale shipment volumes increased by
5% to 1.85 million units, price discounting on passen-
ger car models contributed to a 1.7% fall in consoli-
dated net sales to ¥3,276.7 billion ($26,446 million).
As a result of price erosion and the problems created
by the large-scale vehicle recall we recorded an oper-
ating loss of ¥73.9 billion ($596 million). While our US
operations more than doubled profits, losses in
Europe were compounded by the weak euro. On the
positive side, our Truck & Bus operations returned to
the black, posting operating income of ¥9.4 billion
($759 million), compared with an operating loss of
¥6.2 billion in fiscal 1999.
Our net loss increased, from ¥23.3 billion in fiscal
1999, to ¥278.1 billion ($2,245 million) in fiscal 2000.
This loss included restructuring charges totaling
¥105.8 billion ($854 million), an extraordinary loss of
¥50.7 billion ($409 million) related to maintenance
and recall expenses, and a one-off charge of ¥128.4
billion ($1,036 million) for writing off a pension
fund shortfall following the adoption of new
accounting rules.
MMC undergoing dramatic change
These losses represent the depth of the valley. We
are acutely aware of the need for fundamental
change at MMC. Three key aspects characterize this
process. First, we must change our production-
oriented mindset to a customer-centric marketing
approach. Second, we need to overhaul our quality
control processes. Third, we must realize we are in
business to make profits from satisfying customers,
not just to make well-engineered vehicles. These
changes entail a revolution in our corporate culture.
From the bottom to the top, MMC is now a company
committed to a turnaround that will get us back on
track. We are fully committed to our target of break-
ing even this fiscal year on a consolidated basis and
to achieving operating income margins of 2.5% and
4.5% in fiscal 2002 and 2003, respectively.
The specific operational details of the changes
required are formulated in the Turnaround Plan,
which was hatched in early 2001. To lower expenses,
we will implement material cost savings of 15% by
the end of fiscal 2003, cut production capacity, and
reduce headcount. Already, we have announced the
closure of our Oye Plant and capacity reduction at
our Mizushima Plant.
The implementation of these and other changes
will be facilitated by our new organizational struc-
ture that clarifies responsibility and personal
accountability, allows for a fast information flow via
fewer management layers, and facilitates the delega-
tion of decision-making to operative levels. Among
other changes, we reduced the number of directors
to 25% of the previous level, replaced 60% of execu-
tive management, and plan to abolish the Advisory
System within two years. In addition, by creating glo-
bally integrated offices for procurement, production,
R&D, marketing, IT and control we have assured a
clearly integrated focus for our various operations.
To boost sales revenues, we are taking various
steps to revolutionize the quality and design of our
products and customer service. We have introduced
the Quality Check Gate system developed by DC. This
will ensure that the quality problems that have
troubled us in the past will not recur with our new
“…MMC is now a company committed to a turnaround
that will get us back on track.”
“... MMC is now a company committed to a turnaround that
will get us back on track.”