Mitsubishi 2003 Annual Report Download - page 17

Download and view the complete annual report

Please find page 17 of the 2003 Mitsubishi annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 78

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78

15 MITSUBISHI MOTORS CORPORATION
Hyundai in early 2004, for Chrysler in 2005 and for MMC in late 2006.
The second major benefit of the DC alliance is the access that it gives us to sales networks. We used the local DC
distribution network when we entered the Mexican market in January 2003. We had a cooperative relationship while
pursuing the best dealers in each market when we entered Canada in September 2002. This has helped us considerably
in strengthening our local presence within the NAFTA region.
WHAT IS THE STATUS OF MMC’S SALES FINANCING ACTIVITIES IN THE REGION?
A combination of explosive growth in outstanding sales finance receivables, a delayed reorganization of credit collec-
tion operations in North America and the economic slowdown have created some problems for us. Our response has
been to take a number of measures aimed at tightening our credit policies while maintaining sales growth in volume
terms. One of our first moves was to appoint a top management of sales financing operations, who has since started to
implement solutions to the various issues involved.
First, we have outsourced the collection of outstanding receivables from customers with lower credit scores to loan-
collection specialists. Second, as a risk-reduction policy, we have lowered the number of credit offers we make in certain
types of sales finance products such as “balloon” deals. Third, we have tightened our credit extension criteria. To do this,
we have conducted internal studies within Mitsubishi Motors Credit of America, Inc. (MMCA) and issued guidance to
our dealers in North America on the new credit policies as they pertain to the way we do business. In the sub-prime
category, our new policy is to extend fresh sales credit through a contracted specialist lender only, although we have
configured our systems and procedures to ensure that all sales can be conducted and flowed through by our own
dealers and staff in conjunction with the subcontracted lender.
At the same time, we have strengthened risk-management controls both at MMCA and MMC. Top management at
the head office in Japan established a cross-functional committee to give direct approval for credit strategy and sales
policies. This new system of monitoring oversight, which involves the CFO and all division heads, will help to balance
our sales and financial controls within MMC in a more effective manner.
15 MITSUBISHI MOTORS CORPORATION