Mitsubishi 2003 Annual Report Download - page 5

3MITSUBISHI MOTORS CORPORATION
sales increased by 6% from fiscal year 2001 to ¥724.3 billion ($6.0
billion). Operating profit in fiscal year 2002 stood at ¥8.6 billion
($72 million), compared with ¥9.5 billion a year ago.
CHANGE, FOCUS AND GROWTH
In fiscal 2002, we achieved approximately ¥300 billion in
Turnaround savings, including a 15% reduction in material costs.
We will accelerate cost-reduction initiatives in fiscal 2003, stick-
ing to our successful approach of closely cooperating with sup-
pliers. We also achieved our targets for reducing domestic
production capacity and headcount one year ahead of sched-
ule. A huge overall increase in productivity allowed us to trim
our workforce more than we had originally planned, achieving
a reduction of 16% at the end of March 2003. The capacity utili-
zation ratio at our domestic plants was also improved from 67%
in fiscal 2000 to 80% in fiscal 2002.
These are impressive figures, but the Turnaround is not
merely about numbers. MMC is also undergoing far-reaching
changes in many less-visible areas described in more detail later
in this annual report. We have done away with age-based wage
structures entirely, replacing them with a new company-wide
personnel and remuneration system that is purely based on
qualification and performance. This makes MMC a pioneer in
the Japanese auto industry. Together with Chairman Takashi
Sonobe, I am delighted to be working alongside our Japanese
colleagues as part of a strong international team, within a fresh
corporate culture that has earned the approval of all who work
at MMC. Indeed, one of the most satisfying aspects of our
progress is that our employees have embraced the change tak-
ing place at MMC to achieve our objectives.
Focus is another keyword at today’s MMC. In January 2003,
we spun off our commercial vehicle operations to form
Mitsubishi FUSO Truck and Bus Corporation (MFTBC). This
enables MFTBC to directly tie up with the world’s leading truck
manufacturer DaimlerChrysler (DC) and thus increases its glo-
bal competitiveness. For our part, the spin-off gives us greater
financial flexibility, allowing us to invest in future product
development. Now focused solely on passenger car operations,
MMC is better placed to respond even faster to changing mar-
ket situations and to more clearly position the MMC brand.
Even before this move, we were taking other actions to grow
our passenger car operations. In September 2002, we launched
our first cars in Canada. And our entry into Mexico, supported
by the DC distribution network, allows us to expand into another
important market. China is another important growth area for
MMC. In fiscal 2002, we sold 92,000 vehicles together with our
various local partners, and commenced local production at the
DC affiliate Beijing Jeep Corporation (BJC) in March 2003. The
OUTLANDER will soon roll off the local production line to become
our second Mitsubishi-badged car produced in China, close on
the heels of the PAJERO SPORT, which was launched in March
2003. The alliance with DC will also help us to develop an effi-
cient country-wide distribution network in China. With 50 alli-
ance dealers as of March 2003, we are already well-positioned
for further growth in what is one of the most dynamic automo-
tive markets in the world.
POSITIONED FOR GROWTH AS A PURE CAR COMPANY
Our Turnaround is on course and proceeding well. Although we
have no doubt that business conditions will remain harsh in
some regions in the coming year, we know what we need to do
and how to move forward. The challenge of the Turnaround is
one that extends over time, but we remain keen to take it on.
Now that our operations are purely focused on passenger cars,
we are well-positioned to take on the competition. The medium-
term strategic growth implications of our alliance with DC are
steadily coming into view. Joint platform developments are
ongoing with DC, offering the potential to reap benefits from
economies of scale. While we plan to reduce the number of
global platforms from 15 to 10 over the next five years, we will
double the number of units per platform. In addition, the ben-
efits of major volume-bundling, joint distribution and coopera-
tion in other areas, from research to the recycling business, will
steadily manifest themselves. These alliance synergies, paired
with our model offensive over the next five years, will keep us
on the growth trajectory we attained in fiscal 2002. Hence we
have set ourselves a mid-term sales target of two million units
for 2007. We are highly confident that we will achieve it.
July 2003
Rolf Eckrodt
President & CEO