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59
MITSUBISHI MOTORS CORPORATION ANNUAL REPORT 2006
c. New model launches
The new plan calls for a major increase in the number of new model launches compared with the last four years.
The MMC group will expand earning opportunities by actively introducing new models across all regions.
(iii) Business tie-up strategy
To further promote a policy of selection and concentration, the MMC group will actively pursue strategic tie-up
opportunities with other automakers. As well as an expansion in May 2005 of the supply of minicars on an OEM
basis to Nissan Motor Co., Ltd., in July 2005, MMC reached an agreement with PSA Peugeot Citroën to supply a
new SUV model on an OEM basis. The new SUV model is expected to be released in FY2007 to the European
market. MMC group is looking to expand its tie-ups and considering the options such as increasing OEM arrangements,
component supply partnering, joint distribution arrangements and joint procurements arrangements.
(iv) Regional strategy
a. Japan
Driving towards a group structure that returns stable profits, MMC and its sales companies will continue to work
hand in hand to regain the trust of customers with additional measures that follow on from the free inspection cam-
paign covering 3.4 million owners in FY2004. The MMC group will also restructure its sales network and will drive to
maximize after sales services by launching a new brand in the after market auto parts market.
b. North America
North America remains a vital market for MMC group. To put its operations in that market on a profitable basis, in
January 2006, MMC appointed a managing director to become CEO and President of its North American subsidiary.
The Company also introduced a new management structure that will strengthen links and promote effective
communication with MMC.
The MMC group is currently addressing its U.S. captive finance unit that was at the center of problems in its
North American operations. It is currently reducing its exposure to loan default risk by selling off a portion of its
finance asset holdings to Merrill Lynch & Co. For the purpose of creating competitive and attractive consumer
financing programs, the MMC group also established a new joint venture company with Merrill Lynch.
c. Europe
To move its European operations forward from simply achieving profitability to the growth stage, the MMC group will work
to promote sales for a stronger model lineup and will place its efforts to strengthen its management and sales structures.
d. China
Positioning China as a core market by actively utilizing the Mitsubishi brand, which is very strong and well established
in China, the MMC group seeks to expand its operating base. The MMC group is strengthening its capital tie-ups
with local companies in order to expand the Mitsubishi brand models, and plans to establish and expand its sales
network. The MMC group is also considering establishing engine joint ventures in China, as a major engine produc-
tion hub, and R&D facilities to meet local market needs on a timely basis.
e. Other markets
The MMC group is taking steps to strengthen its operational footing in ASEAN markets. These include strengthening
sales in Thailand, establishing sales structures in Malaysia and reorganizing operations in Indonesia. The MMC group
is also strengthening its production base by boosting capacity in Thailand, which serves as an export hub to global
markets. As for Australia, the MMC group closed its engine plant in August 2005.
Notes to Consolidated Financial Statements