Mitsubishi 2004 Annual Report Download - page 36

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ial costs by 15% (estimated saving effect ¥120 billion ($1,135 million)) by stepping up initiatives in the Mitsubishi Cross-
Functional Project (MXP), a Companywide project charged with cutting material costs across the board. MXP will also be
introduced to offshore plants. Other moves include promoting global sourcing, reducing die costs, and increasing commonal-
ity of parts to keep the cost of indirect materials down.
MMC will also review its captive finance company in the United States, including consideration of downsizing assets
and/or consideration of possible strategic alliances with external partners.
To cut headquarters staff in Japan, MMC will shift its headquarters to Kyoto in order to make maximum use of its assets.
(3) Product Strategy for growth
1. The new cars will be reconstructed and steeped in “Mitsubishi Motors DNA,” which is best summed up by MMC’s SUVs
which are typified by the Pajero and the sporty, driver-oriented traits found in the Lancer Evolution.
2. To clarify responsibility throughout product life cycle development, Product Executives will be appointed for each product to
oversee issues related to the whole product life cycle from initial conception through development, production and sales.
3. The new cars, which have “Mitsubishi Motors DNA,” will be launched actively.
(4) Geographical Strategy for growth
In Japan, the plan aims for a renewed customer-centric sales approach. MMC will successively launch new “Mitsubishi Motors
DNA” cars focused on customer needs. Other steps include offering customers free vehicle inspections and 24-hour support,
building relations with customers on a Companywide basis, improving the sales structure by refurbishing dealer outlets and
making use of IT infrastructure.
Profitability in North America will be achieved by maintaining a balance between supply and demand. In particular, MMC
will review an adjustment to production capacity at its plant, cut back on incentives and the ratio of fleet sales, and launch new
and special edition cars.
MMC will also seek to expand opportunities for profit and stability in the fast-growing Chinese market by investing further
in its local partners to change the production and sales network over to the Mitsubishi brand.
A new strategic car for Asia will be launched to enhance the product lineup.
MMC’s engine and transmission joint ventures will become the main bases for supplying parts to other operations through-
out Asia.
By fiscal 2008, MMC aims to have 500 Mitsubishi Motors dealers in China with annual sales of 220,000 units (310,000
units including local brands).
MMC aims to achieve a drastic increase of sales in North Asia, including China, by the end of fiscal 2008, and the recovery
of sales in North America leading to annual sales of 1,700,000 units worldwide.
(5) Alliance with DaimlerChrysler AG
DaimlerChrysler remains an important partner for MMC and the alliance will continue on the basis of economic rationality for
both companies. Ongoing projects such as the joint development and production of B-segment (Colt class) platforms, the joint
development and production at World Engine, joint development of C-segment (Lancer class) platforms, and OEM operations
for pickup trucks, are mutually beneficial and will continue as planned. MMC will evaluate future projects based on economic
rationality, and for each project will consider alliance possibilities.
(6) Target Consolidated Result
Fiscal 2004 marks the start of MMC’s revitalization plan, which calls for a number of restructuring measures and efforts to
improve operations. While MMC plans to implement measures in fiscal 2004 to drastically reduce costs and reorganize part of
its operations, MMC expects only a limited effect for fiscal 2004. Further, fiscal 2004 forecasts include a one time loss that the
Company expects to book for the period as a result of restructuring costs. As a result, in fiscal 2004, MMC expects consolidated
net sales of ¥2.25 trillion ($21.3 billion); operating loss of ¥120 billion ($1,135 million); ordinary loss of ¥150 billion ($1,419
million), and net loss of ¥230 billion ($2,176 million).
The plan aims to achieve the minimum target of creating positive ordinary income* in fiscal 2005. The Company’s financial