Mitsubishi 2007 Annual Report Download - page 10

MITSUBISHI MOTORS CORPORATION Annual Report 2007
8Lancer Evolution X
Q3. Conversely, what issues still remain?
A. For starters, I feel that we have yet to fully
rationalize some aspects of our business operations,
although we have generally made significant progress
on this front under the plan. Overcapacity in pro-
duction on a company-wide level is one issue.
However, I believe the decision to continue pro-
duction at the Okazaki Plant, where we had planned
to stop production, was correct, although this deci-
sion will not in itself reduce overcapacity in produc-
tion. By transferring part of
Outlander production
from the Mizushima Plant to the Okazaki Plant, we
were able to flexibly respond to a potential produc-
tion shortfall in domestically produced vehicles rela-
tive to demand. The Okazaki Plant now has higher
capacity utilization as an
Outlander production fa-
cility. Similarly, higher capacity utilization was
achieved at Pajero Manufacturing Co., Ltd., in re-
sponse to strong sales of the newly launched
Pajero
and Delica D:5 models. Also, I’m pleased to see that
overall capacity utilization rates remain high at the
Mizushima Plant, where capacity utilization has
always been high, and at our plant in Thailand, which
is responsible for
Triton (L200) production.
However, the Illinois Plant in the U.S. still remains
in one-shift production, despite having begun exports
of the
Galant model. Capacity utilization remains low
at Netherlands Car B.V. (NedCar) in Europe follow-
ing the termination of
smart forfour production in
June 2006, and at our plant in Australia. In regards
to these production facilities, I want to further opti-
mize our global production network in the next mid-
term management plan.
Improving operations in the Japanese market is
another pressing issue. We have been trying to do
so in many ways over the past two years. However,
the market has a high level of saturation and is ex-
periencing slower growth in overall demand. Japan’s
aging society with fewer births is partly responsible.
I also believe that the younger generations’ waning
interest in automobiles is another significant factor.
Against this backdrop, as the overall domestic market
continues to contract in year-on-year terms, I don’t
believe it will be easy to enhance business prospects
by merely pursuing our existing strategy of improv-
ing market share through attractive products and ser-
vices. It is imperative for us to pursue a strategy that
assumes further contraction in demand. For example,
we must further reorganize and rebuild our sales and
distribution networks so that they match the size of
the market. So far in fiscal year 2007 we have re-
built our sales networks. By July 2007, MMC had
integrated its 29 consolidated sales companies na-
tionwide into five companies. In regards to its auto-
parts sales network, MMC also integrated its nine
auto-parts sales companies into three companies.
Through these measures, MMC has simultaneously
reinforced sales capabilities and fundamentally re-
vamped its business structure. In conjunction with
rebuilding its sales network, MMC plans to carry out
a dealership renovation and relocation program. We
also plan to increase the number of mega-dealers
with more floor space in order to attract customers
spread out over larger areas.
Furthermore, in Japan, we adopted a sales policy
of emphasizing profitability over unit volume. Based
on this policy, in fiscal year 2007, we aim to im-
prove profitability by enhancing the ratio of new reg-
istered vehicles*1 to total retail sales through the
launch of new models. These include the
Delica D:5
model and the all-new sedans Galant Fortis *2 and
Lancer Evolution X .
*1 Models other than minicars
*2 Export model name:
Lancer , Lancer EX