Mitsubishi second product line on the line

WHILE prospects for building a long-wheelbase version of the 2005 Magna replacement primarily for the US market look bleak, Mitsubishi Australia is still hopeful of gaining a second product line to build in Adelaide.

The doubts over the LWB car emerged as a by-product of Mitsubishi Motors Corporation’s announcement that it expects a $US673 million loss in the financial year 2002-03.

The shocking loss has resulted in controlling shareholder DaimlerChrysler sending a management team to Tokyo under Smart division boss Andreas Renschler to develop a recovery plan. Mr Renschler is also tipped to replace Rolf Eckrodt as MMC CEO.

Much of that loss has been caused by the collapse in profitability of MMC’s US subsidiary because of the disastrous ‘Triple 0’ financing strategy. That has also prompted a pull-back in forward sales estimates for Mitsubishi in the world’s biggest car market.

The intention had been the LWB car would be developed in Adelaide for the world and that MMAL would be the sole manufacturer, with 25,000 per annum heading to the US from early 2007.

But that estimate has now been cut by 50 per cent and that makes the business case dicey – at a time when the last thing on MMC’s mind would be risk taking.

"It doesn’t make sense to build that car with the amount of volume they are talking about now , particularly when if you are looking at it today you wouldn’t do it because of the currency anyway," MMAL boss Tom Phillips said.

"So the project is on-hold for the moment, and we won’t know for sure whether it will go ahead until April sometime.

"While that project may not go ahead, there has still been a lot of work done and a lot of support out of MMC to find something else and those sorts of studies are still on-going. I think they recognise we have got to have two cars and we’ve got to have some export base."