Clouds lift over Mitsubishi's future

MITSUBISHI appears set to secure the future of its Australian operation with a $400 million capital investment and a bold local production plan.

As well as an all-new domestic market Magna developed in conjunction with America and South Korea, Mitsubishi Motors Australia Ltd could produce a new multi-purpose vehicle (MPV) for export.

The MPV - based on the SUW Active prototype shown at the Tokyo show last month - could go into production as early as 2002.

MMAL executives are still awaiting confirmation of their fate from their troubled Japanese parent company but appear to be more relaxed than ever about the future.

A formal announcement is expected some time next month or in January, though it remains to be seen if details of an export program will be included.

There has been speculation that production of the Pajero - which is 100,000 units a year about right for an Australian plant - will be transferred to Australia to capitalise on our rugged outback image.

But the same could apply to the SUW Active which would compete internationally in a market in which Subaru sells a vehicle called the Outback - which is built in the US.

The Active shown at Tokyo looked production ready although the turbocharged 2.0-litre engine would likely be replaced by a normally aspirated version.

It drives through the front wheels only - which may be how Mitsubishi sees the MPV segment developing - but would clearly be suited to four-wheel drive also.

The vital issue of the Magna replacement model appears to have been resolved in favour of a vehicle based on the Hyundai Grandeur, but developed in the United States with some input from Australia.

This car will go into production in Adelaide probably in early 2004, indicating a further extension of the current Magna's life.

Mitsubishi had previously extended the Magna's replacement from 2001 to 2003, requiring an extra facelift to carry it through.

"The existing platform is only three years old," said Mitsubishi spokesman Mr Kevin Taylor, "and the styling is still quite modern." "Ford and Holden can stretch theirs out for 20 years or so, so there should be no problem using the existing platform for another generation." With the likely decision to develop the next Magna on a Hyundai platform, Mitsubishi has taken the most cost-effective solution to demand for a large sedan by Australia and America.

The only other real alternative was to stretch and widen the Galant platform - the recipe used for creating the original Magna in 1985 - but this would require a bigger engineering effort.

A third option - to reskin the existing Magna and re-fit the interior - appears to have been a last-straw scheme by MMAL to hold onto the Australian manufacturing base.

Like the Magna (and the Adelaide-built US-market Diamante), the Grandeur is front-wheel drive and powered by a V6 engine.

Hyundai has a history of co-operation with Mitsubishi, though it has previously been the Japanese handing down technology to the South Koreans. The relationship changed this year when Mitsubishi badged a Hyundai for the first time, replacing its ageing Debonair luxury saloon with the Hyundai Equus.

Development will almost certainly be handled by the American division of Mitsubishi, despite the fact it sold just 8500 Diamantes last year - about the same total as Japan.

By comparison, Mitsubishi sold 32,500 Magnas in Australia last year.

But there is considerable influence by the US in Japan as the managing director of Mitsubishi Motors Corp, Mr Takashi Sonobe, also heads up Mitsubishi Motor Sales of America.

Mr Sonobe is keen to have control of the Magna/Diamante program but is already committed to developing three other vehicles in about the same time frame.

It is likely that Mr Sonobe was critical in getting the development budget through for the project because the Japanese regard the large car as unimportant, selling fewer than 8000 units in Japan last year.

Fortunately, South Korea is developing a considerable large car market, which has led to Hyundai devoting considerable resources to the Grandeur and Equus.

Mitsubishi is undergoing a massive restructuring program - called Renewal Mitsubishi 2001, or RM2001 - aimed at reducing a crippling debt of more than $20 billion.

RM2001 requires the company to focus on growth markets, which are listed and specifically exclude large sedans.

The Japanese parent could therefore only undertake a new vehicle in conjunction with a company like Hyundai.

Technology and component sharing is Mitsubishi's stated tactic to survive the global auto industry restructuring rather than selling equity in the company. MMC still plans to remain independent.