Annual 1999 Report - Mitsubishi Motors

Transcription

Annual
Report
1999
The Japanese economy has floundered since the collapse of
Consolidated summary
the asset-driven bubble in 1990. Today, the birth pains conMitsubishi Motors Corporation and its Consolidated Subsidaries.
tinue as it shifts from a bureaucracy-managed pattern to
something more akin to the market-driven economies of the
United States and Europe.
Years
ended
March
31
In
fiscal
1998,
Mitsubishi
Motors Corporation(MMC)
Net
Sales
made good its pledge to turn the deficit incurred in fiscal¥
Operating income
1997–the result of slack sales on the Japanese market and inOrdinary income (loss)
creased costs–into a profit. This achievement is the result of
Net income (loss)
major reforms implemented under the RM2001 (Renewal
Per share of common stock (in yen):
Mitsubishi) Net
mid-term
plan, which provides the
incomemanagement
(loss):
blueprint for MMC's
transformation
into a sound and prof-¥
Basic
itable company
at the
earliest possible date.
Fully
diluted
Details of
RM2001
and of the progress achieved to date
Cash
dividends
are given elsewhere in this report. In a nutshell, however,
At March
31 thrust is directed at major reductions in
RM2001's
principal
Total
assets
costs, at the same time as charting strategies for bolstering its¥
Property, plant and equipment
production and sales organizations, for giving added impetus
Stockholders' equity
to new model development, and for promoting the ongoing
1990
1991
2,360,702
63,270
50,228
21,133
¥
26.59
–
5.50
¥
1,771,504
485,166
336,801
¥
1992
(in millions of yen)
2,797,770
¥ 3,087,136
89,725
86,802
55,750
60,541
25,852
29,514
(in yen)
30.28
¥
–
6.50
34.56
–
7.00
2,039,608
¥ 2,284,928
625,420
722,444
357,672
382,260
1993
1994
1995
1996
¥
3,180,430
77,091
50,225
25,832
¥
2,946,932
40,758
21,250
5,584
¥
3,414,133
95,912
53,296
12,615
¥
¥
30.25
–
7.00
¥
6.54
–
7.00
¥
13.70
–
7.00
¥
¥
2,388,753
805,106
401,475
¥
2,414,829
948,032
408,483
¥
2,826,446
1,096,766
479,174
3,537,018
71,911
31,305
12,736
(in yen)
13.84
13.72
7.00
¥ 3,007,736
1,194,612
483,268
1997
1998
1999
1999
(in thousands of
U.S. dollars)
$ 29,138,167
464,073
(34,641)
47,018
¥
3,672,085
45,660
9,524
11,599
¥
3,735,228
(1,301)
(59,274)
(101,846)
¥
3,512,606
55,944
(4,176)
5,668
¥
12.59
11.34
7.00
¥
(110.49)
–
3.50
¥
6.15
5.93
–
(in U.S. dollars)
$
0.05
0.05
–
¥
3,233,239
1,213,614
486,457
¥
3,370,526
1,314,124
349,747
¥
3,060,385
1,312,303
353,613
(in thousands of U.S. dollars)
$ 25,386,852
10,885,964
2,933,331
evolution
the GDI(Gasoline
Direct
engine
techNote 1 : of
U.S.dollar
amounts in this annual
report Injection)
are translated from
yen, for
convenience only, at the rate of
¥120.55=U.S.$1, the exchange rate prevailing on March 31, 1999.
Note 2 : Certain amounts previously reported have been reclassified to conform to the current year. The principal reclassification are detailed in 1 (n) of Notes the Consolidated Statements.
nology
hasdiluted
gained
a significant
edge
foris not
theavailable due to the loss for the period.
Notethat
3 : Fully
net income
per share for competitive
the year ended March
1998
Contents
company. Other reforms currently under consideration in-
Highlights
1
clude:
the setting up of a holding
company; the outsourcing
Non-consolidated
summary
Mitsubishi
Motors
of corporate
functions;
and Corporation
greater management emphasis on
Making it work, making it pay
2
Senior officers
5
consolidated performance, on market-price accounting and
RM2001
6
on earnings.
The reforms piloted by RM2001 extend beyond the
Years ended March 31
shores of Japan, while giving due consideration to differNet Sales
¥
ences in Operating
cultures and
approaches
encountered
in
all
countries
income (loss)
where the
company
operates.
Ordinary
income
(loss) "Customer satisfaction",
"Innovative
creative",
Net and
income
(loss) "Fair and open", "Speedy and simPer share
of common
stockthe
(in company's
yen):
ple": these
keywords
epitomize
corporate
Net incomeworldwide.
(loss):
ideals in its operations
MMC hasBasic
a mission: To extend its global presence in the¥
auto industry.Fully
To bediluted
fair and open in all aspects of its busiCash dividends
ness. To continue to strengthen its financial base and achieve
sustainable
profitability.
The company is focused on this
At March
31
mission Total
so thatassets
it may earn maximum customer satisfaction,¥
create value
and reward
its stockholders
Property,
plant and
equipment and employees.
1990 On the analyst's
1991couch
1992
1993 8
Product & technology development
Environment
2,025,715
¥ 2,313,636
¥ 2,554,055
Models
48,774
65,822
56,186
Operational review
41,419
50,214
50,540
Financial review25,208
20,242
27,023
1994
1995
12
¥
Consolidated balance sheets
(in yen)
Consolidated statements
of operations
25.47
¥
29.52
¥ stockholders'
31.65 equity
¥
Consolidated statements of
–
–
Consolidated
statements
of cash flows –
5.50
6.50
7.00
Notes to consolidated financial statements
Report of the independent public accountants
14
2,615,959
20
57,493
22
46,567
32
20,232
1996
¥
2,455,928
40,085
35,354
15,952
¥
2,652,517
67,745
48,046
18,826
¥
¥
18.68
–
7.00
¥
20.45
–
7.00
¥
2,522,559
62,359
55,393
20,468
1997
1998
1999
¥
2,585,940
57,148
58,035
15,067
¥
2,500,614
(15,512)
(22,157)
(25,656)
¥
2,333,971
21,750
5,231
22,138
¥
16.36
14.68
7.00
¥
(27.83)
–
3.50
¥
24.02
22.03
–
1999
(in thousands of
U.S. dollars)
$ 19,361,020
180,423
43,393
183,642
36
38
23.69
39
40 –
7.00
42
53
Corporate data
54
1,352,076
¥ 1,554,119
¥ 1,667,680
¥ 1,731,985
Financial
summary
58
331,941
395,545
462,220
491,010
The
report is printed on recycled
and recyclable paper.
324,164
344,135
365,041
379,140
¥
1,636,646
515,705
388,959
¥
(in yen)
22.24
22.04
7.00
1,669,599
¥ 1,637,038
507,415
514,486
453,864
467,734
¥
1,705,910
517,543
477,308
Note 1 : U.S.dollar amounts in this annual report are translated from yen, for convenience only, at the rate of ¥120.55=U.S.$1, the exchange rate prevailing on March 31, 1999.
Note 2 : Fully diluted net income per share for the year ended March 1998 is not available due to the loss for the period.
Financial summary
59
¥
1,724,254
535,081
445,032
¥
(in U.S. dollars)
$
0.2
0.18
–
1,637,233
$ 13,581,360
534,592
4,434,608
467,171
3,875,330
Highlights
Mitsubishi Motors Corporation and its consolidated subsidiaries.
1999
1998
Net sales
Operating income(loss)
Ordinary income (loss)
Net income (loss)
Per share of common stock
Net income (loss):
Basic
Fully diluted
Cash dividends
¥ 3,512,606
55,944
(4,176)
5,668
(in yen)
¥
¥ 3,735,228
(1,301)
(59,274)
(101,846)
(in yen)
6.15
5.93
–
¥ (110.49)
–
3.50
At March 31
Total assets
¥ 3,060,385
1,312,303
353,613
1999
(in thousands of
U.S. dollars)
$ 29,138,167
464,073
(34,641)
47,018
(in U.S. dollars)
$
0.05
0.05
–
(in thousands of
U.S. dollars)
¥ 3,370,526
1,314,124
349,747
$ 25,386,852
10,885,964
2,933,331
Note 1 : U.S. dollar amounts in this annual report are translated from yen, for convenience only, at the rate of ¥120.55=U.S. $1, the exchange rate prevailing on March 31, 1999.
Note 2 : Certain amounts previously reported have been reclassified to conform to the current year. The principal reclassifications are detailed in 1 (n) of Notes to the Consolidated
Statements.
Non-consolidated summary
Mitsubishi Motors Corporation
1999
1998
Net sales
Operating income (loss)
Net income (loss)
Per share of common stock
Net income (loss):
Basic
Fully diluted
Cash dividends
¥ 2,333,971
21,750
5,231
22,138
(in yen)
¥
¥ 2,500,614
(15,512)
(22,157)
(25,656)
(in yen)
24.02
22.03
–
¥
(27.83)
–
3.50
At March 31
Total assets
¥ 1,637,233
534,592
467,171
1999
(in thousands of
U.S. dollars)
¥ 1,724,254
535,081
445,032
$ 19,361,020
180,423
43,393
183,642
(in U.S. dollars)
$
0.2
0.18
–
(in thousands of
U.S. dollars)
$ 13,581,360
4,434,608
3,875,330
Highlights
1
low of ¥208 in October 1998 to top ¥600 in May this
year. This very positive appraisal by the market
bears gratifying testimony to the pertinence of the
measures dictated by RM2001 and to the success
with which we are implementing them.
The transformation process set in motion last
year is driven by the corporate ideal of earning enduring customer brand loyalty by offering excellence
in product and service. RM2001 gives us the blueprint for realizing that ideal, so I would like to take
you on a brief tour of the 3-year management plan,
our guiding star to the land of
higher efficiencies, profitability
and increased value for our shareholders.
In a nutshell, RM2001's major
thrust is directed towards the generation of more profits from less
growth. Its strategies dictate the
establishment of realizable management targets and place greater
emphasis on shareholder needs.
The initial transformation is to take
three years, with a return to operational profitability in fiscal 1999 and full recuperation by fiscal 2000.
The restructuring announced in June 1998—absolutely vital to the successful implementation of
RM2001—improved efficiencies and communications, speedier decision-making and implementation,
and of being more responsive to market changes.
Building on the progress made to date, we recently
introduced a new set of efficiency-enhancing organizational reforms in June 1999.
Under RM2001, we have initiated uncompromising and sweeping reductions in costs, interest-bearing liabilities and under-performing assets. To expose hidden factories of free capacity, we have embarked upon a major streamlining and rationalizing
of production facilities and sales units in Japan and
It gives me enormous pleasure and personal satisfaction to be able to report to you that MMC has made
very encouraging progress in the 1998 fiscal year. If
you remember, the company had reached a nadir last
year: recording the worst losses in its history, dividend payment was cancelled, and our share price
was scraping rock bottom.
In my letter last year, I promised that we would
engineer a transformation; a transformation driven
by the corporate mission to earn maximum customer
satisfaction, and to create value and reward our
stockholders and employees. I said
that we had the determination, the
tradition and the resources—particularly in the vital field of environmental technology— to pull the
company back from the edge of the
abyss and make it profitable again.
The first vital move was the announcement in March 1998 of the
company's intention to carry
through sweeping reforms, and followed by the restructuring of the
corporate organization implemented in June 1998. This cleared the way for the 3-year
Renewal Mitsubishi 2001 (RM2001) mid-term management plan, announced in November, which plots
our course back to the land of the living.
I am proud to report that we met all RM2001 targets for fiscal 1998, that we are on track—even
ahead of schedule—for fiscal 1999 and 2000 and
that we are building momentum all the time. We
achieved our fiscal 1998 target of getting net income
back into the black in both non-consolidated and
consolidated operations, and this despite the softest
market in Japan in 20 years, and a virtual melt-down
of the markets in Asia.
This dramatic improvement is reflected in our
performance on the Tokyo Stock Exchange, where
the MMC share price has climbed from a historic
2
The fast-selling Mirage Dingo is the first in our
new-concept Smart Utility Wagon series and is helping to revitalize the Car Plaza sales channel. Joined
by a 1.5-liter unit, the 5-member GDI ecology engine
family cuts consumption and CO2 emissions as it
powers 11 models in Japan and four in Europe.
Cumulative GDI engine production topped 500,000
in May this year.
Also in the field of environmental technology, the
new GDI SIGMA Series powertrain announced in
March this year exploits synergies between the GDI
engine and CVT, hybrid propulsion components, and
other powertrain components to realize further cuts
in fuel consumption and CO2 emissions. Last August,
we launched a LEV Galant that complies with
Japanese 2000 NOx and HC emission levels, and
currently have four GDI models on the European
market that are Step III compliant. Our lead in GDI
technology gives us a significant advantage in the
cost of meeting more stringent levels expected in the
near future.
Looking to the future, the company is collaborating with leader-in-the-field Mitsubishi Heavy
Industries and other Mitsubishi group companies in
the development of fuel cell EVs, and expects to complete a road-test model by 2001.
Profitability is also the name of the game overseas. Improved profits and record sales are the story
in the United States, Europe and Australia, and even
in hard-hit Asia we managed to increase share.
Targets were met in North America as the full effects of cost cutting programs and the introduction of
the new Galant under a new Spirited Products for
Spirited People brand image campaign helped
Mitsubishi Motor Manufacturing of America, Inc., to
its second consecutive surplus, and Mitsubishi Motor
Sales of America, Inc., to a full-year surplus. The introduction of new Eclipse and Montero Sport models
this year will help to keep the ball rolling.
In environment-sensitive Europe, the GDI engine
overseas. In these areas, we exceeded fiscal 1998
targets, cutting costs by ¥107 billion and interestbearing liabilities by ¥241 billion. We have moved
up by a year our year-2000 target for reducing indirect personnel. Car and truck inventories have been
reduced significantly. In Japan, we are trimming
back car and truck production capacity, and are
transferring functions to more productive plants to
realize greater efficiencies. These measures will lower break-even point in both car and truck production
by 15% by the year 2002. Our rationalization program also extends to our car and truck sales organizations in Japan, where integration will lead to
greater efficiency, better coverage and better service.
We are trimming our passenger car lineup, and
reducing the number of platforms. The tighter focus
this realizes is enabling us: to concentrate resources
more efficiently on our three core model series—the
new Smart Utility Wagon (SUW), the Pajero
(Montero in North America) and the minicars; to reduce development costs; and, to get new models to
market more quickly and catch that rapidly shrinking
window of opportunity.
We are leveraging our lead in environmental
technology and powering more models with the GDI
engine family—the most effective and readily applicable means of reducing fuel consumption and carbon
dioxide emissions available today. As emission regulations become more stringent and environmental
awareness grows around the world, our investment
in the GDI engine is giving MMC cars a telling competitive edge, and is attracting lucrative business
from other manufacturers.
We continue to offer appealing and environmentally-advanced vehicles at attractive prices. In 1998,
we put ten new models on the Japanese market. Most
were in the second half of the year and strong sales,
particularly of the Toppo BJ and other new-regulation minicars, bode well for fiscal 1999.
3
scale do not extend ad infinitum. Beyond a certain
size, growth realizes no additional merits in terms of
production costs, and results in an organization of
mammoth proportions; one that gets bogged down in
bureaucracy and other efficiency-crippling restraints. This is quite the opposite tack from the one
we are on today, as RM2001 pilots our metamorphosis into an organization that is lean and nimble. My
philosophy has always been to get our operations
back on track before seeking major growth; to exploit the advantages of our size—large enough for
leverage, small enough to be exciting, agile, speedy.
As if to symbolize the new dynamism driving us,
in a wonderful display of teamwork, determination
and superior engineering, MMC won seven out of 13
World Rally Championship events last year to take
manufacturer honors for the first time.
So, if I am happy about our performance in fiscal
1998, I am really enthusiastic about our prospects
for fiscal 1999 and the millennium. MMC is metamorphosing: driven by the corporate ideal of earning ongoing customer brand loyalty; piloted by
RM2001. The company is leaner, more focused, more
confident. The GDI engine gives us a decisive competitive advantage that is enabling us to gain market
share, and to build profits on. As environmental
awareness and legislation increases, this edge we
enjoy can only grow in potency. Witness the situation
in Japan, where our low-consumption GDI models
already attract sales-boosting tax advantages.
We have caught a wave, and the transformationin-progress to higher business and operational efficiencies world-wide will ensure we stay on it.
and the introduction last year of the Space Wagon,
the Pajero Sport, and the made-in-Europe Space
Star lifted sales to a new record and helped MMSE
and NedCar meet their profit targets. And we can
look forward to better things in 1999 when the GDIpowered Pajero Pinin, compact SUV, produced at
Pininfarina in Italy and based on the fast-selling
Pajero iO, hits the European market this autumn.
Mitsubishi truck sales in Europe grew 10% on 1997,
benefiting from our marketing alliance with Volvo.
In Australia, Mitsubishi brand vehicles sold in
record numbers for the second consecutive year, and
MMC is even able to report good news in Asia and
the ASEAN block, where the recent economic crisis
has badly hit sales almost everywhere.
In Thailand, our global pickup truck production
hub MMC Sittipol Co. moved into the black thanks to
strong export growth assisted by the weaker Baht. In
Taiwan, strong sales of the Freeca multi-purpose vehicle series and the introduction of the new Galant
model saw Mitsubishi brand sales rise by 3% to
maintain leading share for the second year in a row.
In the Philippines, Mitsubishi brand regained leading share for the first time in nine years.
The automobile industry has witnessed some major changes in the last year, with regrouping on a
global scale. Stormy the seas may be, but our ship is
sound and we see no reason to give ear to those
sirens who point to equity alliances as the only safe
harbor. I am willing, however, to consider any operational alliance that brings win-win benefits.
Our Global Partner Alliance strategy brings us
added marketing strength, reduces costs and improves efficiencies through operational and development ties. This may be seen in our Netherlands Car
B.V. (NedCar) production joint venture, truck marketing, and truck development ties with Volvo; in our
technical assistance ties with Peugeot S.A. and with
Hyundai Motor Corp.
Ours is an industry of scale, but the merits of
4
Senior officers
from left to right
Yuzo Murata
Takemune Kimura
Executive Vice President, with responsibility for Headquarters of Truck
& Bus Operations. Born 1937. Has spent whole career with company in
truck production. Formerly held post of Corporate General Manager of
Office of Truck & Bus Sales.
Chairman of the Board. Born 1931. Former president of company. A
passenger car production specialist, has served as Works General
Manager and Corporate General Manager Office of Passenger Car
Production.
Satoru Toyama
Fumikazu Yokogawa
Executive Vice President, with responsibility for Quality & Technical
Affairs. Born 1938. A passenger car body design engineer by training,
has spent whole career with company in passenger car development.
Formerly held post of Corporate General Manager of Office of Car
strategy.
Executive Vice President, with responsibility for Administrative
Organization. Born 1937. Has served in Purchasing, Personnel Planning
& Labor Relations Departments.
Katsuhisa Sato
Executive Vice President, with responsibility for International Car
Operations. Born 1936. Has served in Office of International Business
(North American and Europe Departments). Formerly held post of
President of Mitsubishi Motor Sales Europe B.V.
Katsuhiko Kawasoe
Company President. Born 1936. During career with company, has
served in Accounting, Personnel Planning & Labor Relations, and Labor
Union departments. More recently, has held posts of vice-president of
Mitsubishi Motor Manufacturing of America, Inc., Works General
Manager and Corporate General Manager of Office of Passenger Car
Production.
Senior officers
5
RM2001
MMC announced a set of corporate structural reforms in March and implemented a major
restructuring of its organization in June 1998. These steps paved the way for the three-year
RM2001 (Renewal Mitsubishi) mid-term management plan announced in November 1998, a
blueprint that is charting the way back to corporate health and profitability.
Objective and strategy: RM2001 seeks to put MMC on a
¥1.3 trillion from the ¥2 trillion level at the end of fiscal
profitable footing at the earliest possible time. It charts a
1998.
course that leads to an appropriate profit level by fiscal 2000,
Restructuring: RM2001 provides a blueprint for the restruc-
this to be achieved by generating more profits from less
turing of operations required to achieve the targets. In
growth.
January 1999, MMC introduced the first in its new-concept
More specifically, these targets are to be met by moving
Smart Utility Wagon series as it starts to rationalize its prod-
away from traditional dependence on incremental increases
uct mix to concentrate on three core series: SUW, Pajero and
in sales volume, by improving efficiencies in all develop-
minicars. The number of platforms is being cut from 13 to 6,
ment, production and sales operations and by reducing costs.
and the 24-model lineup trimmed by 40%. RM2001 calls for
The strategy RM2001 dictates includes: (1) The establish-
a minimum reduction in material and labor costs and other
ment of realizable business targets based on critical analysis
overheads of ¥420 billion. The company is streamlining and
of the competition; (2) The orientation of management struc-
rationalizing its domestic car, truck and bus production facil-
ture and priorities towards consolidated results; (3) Greater
ities to pare excess capacity, raise productivity and lower the
emphasis on returns on capital and the shareholder. In re-
break-even point by 15%, and is rationalizing and consoli-
sponse to the major structural changes in the industry over
dating its sales units for greater efficiencies.
Overseas, MMC is moving ahead in putting Mitsubishi
the last six months, RM2001 has been updated to bring forward the "get profitable" target .
Motor Sales of America, Inc., and Mitsubishi Motor
Targets: RM2001 sets out specific business targets for the 3-
Manufacturing of America, Inc., on a footing of sustained
year period it covers. MMC has met the targets for fiscal
profitability at an annual sales volume of 200,000 units and
1998, and is well on track for fiscal 1999 and 2000–to the
production volume of 160,000 units respectively. Payroll in
extent that some future targets have been brought forward.
the MMSA group and at MMMA is to be reduced 1,000 by
For fiscal 1999, the company aims to restore dividend
fiscal 2000. The company is studying the introduction of a
payments, and to move into a surplus in its consolidated
fourth core model that matches North American market re-
business. In fiscal 1998, the ¥25.6 billion extraordinary rev-
quirements and needs.
enue from the sale of the Maruko transmission factory land
In Europe, MMC is aiming at a sales volume of 330,000
contributed to consolidated net income for the year of ¥5.7
units in 2000, to put the Mitsubishi Motors Europe B.V.
billion.
group onto a firmer base. It will continue to introduce models powered by the GDI eco-engine.
For fiscal 2000, in its non-consolidated operations the
company is looking to return minimums of ¥50 billion ordi-
In Asia, MMC is aiming to keep operations in Thailand
nary profit and ¥10 billion net profit on sales of ¥2.5 trillion
on their newly achieved profitable footing by increasing
and volume of 1,200,000 units. In its consolidated business,
world-wide pickup truck exports from that country, and by
the target is a minimum net profit of ¥20 billion on sales of
reducing payroll from 4,000 to 2,800.
In Japan, MMC plans to operate with a total indirect la-
¥4 trillion. Interest-bearing liabilities are to be reduced to
RM2001
6
bor payroll of 12,000. The planned reduction in indirect per-
ing priority to environmental and resource-conserving tech-
sonnel is being brought forward from 2000 to 1999. The
nologies. The company is promoting development of tech-
management structure is to be streamlined further with a re-
nologies that evolve and further raise the efficiency of the
examination of all managerial positions and posts, and by en-
GDI engine. This includes the development of a GDI engine
couraging early retirement.
mated to a CVT, and of an HEV using a GDI engine genera-
To reduce interest-bearing liabilities, MMC has imposed
tor, with automatic idling stop-go system, compact motor
a ceiling of ¥80 billion on consolidated capital expenditure.
and high-power batteries and with a kinetic energy regenera-
The company is working to reduce inventories in Japan and
tion capability. The company is working with Mitsubishi
overseas by reducing lead times, liquidizing trade receivables
Heavy Industries, Ltd., and other Mitsubishi group compa-
and selling off under-performing assets.
nies on the development of fuel-cell electric vehicles.
In its allocation of management resources, MMC is giv-
RM2001
7
On the analyst's couch
In a departure from the normal format for this letter, one of Japan's leading financial analysts—Noriyuki Matsushima, director at Nikko Salomon Smith Barney Limited—probes company president Katsuhiko Kawasoe about the problems the company faces today, and its policies for the near future. The discussion, conducted at the end of April 1999, should prove interesting reading to our shareholders and others who take an interest in the operations of
Mitsubishi Motors.
Q: What are your views about the way Japanese corpora-
ceeding smoothly. And we may actually be able to bring for-
tions are starting to give the same kind of importance to
ward our 2001 target for reducing interest-bearing liabilities
their shareholders as in the United States and Europe?
by ¥700 billion. We are currently on track with all the targets
A: Until five or six years ago, Japanese corporations tended to
laid down in RM2001, and by bringing them forward a little, I
attach overriding importance to the overall welfare of their
reckon our performance would rate 110%. The RM2001 plan,
employees. However, in this day and age of increasing depen-
as the name suggests, requires to be brought to a successful
dence on the financial markets for raising funds, the best way
conclusion before the year 2001. We are already thinking
we can guarantee job security for our employees is to ensure
about what has to be done from 2001 and beyond, and I am
the company is well appraised by its shareholders. This is not
hoping to be able to publish details of our vision for the near
to say that we no longer care for, or look after, our workforce.
future before the end of the calendar year.
But over the last year, I have taken every opportunity to ex-
Q: Mitsubishi Motors stands alone in offering a full lineup
plain that we have to be profitable if they are to reap the full
of motor vehicles. The reforms implemented to date shows
benefits, and I plan to continue implementing measures which
that passenger car and truck operations are now clearly
will be rated highly by our shareholders.
separate from each other. Taking this process one step fur-
Q: In November 1998, you published details of the
ther, you would appear to have the choice, after the revi-
RM2001 (Renewal Mitsubishi 2001) mid-term manage-
sion of the law next year, of introducing a holding compa-
ment plan, which calls for major changes in policy to re-
ny structure and splitting the company into, say,
store corporate health and vigor by March 2001. That was
Mitsubishi Trucks and Mitsubishi Passenger Cars.
six months ago; how would you rate the progress RM2001
A: Under the organizational reforms to be implemented in
has made so far?
June this year, passenger car and truck operations will be
A: I would say that we are right on track. I would give our
made quite separate; this, to make clearer the return on invest-
workforce 10 out of 10 for appreciating what has to be done
ment by individual operational units. This will enable us to
and for getting on with the job. Take the streamlining of our
take, in a timely manner, the appropriate action should we de-
production organization, for example: To be honest, I was
cide the holding company approach is the way to go. The rea-
worried that the inertia that has built up over the years would
son we have maintained a full product lineup to date is be-
make it difficult to push through the changes needed, but I'm
cause it has allowed a certain amount of mutual support be-
happy to report that everything is going according to plan. The
tween operations, which has proved beneficial at times.
same goes for our 3-year ¥350 billion cost reduction target,
However, circumstances today dictate the need for greater spe-
where we have achieved the ¥85 billion reduction scheduled
cialization, and for operational units to be separate from one
for fiscal 1998. The paring down of the number of platforms
another. This also applies to our overseas operations, which
we use and of our indirect workforce of 12,000 is also pro-
we will be splitting up on a country basis.
8
Q: You have drastically cut and put a ceiling on capital in-
Manufacturers the world over are already moving towards the
vestment. Do you intend to continue at this level for a
GDI engine, and this trend will accelerate with the depletion of
while?
oil reserves, as market factors drive up the price of fuel, and as
A: I'm looking at keeping an annual ceiling of ¥80 billion on
environmental awareness increases in the United States. Some
capital investment for three years. Our biggest challenge at the
might say that GDI technology has yet to produce an accept-
moment is deciding how much we can afford to spend on de-
able return on the investment made, but I am confident that it
velopment, while reducing capital investment spending.
gives us a tremendous competitive advantage.
Q: You were the first auto maker to market cars employ-
Q: You have stated that Mitsubishi Motors will develop fu-
ing GDI engine technology
el cell technology within
and you appear ready to
the Mitsubishi group.
catch the wave with the tax
A: We have set a provisional
benefits for low-consump-
target of 2005 for putting a
tion vehicles recently intro-
fuel cell EV into production,
duced by the Japanese
but I believe this particular
Ministry of Transport. You
technology will take a long
supply Volvo with GDI
time to bring to fruition.
technology
have
Q: Daimler Chrysler and
reached an agreement to
Ford, Toyota and GM have
sell the technology to
teamed up to form two dis-
Peugeot. Are there any oth-
tinct camps. Would it not
and
er candidates to whom you can sell GDI technology?
be better for you to team up with one of these?
A: This may sound a little presumptuous, but it is a fact that
A: Now, I might be a little biased here, but as I understand it
Mitsubishi Motors' GDI technology has been favorably ap-
Mitsubishi Heavy Industries currently leads the world in fuel
praised by a majority of auto engineers around the world.
cell theory. This being the case, I see no reason to look else-
When talking to other manufacturers, we point out the huge
where.
investment in R&D the technology requires, and that it would
Q: MHI, your main shareholder, has a new president. Do
be a Herculean task for any company to recover that invest-
you expect to see any change in MHI's approach towards
ment on its own. We go on to point out that we have already
Mitsubishi Motors?
made the investment, and that purchasing the technology from
A: I know the new president, Takashi Nishioka, very well and
us offers significant benefits from a balance sheet viewpoint.
we talk frankly together, so I have no worries at all in that di-
Q: Would you say that the investment you have made in
rection.
the GDI engine is proving a burden to MMC?
Q: Are you saying that it will be business as usual in terms
A: The playing field will level out once other manufacturers
of overall harmony within the Mitsubishi group, and the
start using GDI engines. Fuel-cell EV technology is going to
support Mitsubishi Motors gets from MHI, Mitsubishi
take take several years before it becomes available on the mar-
Corporation, and The Tokyo Mitsubishi Bank?
ket at a reasonable price and until that day, our best option is
A: Precisely; no change.
to improve efficiencies in the internal combustion engine. GDI
Q: Your operations in the United States have moved into
technology provides the only means to do so today.
the black, but if you are looking to expand those profits,
9
your next challenge would seem to be the way you go
A: The situation varies considerably from country to country,
about putting a SUV model on the market. Do you have
but I believe that Indonesia offers the greatest potential. The
plans to build a SUV locally?
key lies in the general election slated for June. With the stable
A: Yes, I believe it is important that we introduce a new mod-
support of the people, the government will be able to formu-
el which will become a solid revenue earner for us. The
late and implement its policies with confidence for a period of
Eclipse makes money, but that particular segment is shrinking
five years and this will encourage a fast recovery.
in size and so we must look carefully at what will be the next
Q: Were you anticipating this when you launched the
growth segment. We have to go ahead on the basis of a well-
Kuda strategic model for the Asian market in March?
researched and thought-out business plan, considering such
A: We actually delayed the introduction of the Kuda for a
factors as how much the SUV market will
year, so I'm hoping that the market will now
grow, and how we can adjust to such
recover and that we will see an explosive
growth from both the production and mar-
increase in demand. The Kuda is a very well
keting aspects.
finished automobile. It is a new type of car;
Q: Turning to Europe. Mitsubishi
one that looks set to become very popular.
Motors has recently increased its holding
Our dealers are swamped with orders and
in NedCar and currently shares manage-
are crying out for shipments to fill them.
ment with Volvo on a 50-50 basis. Now
We expect to see the strongest recovery in
that Volvo has been acquired by Ford,
the region this year in Indonesia. The Thai
what form will the management of
market is also showing signs of recovery,
NedCar take?
but since exports are our real money earner
A: With the change of control that has occurred, this is obvi-
in Thailand, any recovery in domestic demand will be a bonus
ously something we are going to have to discuss with Ford.
for us.
The current arrangement works well both for Volvo and for
Q: Looking at the truck market in Japan, fiscal 1998 saw
ourselves, so I do not see any drastic changes being made for
overall demand at its lowest level for 30 years, and the fi-
the time being. The question is what to do about the next mod-
nancial markets do not expect to see any substantial recov-
el. If we are unable to share a common floor, as we have so
ery this year. How do you see the situation?
far, then we may have to reconsider the relative merits of the
A: I have to agree with you, totally. Judging from the size of
arrangement, and also the question of its implementation. This
the haulage market, there will have to be a reduction in the
is a matter on which we must make a decision in the near fu-
combined capacity of Japan's four truck makers to bring down
ture.
the break–even point, even before we start thinking about a re-
Q: Is there any possibility of Volvo using a Ford platform,
covery. I don't know what the others are going to do, but we
and for NedCar to make the necessary adjustment to its
have already cut capacity by about 10%.
line to accommodate it?
Q: So, what you're saying is that in the Japanese truck
A: Certainly, that possibility exists; as one of several options.
market you are aiming to break–even at a volume of
Q: The auto market in Asia is very depressed at the mo-
80,000 or so?
ment but this situation is not expected to continue for ever.
A: That's about the size of it. Given the size of the market to-
What steps are you planning and what timeframe are you
day, the only way to make any money is to bring down the
looking at in preparation for a recovery?
break–even point. We are working to improve our operational
10
and financial base so that we can make a profit on sales of
put money into it. In the area of trucks, we already have em-
80,000 in Japan and 70,000 overseas.
barked upon an operational alliance with Volvo and if things
Q: Tie–ups in the motor industry, until recentry, have usu-
go well we would certainly look at expanding it further.
ally been limited in scope, but all of a sudden, in the space
Q: If you manage to go on reducing your interest-bearing
of six months, we have seen a major change in this.
liabilities at the current rate, perhaps you won't need to
A: From a business angle, the pursuit of scale is certainly
think in terms of M&A?
meaningful up to a certain extent. Ours, in particular, is an in-
A: I don't think we will. Were we suddenly required to pay off
dustry of scale, so I do not reject the pursuit of scale per se. In
our ¥2 trillion borrowings by tomorrow, then we would have
terms of manufacturing cost, however, the benefits of scale
to turn somewhere for help. But we are not in that situation
disappear at a fairly low volume. But it is a
and so we have no intention of seeking help.
different story when we look at develop-
Q: Moody's currently rates Mitsubishi
ment cost. A five-fold difference in volume
Motors' debt Baa3. Do you foresee any
means a five-fold difference in recovering
further downgrading?
that cost. That's why auto makers try to do
A: I believe we will see a change in our rat-
as much OEM as possible.
ing when we publish our business results for
Q: It looks pretty certain that the burden
fiscal 1998. I don't know how Moody's ar-
of development costs will increase in fu-
rive at their rating, but since the results will
ture.
show there has been no upset or deteriora-
A: As development costs escalate, particu-
tion in our plans and forecasts, that
larly in the fields of safety and environmen-
RM2001 is right on track, I can think of no
tal technology, companies will find it increasingly difficult to
reason for a further downgrading. While the other Japanese
shoulder them on their own. This would be a good reason for a
manufacturers have all reported a deterioration in results and a
company to consider a merger or acquisition, I suppose, but I
falling short of targets, Mitsubishi Motors' RM2001 manage-
see no sense in the M&A approach solely for the pursuit of
ment plan is right on track–to the extent that we are thinking
scale. Companies must be able to share development costs.
of bringing our targets forward. A good look at just how much
Today, we are at technological cross-roads and there will be
progress we have made, will show that our shares actually of-
auto makers who are unable to develop particular technolo-
fer a good investment opportunity. I believe that investors will
gies. Again, this would present a good opportunity for entering
focus upon how we are shaping up for 1999 and beyond.
an alliance, but I do not go along with the argument that M&A
Q: Is there any way that Mitsubishi Motors can make a lot
is the sine qua non for survival or success.
of money overnight?
Q: You are reported as saying that you are willing to con-
A: The automobile business is all about percentages. If you
sider any collaborative association so long as it presents a
get it right, the pluckings can be huge. If you stick to the ba-
win-win solution.
sics and offer a good product at the right price, then the money
A: My view is that tie-ups, of any form, should be on a solid
is there to be made. We have put some fast-selling products on
business basis, regardless of who the other party is. Should the
the market since I became president and we must keep the mo-
parties wish to expand a particular area of business, and it's
mentum going. To date, we've been putting runners on second
something that requires a major investment of money, then
base a lot, but we want some homers too. We have to get to
surely it is simply normal business practice for them both to
the plate more frequently, and start piling up the hits.
11
Pleasing some of the people all of the time
ing more modularization: in dashboards and in air condition-
Our mission is to offer excellence in product and service, and
ing systems, for example. The savings will be significant and
in this way to encourage in our customers a genuine and af-
will make us more competitive.
fectionate pride of ownership. We strive to do this by getting
Quicker: We know the importance of being timely in getting
closer to the customer, leaner in our operations and quicker
products to market, of giving the customer what he wants,
to market. We do this by developing products and technolo-
when he wants it. We are working to further reduce the 18-
gy that offer superior levels of vehicular performance and
month average lead time from model fix to launch in a full
useful life, of occupant comfort, safety and convenience, and
design change. Advance component development, precision
of environmental acceptability.
forecasting using CAE techniques, and new 3D CAD sys-
Closer: We know the following factors are vital to our mis-
tems (CATIA) are some of the tools that are making this pos-
sion: (1) Securing a stable customer base by creating prod-
sible. Bingo! Mirage Dingo was in the showroom just 14
ucts that offer superior quality, are fun to drive, easy to use,
months after getting management approval.
and that earn brand loyalty by merit; (2) Establishing a dis-
Toughest: We know the importance of having 100% confi-
tinctive product identity– "Powerful", "Distinctive presence"
dence in the reliability of our products. For over 30 years, we
and "Innovative concept" are major keywords in our design
have used rallies as the ultimate proving ground, and have
development; (3) Developing products that best match and
fed back the data and information gained into engine, han-
anticipate market and customer needs. Feedback from deal-
dling and 4WD systems development. In the 1998 World
ers and customers, and ongoing market research are integral
Rally Championship, the Lancer Evolution V won seven out
parts of the concept and design studies that enable us to get
of 13 events to bring home our first manufacturer's champi-
closer to those needs, closer to our customers;
onship. Mitsubishi ace-pilot Tommi Makinnen three-peated
Leaner: We know the importance of offering maximum
value. Strategic cost reductions in, and rationalization of,
the total development and
manufacturing process are vital to staying competitive.
This is a part of life at MMC.
We are currently reducing the
number of platforms used in
our passenger model lineup.
This will produce significant
saving in development, ride
and handling performance
testing, crash testing and other
costs. We are reducing the
number of parts and increasing commonality. We are us-
MMC clinches first–ever manufacturers' championship, and Tommi Makinen 3–peats in 1998 WRC
12
in the driver's championship.
in. Today, the Mitsubishi RISE body enhances occupant
Direction: We know the importance of offering new cate-
safety in a crash, while the INVECS smart automatic trans-
gories of vehicles that match and anticipate changing market
mission, Traction Control with Road Curvature Preview,
and customer requirements. A new concept for a new age,
Active Yaw Control, Active Stability Control and other in-
Mitsubishi's Smart Utility Wagon series creates a new cate-
dustry-first active safety systems enhance safety by support-
gory of multi-purpose vehicle, and has been developed to a
ing and compensating driver operation.
The latest contribution to safety from MMC is the
theme of providing maximum ease of use and environmental
Mitsubishi Driver Support System, an advanced Intelligent
acceptability, and targeted at a wide user base.
The SUW concept melds together sedan and RV qualities
Traffic System technology that reduces load and strain on the
within compact lines to provide generous interior space and
driver. Comprising Lane Departure Warning, Side-rear
comfort with excellent maneuverability, and gives full ex-
Monitors, and Preview Distance Control, this advanced sys-
pression to MMC's trademark fun-to-drive and easy-to-use
tem uses strategically placed CCD cameras to monitor and
philosophy. GDI engines keep carbon dioxide, NOx and HC
correct inappropriate vehicle operation. Voice, visual and
emissions low, return great mileage and deliver peppy per-
tactile warnings prevent the driver falling asleep at the
formance. The Mirage Dingo launched in January is the first
wheel, and alert him when he takes his eyes off road. Rest
in the new-concept SUW series, which will eventually offer
assured, MMC is no dummy when it comes to protecting the
a full range of sizes.
safety of those using its products.
Safer: Safety technology is a field MMC has long excelled
13
Environment
Urban population densities, traffic congestion, greater understanding of the way in which human activities impact the environment: these factors are today making the car purchaser
more environmentally aware and sensitive. The days when auto makers sold their products
on the basis of raw performance or luxury specifications alone are over. Motor vehicles, and
cars in particular, have to clear strict emissions standards and be otherwise environmentally
acceptable. These requirements will continue to grow more stringent as the pressures on the
environment increase and as consumers insist on their amelioration.
MMC is keenly aware of its civic responsibility to lessen the
dustry leader in the field of fuel-efficiency and engine emis-
impact of its corporate activities on the environment. The
sions and has focused its development resources on consoli-
company does not view this as a burden, however, for it is
dating and extending that lead, to stay competitive and prof-
convinced that leadership in this field will be a major key to
itable.
survival in the industry, and to creating value for the shareholder. Already, the company has forged its place as an in-
Environment
14
Environmental stewardship: products
creasing power 10%. And a brand new MVV leanburn engine now powers the fast-selling Mitsubishi minicars.
The message from the market today is that clean cars sell
well, and that translates directly to the bottom line. Fuel effi-
The company already uses direct injection diesel engines
ciency and emissions have figured high in the company's pri-
to power its trucks, and the new Pajero (Montero) series to
orities right from its beginning. To better focus its efforts to
be launched this summer will be the first Mitsubishi SUV to
preserve the environment, in 1984 the company set up the
be powered by a DI Diesel.
Global Environmental Issues Project Team. In 1993, the
Atmospheric pollution
company formulated the Mitsubishi Motors Environmental
Action Program that provides environmental stewardship
At the urban environment level, vehicle emissions of NOx,
guidelines for corporate activities. In the same year, the
CO and HCs are already strictly controlled, but increasing
Project Team was replaced by the company-wide
miles traveled and growing environmental awareness mean
Environmental Council, chaired by the president, which to-
regulated levels will continue to become more stringent.
day directs environmental management strategy and the im-
MMC is at the fore in the development and application of
plementation of measures to reduce the impact of company
technology in this field, giving the company a telling com-
products and activities.
petitive advantage.
In its ongoing evolution of the GDI engine, MMC has
Development policy
developed advanced catalytic converter technology that re-
At an early stage, MMC identified environmental technology
duces tailpipe HCs and NOx emissions by 80% of current
as a major revenue engine, even as the key to survival in an
regulated levels, without diluting the fuel-saving and power
industry so intimately connected with such issues as global
benefits of the original GDI technology. (For details, see
warming, ozone layer destruction and depletion of finite re-
page 18)
sources. In its product and technology development, the
In its truck and bus diesel engines, the company has in-
company is focused on reducing impacts on global and urban
troduced many innovations that have improved their environ-
environments, without sacrificing the superior performance,
mental performance: these include intercoolers, more effi-
comfort and utility levels that make its vehicles attractive.
cient intake systems, high-pressure fuel pumps, delayed injection timing. The MBECS-III regenerative braking system
Global warming & CO2
fitted to city buses in Japan cuts fuel consumption and emis-
The relationship between global warming and carbon dioxide
sions. The company applies Common Rail high-pressure fuel
emissions is still being debated, but under COP3 manufactur-
injection to reduce NOx and particulate matter emissions.
ers have been set challenging CO2 reduction targets. MMC
For just around the corner, the company is looking at strati-
has an outstanding track record in the production of fuel-effi-
fied fuel-water injection systems, at premixed compression-
cient and clean power units. It started production of MCA-Jet
ignited combustion, and at NOx catalytic converters.
leanburn engines in the 1970s, and followed up with the MD
The company has set targets to reduce all substances that
modulated displacement engine in the 1980s. Today, 75% of
negatively impact the environment. To ameliorate destruc-
the model series in the company's Japan market passenger
tion of the ozone layer, MMC completed substitution of air-
car lineup are powered by the revolutionary GDI engine that
conditioner CFCs with non-destructive HFC134a in 1994.
injects gasoline directly into the cylinder to cut fuel con-
This refrigerant has subsequently been found to be a green-
sumption and carbon dioxide emissions by 30%, while in-
house gas, and so the company has made improvements to its
Environment
15
air conditioning systems that have cut HFC134a quantities
ability and lower costs, by marrying the GDI engine with
by 20%. The company is working to reduce the quantity of
continuously variable transmission, idle-stop, turbocharging,
lead used to under a half the 1996 level in 2000-model year,
and HEV technologies. (See page 19)
The fuel cell, which generates energy through the hydro-
and to under a third in 2005-model year, cars.
gen-oxygen reaction, promises a very clean source of energy
Alternative energy vehicles
for electric vehicles. MMC is currently working on develop-
MMC is actively working towards two principal objectives
ment of this exciting technology with Mitsubishi Heavy
in the field of alternative energy vehicles: (1) Developing
Industries, the world-leader in the field, with Mitsubishi
cleaner power and, (2) Finding alternative to diminishing
Electric and with other members of the Mitsubishi group.
fossil fuel reserves.
The company expects to complete the first prototype by
2000, a road-test vehicle by 2001 and to start prototype pro-
Electric vehicles are virtually pollution free, but are
duction in 2005.
handicapped by restricted cruising range and high prices due
to low production volumes. Hybrid propulsion systems sig-
Vehicles using CNG fuel produce 30% less CO2 than
nificantly reduce emissions over gasoline or diesel engines
gasoline, and none of the particulate matter associated with
MMC has market-ready technology that has been part of the
diesel vehicles. MMC currently markets several CNG mod-
California Air Resource Board testing program since 1995.
els, ranging from minicars to city buses, and will continue to
The company has developed advanced high-power lithium-
expand this range.
ion batteries that are lighter and have a longer useful life, and
Environmental stewardship: production facilities
high-efficiency energy management systems for EV and
HEV use.
Environmental stewardship at MMC extends beyond the mo-
The GDI SIGMA Series powertrain announced this year
tor vehicles it produces. Stringent internal standards govern
utilizes the superior starting and response characteristics of
energy and water use, waste generation and the recycling of
GDI technology to give 10-30% better mileage, better drive-
plastic and metal scraps at all production facilities and make
Motor
Fuel cell
Power
Reformer
Hydrogen
Air
Systematic representation of MMC fuel cell EV
Environment
16
Fuel tank
them cleaner, quieter, and healthier places to work in and
troduction of a pilot Pollutant Release and Transfer Register
live near.
(PRTR) scheme to pinpoint the origin and fate of pollutants.
The Environmental Council Production Sub-council
Reuse and recycling efforts translate into higher manu-
oversees and directs environment preservation, waste con-
facturing efficiency, lower costs and improved profits.
trol, energy conservation and rationalization of physical dis-
Mitsubishi models will be 90% recyclable by weight by
tribution activities at the company's places of work. Under
2000. Under its Voluntary End-of-Life Vehicle Recycling
the direction of the council: the company has earned ISO
Action Program, the company is: promoting the use of more
14001 Environment Management Systems certification at
easily recyclable parts–one example is the consolidation of
three of its major works in Japan; energy use per unit sales
plastic parts used in dashboards–and of more recycled PET
is being reduced 10% over 1990 levels by 2000; the quantity
and other recycled materials; developing structures and as-
of in-plant waste that required disposal in 1998 was down to
sembly processes that facilitate disassembly; making recycla-
20% of that in 1990. The sub-council is also promoting: the
bility assessment an integral part of the vehicle design
ongoing reduction of SOx, NOx, soot and dust, volatile or-
process and, eliminating the use of noxious materials. The
ganic compounds and other atmospheric pollutants; the pro-
company provides disassemblers in Japan with guidelines for
tection of water quality and conservation of water supplies
the proper dismantling of its vehicles, and is working with
through primary and secondary treatment systems, the use of
them to develop vehicle structures that are easier to disas-
nutrient-free materials, and promotion of water reuse; the re-
semble. Overseas, the company's affiliates in the U.S. are
duction of noise and vibration levels in production facilities;
currently promoting an R3 - Reduce, Reuse, Recycle - cam-
the elimination of noxious smells using deodorizing re-incin-
paign, just one of many efforts to promote both internal cor-
erators for paint scrap and other waste disposal; and, the in-
porate and public awareness.
Kyoto Plant–Shiga awarded Minister of Trade and lndustry's Award for factory greenification
Environment
17
GDI technology: another evolutionary step
engine–acclaimed by auto engineers the world over as the
Environmental technology is well on the way to being a ma-
most effective and most immediately applicable way to re-
jor revenue engine in the early 21st century. With growing
duce carbon dioxide emissions.
MMC's ongoing evolution of GDI technology has real-
environmental awareness and changes in energy supplies, the
development and application of leading-edge technology in
ized further reductions in after-treatment emissions. In
this field is a pre-requisite in order to stay competitive and is
August 1998, the company launched Galant and Legnum
the key to survival and profits. MMC has the GDI
models that comply with the tougher NOx and HC levels to
Lean NOx catalytic converter useful life testing for high–sulfur gasoline
Conversion
efficiency(%) 100
Before test
After test
NOx trap type
Selective-reduction
type
50
80,000km sulfur
content:200 ppm
0
Vehicle speed (km/h)
Vehicle speed (km/h)
GDI emission technology and regulated levels in Japan, Europe and U.S.
Japan
Europe
United States
10-15 mode
New EU-Combined mode
FTP mode
NOx (g/km)
0.5
Current
Tier 1 (Federal)
Current
0.25
Year 2000
Year 2000
ULEV (California)
LEV (California)
0
0
0.25
HC (g/km)
0.5 0
0.25
HC (g/km)
GDI emission technology performance comparison
Environment
18
0.5 0
0.25
HC (g/km)
0.5
be introduced in Japan in 2000. In Europe, Carisma, Galant,
Space Wagon and Space Star models meet Germany's D3
levels that correspond closely to the Step III regulations to
be introduced in the EU in 2000. This ultra-clean performance has been achieved through the addition of advanced
catalytic converter technology to the two-stage combustion
and other clean-combustion features inherent to GDI.
Depending on the gasoline sulfur content in a particular
market, the GDI engine uses one of two lean NOx catalytic
converters (LNC). In Europe and other markets where sulfur
content is usually 100 ppm or more, the selective reduction
LNC is used because it is less affected by contamination.
MMC holds the original patents for this type of catalytic
converter. In Japan, California and other markets where sulfur content is under 50ppm, the NOx trap LNC is used. With
this ability to conform to increasingly stringent NOx and
HC regulations world-wide, the GDI engine gives MMC a
telling and potent competitive advantage.
The company is devoting substantial resources to further
development of GDI technology to retain and increase its
lead in the field. Further improvements in combustion effi-
GDI–HEV: one of the GDI SIGMA Series powertrain configurations
ciency will enable the company to meet regulations world
wide at a lower cost than competitors.
eration. Due for market introduction in early 2000.
GDI–ASG: The fast-start characteristics of the GDI engine
GDI SIGMA Series powertrain
enable seamless and automatic idling stop-start operation, re-
The latest addition to the company's environmental technolo-
ducing fuel consumption in the Japanese 10-15 urban driving
gy arsenal is the GDI SIGMA Series powertrain, which real-
mode by 10% over a conventional GDI engine. Due for mar-
izes a further 10%–30% improvement in fuel economy, de-
ket introduction in late 1999.
pending on configuration, and gives improved driveability.
GDI–HEV: The superior torque and fuel efficiency at low
This advanced powertrain realizes efficiency-boosting
loads of the GDI engine enable the use of a smaller motor
synergies with continuously variable transmission, automatic
and batteries, to realize up to 50% better fuel economy over
idling stop-go, HEV, and clean turbocharger technologies by
conventional engines. Due for market introduction in late
exploiting the superior starting and torque management char-
2000.
acteristics of the GDI engine. The GDI SIGMA Series pow-
GDI–Turbocharger: The two-stage mixture detonation con-
ertrain features the following component marriages:
trol of the GDI engine enables use of a higher compression
GDI–CVT: The superior torque management of the GDI en-
ratio and generation of more low-end torque, and thereby
gine enables a reduction in CVT operating pressure, to give a
avoids the deterioration in fuel economy and lag normal with
10%–13% improvement in fuel economy, and smoother op-
turbocharged engines. Due for introduction in early 2000.
Environment
19
Models
Mirage Dingo
Pajero iO
Launched in January 1999, this is the first in Mitsubishi's all-
The latest addition to Mitsubishi's brand-image Pajero series,
new Smart Utility Wagon (SUW) series of models, which mar-
iO is a full-feature SUV that fits outstanding maneuverability
ries fun-to-drive,
and easy-drive qualities into "just-my-size" dimensions, and
safety, and environ-
is available in 3- and 5-door bodies. Developed for the
mental acceptability
younger or young-
with comfort and
at-heart driver who
versatility. The strik-
knows
ing appearance of
likes, iO offers spa-
this new-generation
cious comfort inside
model derives from
the
what
RISE
he
safety
its "Spacious and Easy" development theme. Easy entry and
body, and is pow-
egress–no need for gymnastic contortions. Spacious
ered by Mitsubishi
interior–the H-shape walkthru provides the central axis to this
GDI eco-engine. The European-market Pajero Pinin due to go
mobile living room. Easy operation–the control layout and in-
into production at Pininfarina in Italy this summer is derived
strument design follow proven ergonomic principles. Easy dri-
from Pajero iO, and plans call for sales of 35,000 units in
ving–compact dimensions and clean styling make for great
2000.
maneuverability. Powered by Mitsubishi's GDI eco-engine,
Dingo returns outstanding mileage and is easy on the environment.
Chariot Grandis
The forerunner of the company's new SUW concept series,
Chariot Grandis' powerful, crisp lines are sculpted into a
handsome appearance. With three rows of seats arranged
about a central walkthru, the sumptuously trimmed interior offers outstanding space efficiency and comfort. Mitsubishi's
RISE safety body, GDI eco-engine and INVECS-II 4-speed
"smart" automatic transmission with dash-mounted shift are
other features that make this the campany's fastest selling
model in recent years.
Models
20
Lancer Evolution VI
Space Star
Mitsubishi's Lancer Evolution model won seven out of 13 ral-
Mitsubishi's second made-in-Europe model was developed to
lies in the 1998 WRC calendar to capture the manufacturer's
a "go-anywhere, do-anything in style" theme. Space Star pro-
championship for
jects a commanding presence, the result of sculpting graceful
the first time, while
aerodynamic contours into the no-nonsense proportions of a
ace-driver Tommi
European compact.
Makinnen
three-
The short-and-wide
peated in the dri-
body dimensions
ver's championship.
give outstanding
With its aggressive
maneuverability,
shape wrapped in
while the highboy
neat, rational lines, powered by a 2.0-liter DOHC intercooler /
profile strikes an
turbocharged engine, and sporting the latest in aero parts, the
optimum balance
race-ready production model brings the rally version's world-
between generous interior space and wind-cheating aerody-
beating qualities to those looking for true road fun.
namics. Space Star brings together the road performance and
luxury of a sedan, the space efficiency of a wagon and the
2000 Eclipse
versatility of a family car. The rear seats reflect this versatility:
folding forward to create cavernous cargo space, or flat to pro-
The 2000 Eclipse epitomizes Mitsubishi's fun-to-drive philos-
vide a comfortable sleeping area. The 1.8-litre GDI engine de-
ophy. The sexy Geo-Mechanical design uses an aggressive
livers super-clean, economical and peppy performance for environment-aware Europe.
cabin-forward layout and an extend-
Toppo BJ
ed wheelbase to improve handling stability, and provide
Designed under the new Japanese minicar size and safety
more relaxing occu-
regulations introduced in 1998, the Toppo BJ offers signifi-
pant comfort. The
cantly improved lev-
current Mitsubishi
els of safety, com-
Eclipse has captured leading share in the small specialty
fort and fun-to-use
class. The new 2000 Eclipse model has been designed for the
utility. The highboy
American market by Mitsubishi Motors R&D of America, Inc.,
proportions provide
and received rave reviews at the New York International
generous interior
Autoshow in April this year. Powered by a new 3-liter V6 en-
space, as well as
gine, mated to Mitsubishi's Sportronic "smart" automatic
excellent all-round
transmission, the new 2000 Eclipse is produced at MMMA
visibility. Toppo BJ is powered by either a leanburn engine for
and will be launched on the US market in the summer of
maximum economy, or a 20-valve turbocharged unit for lively
1999, with plans calling for sales of 55,000 in 2000.
performance.
Models
21
Operational review
Overview
conduct its business in a transparent manner and to regularly
Fiscal 1998 was make-or-break year for Mitsubishi Motors
publish details of the progress being made, have been favor-
after 1997 saw the worst set of results in the history of the
ably assessed by the market. MMC stock had recovered to
company. Total commitment to the corporate ideals has seen
¥400 at the end of the fiscal year, and was standing at ¥600
a dramatic improvement in the financial and business health
in May. Assisting this recovery is the general consensus that
of the company over the last year, as reflected in the sharp
the Japanese domestic truck market has finally bottomed out,
increase in the value of its shares on the Tokyo Stock
opening the door for recovery in what has traditionally been
Exchange.
a very profitable area of operation.
The recuperation process started in earnest in March
The company is currently engaged in a major restructur-
1998 with the introduction of forward-looking structural re-
ing of all its operations in order to raise efficiencies through-
forms, followed by the announcement of a new management
out the organization. The targets set out in RM2001 for fiscal
team in June. The RM2001 mid-term management plan an-
1998 have all been met on, or even ahead of, schedule. They
nounced in November 1998 provides the main blueprint for
include: a reduction in costs of ¥107 billion and in interest-
the company's do-or-die quest.
bearing liabilities of ¥241 billion; the selling off of the
Details of RM2001 may be found elsewhere in this letter
Maruko truck transmission plant; the consolidation of sales
but, in essence, the 3-year plan sets two major targets: (1) To
companies in Japan; the restoration to profitability of the
post a ¥20 billion consolidated profit in fiscal 2000, this to be
company's units in North America, Europe and Thailand; a
achieved through improved efficiencies in sales, production
reduction in capital expenditure and, a reduction in the indi-
and development, and through uncompromising cuts in labor
rect labor payroll.
and other fixed costs and in material costs; (2) To reduce in-
In fact, the patient is recuperating so well that other tar-
terest-bearing liabilities from the March 1998 level of ¥2.0
gets have been brought forward to enable the company to re-
trillion to ¥1.3 trillion by fiscal 2000, this to be achieved by
spond more effectively to the major changes seen in the in-
cutting capital expenditure and by paring the company's port-
dustry and the global economy over the last year.
folio of under-performing assets. The
company's deteriorating performance was
reflected on the Tokyo Stock Exchange,
where MMC stock sank from ¥700 at the
end of August 1997, to a historic low of
¥208 in October 1998. This collapse was
sparked principally by the losses recorded
in fiscal 1997 by a one-time foreign exchange appraisal loss in Thailand and, by
sharply lower sales in the depressed
Japanese market.
The pertinence of the measures laid
out in RM2001, the determination and
speed with which they are being implemented, and management's eagerness to
Operational review
22
Domestic operations
1999. The revolutionary GDI engine family continues to give
Implementation of measures introduced under RM2001 in
the company a competitive edge that will play an increasing-
fiscal 1998 has brought the 1997 slide in domestic sales and
ly important role in years to come.
share to a halt. A strong product drive in 1998 has strength-
Total industry vehicle sales in Japan in fiscal 1998 were
ened the company's lineup and firm second half sales bode
5,874,172 units, 6.5% down over 1997 and the second de-
well for fiscal 1999. The prolonged slump in truck sales, a
cline in a row. MMC sales volume was 603,642 units, 4.2%
major revenue engine for the company, appears to have come
down for a market share of 10.3%.
Total industry vehicle production in Japan was 9,968,440
to an end, promising a significant improvement for fiscal
units, 7.5% down over 1997 and dropping below the 10 million level for the first time in 20 years. MMC production was
MMC sales in Japan
Passenger car
(1,000 units)
1,092,612 units, a fall of 7%.
Truck & Bus
Minicar
Passenger car
Total industry car sales in Japan were 5,351,885 units in fis-
8,000
cal 1998, a drop of 5% over fiscal 1997.
7,288
Total market
6,898
7,000
6,275
6,697
5,874
MMC increased market share in fiscal 1998, driven by
class-topping sales of the Chariot Grandis, Pajero iO and
6,000
new-regulation minicar models. Total passenger car sales
1,000
800
were 525,537 units, a slight decline of 0.4 % on 1998.
789
813
Minicar sales were 13% up over the previous year.
772
630
Total car production volume was 982,449 units, a de-
604
600
crease of 4% on 1997, but production of minicars at 261,552
400
was up by 9.8% and reflected the successful introduction of
200
the new-regulation minicar series.
MMC introduced ten new models in fiscal 1998, many of
0
94
95
96
97
these in the second half of the year. Reflecting the company's
98
published policy to concentrate on core revenue earners,
MMC production in Japan
(1,000 units)
Passenger car
Truck & Bus
Minicar
1,500
1350
1284
1,200
1221
1175
1093
900
600
300
0
94
95
96
97
98
Operational review
23
introduction in the near future. (See page 18)
Underlining its position as industry leader in environmental technology, the company recently announced the development of the GDI SIGMA Series high-efficiency powertrain. This system utilizes synergies between the GDI engine
and such component systems as a continuously variable
transmission, hybrid electric propulsion, idle-stop, and turbocharger to achieve further improvements in fuel consumption and reductions in emissions. (See page 19), Models using this advanced eco-friendly powertrain will first go on the
these were: the Pajero iO, Aspire; five new-regulation mini-
market in Japan at the end of the year. The company has in-
cars–Toppo BJ, Minica, Pajero Mini, Minicab and Townbox;
stalled CVT production facilities at the Yagi Plant in Kyoto.
the Mirage Dingo–the first in the company's new SUW se-
The HEV system employs compact and high-power Lithium-
ries; and, the Lancer Evolution VI and Toppo BJ Wide.
ion batteries.
RM2001 is bringing major changes to the company's pas-
These models have been well received by market and con-
senger car operations in Japan. The product lineup is being
sumer alike and strong sales bode well for fiscal 1999.
Production of MMC's family of GDI ultra-high efficien-
streamlined, enabling the company to concentrate on the
cy eco-engines topped 500,000 units in April 1999, with
model series it does best and which provide the maximum
monthly volume up to 22,000. Joined by the 1.5-liter engine
revenue: the Pajero, minicar and new SUW series. Towards
that powers the new Mirage Dingo, the five-member GDI
this end, the number of platforms used is currently being
family now powers 11 MMC models, sales of which have
trimmed from 13 to 6. Skillful tailoring of bodies and com-
topped 400,000 in Japan.
ponents will maximize the choice of model variations available to meet diverse customer needs.
The company launched a low-emission Galant model that
integrates further evolutions in GDI combustion technology
Current production capacity is being cut by 15 % to bring
with advanced catalytic converter technology to clear
it more in line with the shrunken domestic market and with
Japanese 2000 NOx and HC emission regulations. This tech-
the drop in exports resulting from growing production at pro-
nology will also enable Mitsubishi cars to meet the European
duction facilities overseas. The functions of the Oye compo-
Step III levels and the ULEV levels in California slated for
nent, and the Kyoto engine and transmission, plants are being transferred to other facilities.
The company's sales organization in Japan will retain the
current Galant and Car Plaza two-channel structure, but is
being streamlined and regrouped around the better-performing dealerships. The fast-selling Mirage Dingo, the first in
the new SUW series, has been made exclusive to the Car
Plaza channel in a move designed to revitalize this channel's
performance. At the end of March, factory and dealer car inventories had been reduced by 6,000 to 53,000 units compared with the same date in 1998.
Operational review
24
Truck and bus
The truck market in Japan remained extremely weak for
most of the year. Total sales of 225,335 units in fiscal 1998
were 25% down on 1997. Sales of heavy- and medium-duty
trucks (GVW of 8 tons and up) were 81,414 units, 27%
down, and the worst year in this category since statistics
were first compiled in 1966.
Mitsubishi truck sales were 70,396 units. This represented a drop of 22% over 1997, but the company maintained
leading market share of 31.2%. Sales of heavy- and mediumduty trucks were 22,037 units, 26% down, giving the company market share of 27.1%.
The truck business has traditionally been a major profit
today. At the beginning of 1999, the company sold the
engine for the company and the prolonged recession has se-
Maruko transmission factory for ¥32.7 billion; the plant and
verely impacted earnings. However, there were indications
machinery to be transferred in stages to the company's main
towards the end of fiscal 1998 that the market has now bot-
truck facilities at Kawasaki and Nakatsu by 2001. As a re-
tomed out and expectations are that sales will improve sig-
sult, annual capacity has been reduced by approximately 7%.
The company's FUSO truck sales network is being over-
nificantly in fiscal 1999.
hauled to realize greater efficiencies in what is traditionally a
Truck production has been reduced by 29.3% to 102,145
solid and lucrative profit center.
units. Adjustments to production schedules at the Tokyo
Plant have helped reduce inventories to appropriate levels:
New regulations governing light- and medium-duty truck
total inventories by 7,200 to 19,400 units, and heavy- and
emissions will take effect in September this year. MMC
medium-duty truck inventories by 4,300 to 7,500 units.
launched compliant light- and medium-duty trucks in April
Under RM2001, the company is cutting truck production
and May this year. Employing advanced Common Rail fuel
capacity to bring it in line with the smaller size of the market
injection, EGR, and improved combustion chamber design,
these trucks reduce NOx and particulate matter emissions by
between 25% and 50% over current regulatory levels, as well
as reducing fuel consumption and increasing power.
Total bus sales in Japan were 12,102 units, a 12% decline
over 1997. Mitsubishi brand bus sales were 4,589 units. This
marked a 7% decrease, but the company retained leading
share of 37.9%.
All large-size bus production was transferred to
Mitsubishi Automotive Bus Manufacturing Co., Ltd. (MBM)
in May 1998 to raise efficiencies. With no sign of recovery
in the bus market, however, the company is currently looking
at plans to reduce payroll and seek further increases in efficiency.
Operational review
25
International operations
Global sales
MMC enjoyed sales growth in North America, Europe and
Japan
Australia, together with record exports from its global pickup
(1,000 units)
truck production hub in Thailand. The GDI eco-engine
2,000
1,792
helped increase sales in environmentally-aware Europe. The
North America
Central &
South America
Oceania
1,843
Europe
Asia & ASEAN
Africa & Middle East
1,846
1,803
1,625
1,500
company's units in North America, Europe and Thailand all
returned to profitability in fiscal 1998.
1,000
Total industry exports from Japan in fiscal 1998 were
4,519,289 units, 3.3% down on 1997 and the third fall in as
500
many years. This was mainly due to declines in shipments to
Asian, and Central and South American markets.
0
MMC export shipments totaled 511,409 units, a drop of
94
95
96
97
98
8.2% on 1997. Shipments to the United States and to Central
America rose by 13% and 20% respectively. Shipments to
Production outside Japan
Asian and to South American markets fell by 52% and 18%
North America
respectively.
(1,000 units)
MMC production overseas was 592,595 units, a drop of
Europe
Asia & ASEAN
Oceania
Others
1,000
21% on 1997. Production rose by 12% at NedCar in Europe,
801
800
but fell by 13% in the United States, and by 42% and 31% in
683
Asia and Australia respectively.
600
Sales of trucks in the United States, Europe and Australia
716
591
594
400
were encouraging. While sales volume dropped in the eco200
nomically-stricken countries of Asia and the ASEAN block,
MMC secured a 50%-plus share of the market in Indonesia
0
and Taiwan.
94
95
96
97
98
North America
Mitsubishi brand car sales in North America were 190,515
units in fiscal 1998, an increase of 1% over 1997. This performance was helped by the introduction of the new Galant
model in August 1998, and by continuing strong sales of the
Montero Sport and Eclipse Spyder models.
Mitsubishi Motor Sales of America, Inc., the company's
sales unit in the United States, returned to profitability, and
moved onto a much firmer financial base in fiscal 1998. This
was the result of a new marketing strategy introduced by
chief operating officer Pierre Gagnon, designed to get closer
to dealers and the customer.
Pajero Pinin debuts at 1999 Geneva Motor show
Operational review
26
Driven by a new Spirited Products for Spirited People
brand image campaign, MMSA sold 20,386 units of the new
Galant model in just five months without resorting to cash
incentive programs. MMSA began the process of rationalizing its market areas, introduced employee awareness training
and, through the National Dealer Advisory Board, continued
to work closely with its dealers in making policy decisions.
In December 1998 inventories stood at 69,000 units, a reduction of 14,000 units compared with the same period in 1997.
Mitsubishi Motor Manufacturing of America, Inc., the
company's manufacturing arm in the United States, returned
SST show model & 2000 Eclipse
a profit for the second consecutive year. This was the result
of ongoing cost reductions and improvements in production
Shipments of V6 engines from Japan to DaimlerChrysler
efficiencies designed to lower the break-even point, led by
were 267,450 units, down 18%.
To maintain sustained profitability at its units in North
chief operating officer Richard Gilligan.
Both the new Galant, which went into production in the
America, in addition to implementing the measures outlined
spring 1998, and the new 2000 Eclipse, which hits the mar-
above, Mitsubishi Motors will cut payroll by 300 in the MM-
ket this year, feature significant designed-in savings in mate-
SA group and 700 at MMMA by the year 2000.
rial costs and through the use of greater parts commonality.
The company is studying the addition of the fourth mod-
Introduced in January, In-Station Process Control is now
el to the current Mitsubishi lineup of the locally-produced
helping to raise line-off quality levels and productivity.
Galant and Eclipse and the imported Montero Sport. This is
Production volume at MMMA was 157,144 units, 17%
likely to be from the company's new core SUW series recent-
down on fiscal 1997. Production of the 2-door Avenger /
ly introduced in Japan, and will be tailored to match
Sebring model for DaimlerChrysler was 23% down.
American SUV tastes.
Truck sales in North America were 5,764 units, an increase of 17% over 1997 and a record.
Production & sales in North America
(1,000 units)
250
Production
Sales
236
219
203
200
193 191
196
189 194
170
157
150
100
50
0
Montero Sport
Operational review
27
94
95
96
97
98
Europe
manufacturing arm in Europe and a joint venture with Volvo Car
MMC sold a record 277,206 cars in Europe in fiscal 1998, a
Corporation–was increased from 180,000 to 280,000 in 1998. In
10 % increase over 1997 and a record. A slight decline in
February 1999, MMC and VCC each acquired half of the Dutch
volume in Germany and the UK was more than made up for
government's holding in their NedCar joint venture. MMC paid
by strong sales in other EU markets, Italy and Spain in par-
NLG110 million for 16.7% of total stock, raising its holding
ticular.
from 18.3% to 35%. The MMC group and VCC now have equal
holdings in NedCar.
Sales of the made-in-Europe Carisma were 10% up, and
were supported strongly by the new GDI-powered Galant,
Total production volume at NedCar was 242,804 in
and the L200 pickup imported from Thailand. Sales were al-
1998, of which 91,884 were Mitsubishi brand vehicles. The
so boosted by the introduction of three new models in 1998:
new Space Star model accounted for 13, 645 of these.
In January 1999, MMC and Peugeot S.A. signed an
the Space Wagon, Pajero Sport and the made-in-Europe
agreement under which the company will supply the French
Space Star.
The enthusiastic acceptance in environmentally-aware
manufacturer with GDI engine technology. This represents
Europe of Mitsubishi's GDI eco-engine, which cuts fuel con-
another significant step forward in the company's quest to
sumption and carbon dioxide emissions by an average 30%,
popularize what is currently the most effective and immedi-
gives the company a telling competitive advantage. The
ately applicable technology for reducing fuel consumption
company now markets four GDI-powered models in Europe:
and greenhouse gas carbon dioxide emissions.
Mitsubishi brand truck sales in Europe were 8,434 units,
Carisma, Galant, Space Wagon and Space Star. GDI engines
an increase of 10% on 1997. Production volume of Canter
light-duty trucks at Mitsubishi Truck Europe in Portugal was
9,455 units, an increase of 30%.
The company sold 1,339 MTE-made trucks through
Volvo Trucks Corporation's network in the UK, France and
Italy in the initial year of its operational alliance with the
Swedish manufacturer. The company started truck sales in
Poland in the latter half of 1998, and plans to expand sales to
Production & sales in Europe
(1,000 units)
Production
Sales
Pajero Pinin
300
286
257
250
also power Volvo S40 and V40 models made at NedCar.
214
The new Pajero Pinin compact SUV, exhibited at the
200
Geneva Motor Show, is due to go into production at Pininfarina
150
in Italy this summer, and debut on the European market in the
100
194
189
101
autumn. With its Pajero pedigree, GDI engine and Pininfarina
90
45
50
styling, sales are expected to reach 35,000 in 2000.
24
5
0
Annual production capacity at Netherlands Car B.V–MMC's
Operational review
28
94
95
96
97
98
down. Mitsubishi light-duty truck sales in Australia were
15% up on 1997 and a record.
In Thailand, total car sales were 60% down on fiscal 1997.
Mitsubishi brand car sales were 55% down, but strong growth of
47% in pickup truck exports, including the start of exports
Lancer models to New Zealand, and an uncompromising restructuring program that included the closing of a factory and a reduction in payroll of 1,200, and hedging of borrowings helped
MMC Sittipol Co., post a profit. MSC started shipments of pickup truck knock-down kits to South Africa and the Philippines.
Heavy-duty truck sales decreased by 74%.
In the Philippines, total industry car sales were 44%
down on 1997. Mitsubishi brand car sales fell by 33%, and
combined car and truck sales by 35%, but the company
brand recaptured leading share for the first time in nine
Space Star
years, helped by strong sales of the Adventure MPV model
other countries in Europe. The company is collaborating with
launched at the beginning of 1998. Mitsubishi's MPV series
VTC in the development of a medium-duty truck and is look-
is a strategic model for the Asian market that is assembled in
ing at a further expansion of the relationship.
Taiwan, the Philippines and Indonesia, and employs parts
complementation to maximize efficiencies and optimally tai-
Asia & Oceania
lor specifications for each market.
MMC enjoyed record sales in Australia for the second con-
In Indonesia, total industry car sales dropped 84% over
secutive year. Sales in Asia and the ASEAN block declined
1997, due to political and economic instability in the coun-
sharply due to currency crises and economic upheavals. The
try. Mitsubishi brand car sales dropped by 88%, and com-
one exception was Taiwan where Mitsubishi brand vehicles
bined car and truck sales by 87% over 1997. In March this
posted increased sales. The company's strategic multi–pur-
year, the company launched the Kuda MPV series model in
pose vehicle (MPV) model for Asian markets has helped it to
retain and increase share in these markets.
In Australia, sales of Mitsubishi brand vehicles posted
record sales for the second year in a row, as sales grew by
2% on 1998. Market share declined slightly to 10.4% as the
total market grew 12%. Strong sales of the Lancer and Pajero
Sport models imported from Japan offset a decline in sales of
the locally-produced Magna and Verda models due to strong
competition activity in the segment. The Lancer was the second best-selling model in the compact class. Production at
MMAL was 23% down on the previous year. Exports to
North America and to other Oceania markets were 50%
L200 Strada
Operational review
29
venture production of engines and transmission in Shenyang
province October 1999 and in Harbin province in 2000.
In India, Mitsubishi Motors has produced Canter lightduty trucks at its local affiliate Eisher Motors since the
1980s. To strengthen its operational base in India, the company entered a technical assistance agreement with Mahindra
& Mahindra Co., Ltd., under which the Indian company began production of the Delica minivan in October 1997. The
company entered a technical assistance agreement with
Hindustan Motors Limited, under which the Indian company
Kuda
started production of the Lancer at new facilities in October
1998, with plans to sell some 20,000 units a year.
the only segment of the market that is showing signs of
growth. Mitsubishi trucks retained a record leading share of
63.6%, and inventories are being successfully reduced.
In Malaysia, total industry car sales were 55% down over
1997. A reduction in interest rates on car loans, and other fis-
Production & sales in Asia
cal relaxation measures helped to spark a recovery in the sec-
(1,000 units)
Production
ond half of the fiscal year and a significant recovery is expect500
ed in 1999. Proton, the national manufacturer in which MMC
481
451
has an equity interest, posted a 53% decrease in sales on 1997.
400
The introduction of lower priced versions of the Saga Iawara
384
Sales
461 475
431
398
366
300
275 264
and Wira models put the brake on the slide in share. With the
200
recovery in the general market apparent since December 1998,
Proton sales have started to climb over 1998.
100
Taiwan was least affected by the economic upheavals else0
where in the region. Total car sales declined by just 0.4% on
94
95
96
97
98
fiscal 1997, helped by strong sales in the first half of the year.
Sales slowed in the second half with concern about financial
Production & sales in Oceania
markets, and a deterioration in the balance of payments and in
(1,000 units)
Production
Sales
exchange rates. MMC's affiliate China Motor Corp., posted an
100
11% increase in sales on 1997, to maintain leading share for
90
86
the second year in a row. This performance was helped by
79
80
66
strong sales of the Freeca MPV series model introduced in the
66
59
60
48
autumn 1997, and the introduction of the new Galant model in
May 1998. Mitsubishi truck sales increased by 4% on 1997,
securing a 53.8% market share.
47
45
40
40
20
New entries into the promising automobile market in China
0
are currently restricted but Mitsubishi Motors is due to start joint
Operational review
30
94
95
96
97
98
Organizational reforms
ed to local management in the areas of business operations
As a vital first step to the successful execution of RM2001,
and staffing.
major reforms of the corporate organization were implement-
•
ed in June 1998. Additional changes were introduced in June
key functions in order to realize further organizational effi-
1999 to simplify the organization further and enable faster
ciencies. As the first step in this strategy, the head office
decision making and execution by management, as well as to
Business Information Systems Department was spun off as
more clearly define responsibilities and authority involved in
an independent company in June.
In addition, the company has decided to outsource some
the implementation of the measures and attainment of tarTrimming the payroll
gets, set by RM2001. The principal changes implemented in
June this year are:
To reduce fixed costs, RM2001 calls for nonconsolidated in-
•
In the first tier of the organization, two of the three
direct personnel to be reduced from 13,400 in April 1998 to
Headquarters have been eliminated to leave just the
12,000 in April 2000. This is well on track, with indirect per-
Headquarters of Truck & Bus Operations, thereby highlight-
sonnel down to 12,700 in April 1999 and as a result, indirect
ing its standing as the unit which directs all aspects of truck
labor costs in fiscal 1998 were down to ¥128 billion, a reduc-
and bus operations.
tion of ¥7 billion.
•
In the passenger car overseas operations division, "local-
ization" is the key word in the establishment of two new
Y2K
Offices: Office of North America Car Operations and Office
The company started research into the potential problems re-
of Europe Car Operations. More authority has been delegat-
lated to Y2K in July 1996, and has implemented programs to
identify and remediate potential problems in its products, information systems, and production and administrative facili-
Office of Corporate Planning Strategy
[General Administration]
ties, and at associates and client companies in Japan and
[Quality & Technical Affairs]
overseas.
Office of Purchasing
The company has already ascertained that none of its
Office of Service Parts
products, either current or older models, will be affected by
Office of Car Product Strategy
Y2K. The company is currently assessing potential problems
Car Product Design Office
in, and taking remedial action where required, its internal in-
Car Reseach & Development Center
President
[Car Production Control & Engineering]
formation systems and production facilities. The target date
Nagoya Plant
for completion of modifications is the end of September this
Kyoto Plant
year. The company has formally requested affiliate and client
Mizushima Plant
companies in Japan and overseas to deal pertinently with
Office of Domestic Car Operations
Y2K, and stays in regular touch with them to ascertain the
Office of International Car Operations
state of progress.
Office of North America Car Operations
The company estimates nonconsolidated Y2K expendi-
Headquarters of Truck & Bus Operations
Truck & Bus Research & Development Center
ture at around ¥1.2 billion. Of this total, approximately ¥640
Tokyo Plant
million had been incurred by the end of fiscal 1998, with a
Office of Truck & Bus Sales
forecast of further spending of ¥550 million required in fu-
Truck & Bus International Sales
ture.
Operational review
31
Financial review
Overview
major decline in total vehicle demand, and in truck sales in particular.
In a very difficult business environment, characterized by the continuing slump in the Japanese domestic market and very weak
Sales outside Japan totaled ¥2,030.1 billion, a decrease of
Asian markets, the rationalization of achieved as a result of the
3.6% on the previous year. Increased sales volume and a weaker
determined execution of the RM2001 mid-term management plan
Yen saw sales income in North America and Europe increase sig-
enabled the company to turn around the ¥101.8 billion net loss of
nificantly to ¥796.8 billion and ¥516.5 billion respectively, up
fiscal 1997 into a profit of ¥5.7 billion in fiscal 1998.
6.6% and 9.5% on the previous year. However, a major drop in
export shipments to Asian markets resulted in sales income of
The principal objective of RM2001 is to strengthen the corpo-
¥230.3 billion, 41.8% down on the previous year.
rate financial base, and to that end the company has embarked on
a major reduction in interest-bearing liabilities. Through an uncompromising scaling back of total assets, the company reduced
Cost of sales
interest-bearing liabilities from ¥2,013.3 billion at the end of
Cost of sales in fiscal 1998 was ¥2,816.1 billion, a decrease of
March 1998 to ¥1,772.0 billion at the end of March 1999, a signif-
7.7% on the previous year and the result of concerted reductions
icant reduction of ¥241.3 billion.
in material and other costs. The reduction in cost of sales was
greater than the decline in sales income. Selling, general and ad-
Reclassifications
ministrative expenses were ¥642.6 billion, an improvement of
Certain reclassifications have been made in the financial state-
6.8%. As a result, the company reported operating income of
ments for the year ended March 31 1998 to conform with the pre-
¥55.9 billion, a major improvement on the loss of ¥1.3 billion of
sentation for the year ended March 31, 1999. The principal reclas-
the previous year.
sifications are detailed in 1 (n) of Notes to the Consolidated
Selling general and administrative expenses
Statements. (See page 44). The figures given in the Financial
(¥ billion)
(%)
20
800
Review for fiscal 1997 and fiscal 1998 reflect these reclassifications.
417
600
362
Net sales
452
414
15
378
10
400
Mitsubishi Motors Corporation's consolidated sales in fiscal 1998
215
233
229
'95
'96
'97
'98
15.4%
545
17.2%
632
18.3%
685
18.3%
643
200
were ¥3,512.6 billion, a decrease of 6.0% on the previous year.
Japanese domestic market sales were ¥1,482.5 billion, a decrease
139
167
'94
14.7%
501
0
0
FY
of 9.0% on the previous year. The decrease was primarily due to a
Sales ratio
Total
Net sales
5
(¥ billion)
4,000
Operating income
3,000
(¥ billion)
(%)
120
3.0
80
2.0
40
1.0
2,000
1,000
0
'94
'95
'96
'97
'98
Sales outside Japan
FY
1,474
1,551
1,756
2,105
2,030
FY
Sales in Japan
1,940
1,986
1,916
1,630
1,483
Operating income
95.9
71.9
45.7
3.2
55.9
Total
3,414
3,537
3,672
3,735
3,513
Operating profit margin
2.8%
2.0%
1.2%
0.1%
1.6%
0.0
0
Financial review
32
'94
'95
'96
'97
'98
Non-operating Profit and loss
tives.
Non-operating income in fiscal 1998 was ¥25.5 billion, a 1.3% in-
In Europe, operating profit was¥3.7 billion, a major improve-
crease over the previous year. Non-operating expenses increased
ment on the ¥11.4 billion loss of the previous year. This was the
by 3.0% to ¥85.6 billion, however, resulting in an ordinary loss of
result of increased sales volume, and was achieved despite in-
¥4.2 billion.
creased selling and administrative costs linked to greater competition.
Extraordinary items
In Asia, operating loss was ¥3.7 billion compared with a ¥600
Extraordinary gain represented by gain on sales or disposal of
million profit for the year before. This was due to the very sharp
property, plant and equipment totaled ¥23.4 billion, which includ-
decline in total demand seen in 1998.
ed ¥25.6 billion from the sale of the Tokyo Plant Maruko factory.
In other regions, operating profit in Australia was ¥4.4 billion,
Extraordinary loss included the ¥4.5 billion conciliatory settle-
a 66.0% decrease on the previous year when operating profit had
ment by Mitsubishi Motors Manufacturing of America Inc., with
increased sharply as a result of sales volume and favorable ex-
the Equal Employment Opportunities Committee. As a result, the
change rates.
company turned last year's loss before income tax into a profit of
Net sales
¥11.8 billion. Taxes of ¥7.7 billion resulted in a net profit for the
(¥ billion)
'97FY
'98FY
4,000
year of ¥5.7 billion, a major improvement on the net loss of
3,735
¥101.8 billion in fiscal 1997.
3,000
3,513
2,929
2,676
Net income and net income per share
2,000
(¥ billion)
(¥)
15
15
10
10
5
5
1,000
707 767
241
0
FY
–100
'94
'95
'96
'97
'98
Net income
12.6
12.7
11.6
-101.8
5.7
Net income per share
14.08
13.84
12.59
-110.49
6.15
331 296
-640
Japan
–100
167 132
-1,000
0
0
439
North
America
Europe
Asia
Others
-798
Corporate
Consolidated
and
eliminations
Operating income
'97FY
(¥ billion)
'98FY
559
500
400
394
300
Segment performance (geographical)
200
In Japan, the company cut the ¥13.7 billion operating loss of fiscal
130
130
100
1997 to ¥7.8 billion. This significant improvement in performance
78
0
stemmed from cost reductions, foreign exchange gains, and im-
-81
proved passenger car income, and was achieved despite a major
-100
deterioration in truck and bus income resulting from the sharp
In North America, operating profit was ¥39.4 billion, a ¥26.4
billion improvement on the year before. This was the result of reduced production costs for the new Galant model and of reductions in selling and administrative expenses, which included the
employment of marketing strategies that did not use cash incen-
Financial review
33
-6 -37
-49
-13
-137
Japan
drop in total demand.
46
44
34
North
America
Europe
Asia
Others
Corporate
Consolidated
and
eliminations
Total assets
Total corporate assets at the end of March 1999 were ¥3,060.4 bil-
(¥ billion)
(%)
500
lion, a 9.2% reduction over the previous year. This was the result
of multi-faceted efforts to trim the company's asset portfolio.
400
20
300
15
200
10
100
5
Trade notes and accounts receivable totaled ¥597.5 billion, a
8.4% reduction of ¥54.9 billion over the previous year. The liquidation of receivables accounted for ¥26.1 billion of this reduction.
Inventories stood at ¥380.7 billion, a major 29.2% reduction
of ¥157.1 billion on the year before. This decrease was the result
of determined reductions in finished product inventories.
0
0
Short- and long-term loans totaled ¥158.7 billion, a 49.5% re-
FY
duction of ¥155.6 billion on the year before. This reduction in-
Stockolder's equity
479.2
483.3
486.5
349.7
353.6
Equity ratio
17.0%
16.1%
15.0%
10.4%
11.6%
cludes ¥93.9 billion through liquidation, and ¥30.0 billion as the
'94
'95
'96
'97
'98
result of appropriating long-term loans to funds for the purchase
new Space Star model in Europe saw increased capital expendi-
of land for the company's new head office.
ture outside Japan.
Property, plant and equipment at the end of March 1999 to-
Capital expenditure
(¥ billion)
taled ¥1,312.3 billion. Despite cut backs in capital expenditure,
300
this represented a decrease of 0.1% over the year before, and was
due primarily to unfavorable foreign exchange rates.
200
Total assets
(¥ billion)
4,000
100
3,000
0
FY
2,000
Total
'94
'95
'96
'97
'98
194.3
227.4
155.0
181.2
156.7
Excluding Leased vehicles
1,000
Depreciation expenses
0
FY
'94
'95
'96
'97
'98
2,826.4
3,007.7
3,233.2
3,370.5
3,060.4
Depreciation expenses (leased vehicle assets excluded) were
¥127.7 billion, a 1.0% decrease on the previous year. Depreciation
expenses decreased in Japan, but increased elsewhere.
Depreciation & amortization
(¥ billion)
Retained earnings at the end of March 1999 were ¥112.0 billion.
200
Assisted by a ¥5.7 billion increase in net income for the year, this
resulted in shareholders' equity of ¥353.6 billion. Stockholder equity ratio was 11.6%, an improvement of 1.2% over last year.
100
Capital expenditure
The company reported capital expenditure (leased vehicle assets
excluded) of ¥156.7 billion, a 13.5% decrease over the previous
0
year. Expenditure decreased in Japan, but installation of new plant
Total
for production of the new Eclipse model in North America and the
Excluding Leased vehicles
Financial review
34
'94
'95
'96
'97
'98
106.6
152.2
109.9
129.0
127.7
Interest-bearing liabilities
56 subsidiaries and 16 affiliates. The company's 45 truck and bus
dealerships in Japan include 35 subsidiaries and 3 affiliates.
At the end of March 1999, interest-bearing liabilities (short- and
long-term loans payable, commercial paper and bonds), including
those at the company's financing subsidiaries in North America,
Leased vehicles
stood at ¥1,772.0 billion, a 12.0% reduction over the previous
Mitsubishi Motor Sales of America Inc., the company's sales unit
year. This reduction was realized by trimming inventories, selling
in North America, conducts lease financing through its wholly-
off fixed assets, and liquidating trade receivables.
owned subsidiary Mitsubishi Motors Credit of America, Inc. New
lease contracts in fiscal 1998 numbered 44,771 vehicles, while
Cash flows
35,654 vehicles were returned. Current leases at the end of
Net cash provided by operating activities was ¥232.6 billion, a
December 1998 numbered 126,072, a reduction of 4,198 over the
major increase on the ¥67.4 billion of the previous year. This fig-
previous year.
ure includes the ¥5.7 billion net income for the year, depreciation
expenses of ¥159.0 billion, the ¥45.7 billion reduction in trade
Exchange rates
notes and accounts receivable, and the ¥141.2 billion reduction in
The foreign currency exchange rates applied in calculating the
inventory assets. Net cash used in investing activities was ¥36.9
revenues, expenses, assets and liabilities of the company's princi-
billion, a major decrease of ¥218.3 billion on the year before. This
pal foreign subsidiaries in fiscal 1998 are as follows:
was the result of the 22.1% decrease in acquisition of property,
• Revenues and expenses: USD 1 = ¥131.17 (¥121.33 in fiscal 1997)
plant and equipment at ¥256.8 billion stemming from the compa-
• Assets and liabilities: USD 1 = ¥115.70 (¥130.10 in fiscal 1997)
ny's cut back on investment, and from the collection of loans receivable and the sales of property, plant and equipment. As a re-
Dividend payment policy
sult, the company produced an inflow of ¥159.6 billion in financ-
The Company makes the maintenance of a stable dividend its first
ing activities.
principle, giving due consideration to achieving a balance between returning profits to shareholders and to securing sufficient
Consolidated companies
funds for future development of its business. To this end, the
The number of consolidated subsidiaries included in the consoli-
Company considers efforts both to improve business results and to
dated statements at the end of March 1999 was 165, an increase of
meet the expectations of its shareholders to be of the utmost im-
two over the previous year. The total decreased by two and in-
portance.
creased by four. There was no change in the total number of com-
The company reported a net income in fiscal 1998, this pri-
panies accounted for by the equity method at 54, with four addi-
marily resulting from determined cost reductions and from profits
tions and four deletions. Noteworthy among companies newly in-
on the sale of property. At the annual general meeting, however,
cluded in the consolidated statements was the addition of NedCar
the stockholders decided to retain all net income and not to make
as an affiliate accounted for by the equity method as a result of
payment of end-of-term dividend.
additional investment in NedCar stock by the company in
For fiscal 1999, the company expects it will be unable to
February 1999. Because NedCar became an affiliate near the end
avoid canceling payment of the interim dividend. However, to en-
of the fiscal year, its net profit for the 1998 fiscal year is not in-
sure payment of an end-of-term dividend, the company will make
cluded in the consolidated net income.
further efforts to reduce costs and strengthen the corporate finan-
MMC has included all material subsidiaries and affiliates in
cial base. In addition, the company is exerting every effort to at-
its consolidated results. The company considers that the 1999
tain the targets set out in the RM2001 mid-term management plan
change in criteria relating to subsidiaries and affiliates will have
in order to return dividends to a level that is satisfactory to its
no impact on the scope of consolidation or on the financial state-
shareholders as soon as possible.
ments.
The company's 249 passenger car dealerships in Japan include
Financial review
35
Mitsubishi Motors Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31,
1999
1998
(In millions of yen)
Assets
Current assets:
Cash and cash equivalents
Trade notes and accounts receivable (Note 4 and 6)
Marketable securities (Note 6)
Inventories (Note 5)
Short-term loans (Note 4)
Deferred taxes
Prepaid expenses and other current assets
Allowance for doubtful receivables
Total current assets
Property, plant and equipment (Note 6):
Land
Buildings and structures
Machinery and equipment
Construction in progress
¥
123,294
597,545
51,897
380,696
33,068
11,410
117,603
(11,468)
1,304,046
406,133
507,749
1,684,323
50,262
2,648,468
(1,336,164)
1,312,303
Accumulated depreciation
Property, plant and equipment, net
Intangible assets
28,113
Investments and other assets:
Investments in unconsolidated subsidiaries and
affiliates accounted for by the equity method
Investments in securities
Long-term loans (Note 4)
Long-term prepaid expenses and other
Allowance for doubtful receivables
Investments and other assets, net
Translation adjustments
Total assets
36,752
40,103
125,626
161,807
(12,434)
351,856
64,065
¥ 3,060,385
36
¥
1999
(In thousands of
U.S. dollars)
(Note 3)
97,744
652,465
61,193
537,816
130,150
13,171
105,014
(14,716)
1,582,839
$ 1,022,762
4,956,823
430,502
3,157,993
274,309
94,650
975,554
(95,131)
10,817,470
376,025
506,133
1,678,132
55,030
2,615,322
(1,301,197)
1,314,124
3,369,000
4,211,937
13,971,987
416,939
21,969,871
(11,083,899)
10,885,964
34,301
26,843
51,747
184,169
138,218
(14,206)
386,771
52,489
¥ 3,370,526
233,206
304,869
332,667
1,042,107
1,342,240
(103,144)
2,918,756
531,439
$ 25,386,852
March 31,
1999
1998
Liabilities and stockholders' equity
Current liabilities:
Trade notes and accounts payable
Short-term borrowings (Note 6)
Current portion of long-term debt (Note 6)
Employees' savings deposits
Accrued expenses
Accrued income taxes
Other current liabilities
Total current liabilities
Long-term debt (Note 6)
Accrued severance indemnities
Customers' guarantee deposits and other
Total liabilities
¥
612,424
927,274
233,498
27,611
85,917
3,470
78,552
1,968,749
611,179
87,382
21,510
2,688,822
660,463
1,105,915
179,513
30,720
96,127
4,971
82,002
2,159,715
727,866
92,340
21,382
3,001,304
$ 5,080,249
7,692,028
1,936,939
229,042
712,708
28,785
651,613
16,331,389
5,069,921
724,861
178,432
22,304,620
17,950
19,474
148,901
136,224
105,339
112,049
353,613
136,224
105,339
108,183
349,747
1,130,021
873,820
929,482
2,933,331
¥ 3,060,385
¥ 3,370,526
$ 25,386,852
Minority interests
Stockholders' equity:
Common stock:
Authorized: 2,814,160,000 shares
Issued and outstanding: 921,791,624 shares
Capital surplus
Retained earnings
Total stockholders' equity
¥
1999
(In thousands of
U.S. dollars)
(Note 3)
Contingent liabilities (Note 9)
Total liabilities and stockholders' equity
See accompanying notes to consolidated financial statements.
37
Consolidated Statements of Operations
Year ended March 31,
1999
1998
Net sales
Cost of sales
Reversal of deferred profit on installment sales
Gross profit
Selling, general and administrative expenses
Non-operating income:
Interest and dividend income
Other income
¥ 3,512,606
2,816,067
2,016
698,555
642,611
55,944
Non-operating expenses:
Interest expense
Other expenses
Ordinary loss
Gain (loss) on sales or disposal of property, plant and
equipment, net (Note 7)
Gain on sales of stocks of a subsidiaries
Foreign exchange loss at consolidated subsidiary
in Thailand
Loss on settlement of litigation
Other, net
Income (loss) before income taxes
Income taxes:
Current
Deferred
Minority interests
Net income (loss)
¥
¥ 3,735,228
3,050,216
3,170
688,182
689,484
(1,301)
¥
18,409
6,742
25,151
144,737
66,537
211,273
79,644
5,945
85,590
(4,176)
73,993
9,131
83,124
(59,274)
660,672
49,316
709,996
(34,641)
23,441
47
(4,808)
8,794
194,450
390
–
(4,459)
(3,069)
11,783
(38,299)
–
(2,279)
(95,867)
–
(36,989)
(25,458)
97,744
5,749
1,986
7,735
7,923
(808)
7,115
1,621
5,668
1,135
¥ (101,846)
6.15
5.93
–
Consolidated statements of operations
38
$ 29,138,167
23,360,158
16,723
5,794,732
5,330,659
464,073
17,448
8,021
25,469
47,690
16,474
64,164
$
13,447
47,018
(In U.S. dollars)
(Note 3)
(In yen)
Per share of common stock:
Net income (loss):
Basic
Fully diluted
Cash dividends
1999
(In thousands of
U.S. dollars)
(Note 3)
¥
(110.49)
–
3.50
$
0.05
0.05
–
Consolidated Statements of Stockholders' Equity
Common
stock
Capital
surplus
Retained
earnings
Total
Balance at April 1, 1997
Net loss
Adjustment to retained earnings at
beginning of year for inclusion or
exclusion of subsidiaries and affiliates
in or from consolidation or equity
method of accounting
Cash dividends
Bonuses to directors and statutory auditors
Revaluation of assets and liabilities at U.S. subsidiaries
Conversion of convertible debentures
Balance at March 31, 1998
Net income
Adjustment to retained earnings for inclusion or
¥ 136,221
–
¥ 105,337
–
¥ 244,898
(101,846)
¥ 486,457
(101,846)
–
–
–
–
2
136,224
–
–
–
–
–
2
105,339
–
(156)
(6,452)
(172)
(28,087)
–
108,183
5,668
(156)
(6,452)
(172)
(28,087)
4
349,747
5,668
–
¥ 136,224
–
¥ 105,339
(1,803)
¥ 112,049
(1,803)
¥ 353,613
Common
stock
Capital
surplus
Retained
earnings
Total
(In thousands of U.S. dollars)(Note 3)
Net income
Adjustment to retained earnings for inclusion or
$ 1,130,021
–
–
$ 1,130,021
$
$
873,820
–
–
873,820
Consolidated statements of retained earnings
39
$
$
897,412
47,018
$ 2,901,261
47,018
(14,956)
929,482
(14,956)
$ 2,933,331
Consolidated Statements of Cash Flows
1999
1998
Operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization
Allowance for doubtful receivables, net
(Gain) loss on sales and disposal of property,
plant and equipment, net
Gain on sales of marketable securities
Devaluation loss on marketable securities
Gain on sales of stocks of a subsidiary
Foreign exchange loss on loans
Accrued severance indemnities, net
Change in operating assets and liabilities:
Trade notes and accounts receivable
Inventories
Other assets
Trade notes and accounts payable
Accrued income taxes
Other liabilities
Other
Net cash provided by operating activities
¥
5,668
158,989
(4,784)
Investing activities
Decrease in short-term investments
Increase in investments in securities
Proceeds from sales of investments in securities
Long-term loans made
Collections of long-term loans receivable
Increase in property, plant and equipment
Proceeds from sales of property, plant and equiment
Inclusion or exclusion of subsidiaries, net
Other
Net cash used in investing activities
¥(101,846)
157,022
4,925
$
47,018
1,318,864
(39,685)
(23,330)
(602)
4,676
(39)
–
(4,958)
4,834
(1,808)
4,524
(8,794)
34,590
2,200
(193,530)
(4,994)
38,789
(324)
–
(41,128)
45,671
141,242
(39,546)
(32,619)
(1,446)
(4,911)
(4,919)
239,090
159,515
(49,803)
(53,963)
(87,898)
(6,122)
16,356
(6,321)
67,409
378,855
1,171,647
(328,046)
(270,585)
(11,995)
(40,738)
(40,805)
1,983,326
4,954
(6,619)
1,782
(346,601)
485,425
(256,859)
74,959
707
(1,149)
(43,400)
10,640
(1,024)
11,514
(294,532)
316,165
(329,780)
91,609
(17,119)
(5,732)
(218,258)
41,095
(54,907)
14,782
(2,875,164)
4,026,752
(2,130,726)
621,808
5,865
(9,531)
(360,017)
Consolidated statement of cash flows
40
1999
(In thousands of
U.S. dollars)
(Note 3)
1999
1998
Financing activities
(Decrease) Increase in short-term borrowings
Proceeds from issuance of long-term debt
Repayment or redemption of long-term debt
Cash dividends paid
Other
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(127,501)
190,773
(222,818)
–
(53)
(159,599)
124,856
194,766
(130,803)
(6,452)
–
182,367
(1,057,661)
1,582,522
(1,848,345)
–
(440)
(1,323,924)
(10,541)
25,549
97,744
¥ 123,294
(1,907)
29,610
68,133
¥ 97,744
(87,441)
211,937
810,817
$ 1,022,762
Consolidated statement of cash flows
41
1999
(In thousands of
U.S. dollars)
(Note 3)
Notes to Consolidated Financial Statements
March 31, 1999
1.
Significant Accounting Policies
(a) Basis of presentation
Mitsubishi Motors Corporation ("MMC") and its domestic subsidiaries maintain their books of account in conformity
with the financial accounting standards of Japan, and its foreign subsidiaries, in conformity with those of the countries
of their domicile.
The accompanying consolidated financial statements have been prepared in accordance with accounting principles and
practices generally accepted in Japan and have been compiled from the consolidated financial statements filed with the
Ministry of Finance as required by the Securities and Exchange Law of Japan and include certain additional financial
information for the convenience of readers outside Japan. Consolidated statements of cash flows have been prepared for
the purpose of inclusion in these consolidated financial statements, although such statements are not currently required in
Japan.
As permitted, amounts of less than one million yen have been omitted. Consequently, the totals shown in the
accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily agree with the sum
of the individual amounts.
(b) Principles of consolidation
The accompanying consolidated financial statements include the accounts of MMC and its significant subsidiaries.
All significant intercompany transactions and accounts have been eliminated in consolidation.
Investments in certain unconsolidated subsidiaries and affiliates (companies owned 20% to 50%) have, with certain
minor exceptions, been accounted for by the equity method.
The difference at the time of acquisition between the cost and underlying net equity of investments in consolidated
subsidiaries and other companies accounted for by the equity method is, as a rule, amortized after appropriate
adjustments over a period of five years, except for a certain acquisition which is being amortized over a period of ten
years.
(c) Cash and cash equivalents
All highly liquid investments with original maturities of three months or less when purchased are considered cash
equivalents.
(d) Inventories
Inventories of MMC are principally stated at cost determined by the first-in, first-out method.
Inventories of the consolidated subsidiaries are principally stated at specific-identification cost, at the lower of cost
determined by the specific-identification method or market, or at the latest purchase price.
(e) Marketable securities and investments in securities
Marketable equity securities listed on stock exchanges are, with minor exceptions, stated at the lower of cost or market,
cost being determined by the moving average method.
Other marketable securities are stated at cost determined by the moving average method.
Investments in securities are stated at cost determined by the moving average method.
42
(f) Depreciation
Depreciation of property, plant and equipment of MMC and its domestic subsidiaries is principally calculated by the
declining-balance method over the estimated useful lives of the respective assets. For buildings, however, the
straight-line method is also followed.
Depreciation of property, plant and equipment at the foreign subsidiaries is principally calculated by the straight-line
method over the estimated useful lives of the respective assets.
(g) Accrued severance indemnities and pension plans
Employees who terminate their services with MMC and its domestic consolidated subsidiaries are generally entitled to
lump-sum severance benefits determined by reference to their basic rate of pay and length of service at the date of
termination.
The indemnity for cases of voluntary termination is lower than that for involuntary termination or retirement. MMC and
its domestic consolidated subsidiaries have, in general, provided for such liability at 40% of the amount which would be
required to be paid if all eligible employees voluntarily terminated their services at the balance sheet date.
In addition to the lump-sum severance indemnity plans, MMC and certain of its domestic consolidated subsidiaries have
pension plans which, under certain conditions, cover a portion of the existing lump-sum severance benefits to employees
who retire at the mandatory retirement age.
Pension cost is funded as accrued. Past service cost was amortized over a period of 26 and 25 years for the years ended
March 31, 1999 and 1998, respectively.
(h) Installment sales
Certain domestic consolidated subsidiaries recognize revenues by the installment sales method whereby gross profit on
installment sales is deferred and credited to income in proportion to the amount of installment receivables which become
due.
(i) Income taxes
Income taxes are principally accounted for on an accrual basis. Deferred income taxes pertaining to timing differences
are recognized only insofar as they relate to the elimination of unrealized intercompany profits and other adjustments for
consolidation purposes.
(j) Translation of foreign currency accounts
Foreign currency receivables and payables of MMC and its domestic consolidated subsidiaries are translated into yen as
follows:
(1) Current receivables and payables are translated at the applicable year-end rates; and
(2) Non-current receivables and payables are translated at historical rates, which approximate the prevailing rates on the
dates of the transactions.
The accounts of the consolidated foreign subsidiaries are translated into yen as follows:
(1) Asset and liability items are translated at the rate of exchange in effect on the closing date of each subsidiary;
(2) Components of stockholders' equity are translated at the historical rates at acquisition or occurrence; and
(3) Revenue and expense items are translated at the average rate for the fiscal year of each subsidiary.
Translation differences are presented as translation adjustments in the accompanying consolidated balance sheets.
43
(k) Amounts per share
The computation of basic net income (loss) per share is based on the weighted average number of shares outstanding
during each year. Fully diluted net income per share is computed based on the weighted average number of shares of
common stock outstanding each year after giving effect to the dilutive potential of common shares to be issued upon the
exercise of warrants and the conversion of convertible bonds. Fully diluted net loss per share for the year ended March
31, 1998 is not presented as a loss was recorded. Cash dividends per share represent cash dividends declared as
applicable to each respective year.
(l) Appropriation of retained earnings
Cash dividends, bonuses to directors and statutory auditors and other appropriations of retained earnings are recorded in
the financial year in which the appropriations are approved at a general meeting of the stockholders.
(m) Leases
Noncancelable lease transactions are accounted for as operating leases regardless of whether such leases are classified as
operating or capital leases, except that lease agreements which stipulate the transfer of ownership of the leased property
to the lessee are accounted for as capital leases.
(n) Reclassifications
Certain amounts previously reported have been reclassified to conform to the current year.
The significant items are as follows:
a. At March 31, 1998 the legal reserve of ¥9,029 million was reclassified to retained earnings.
b. At March 31, 1998 consolidation adjustments of ¥28,096 million were reclassified to intangible assets.
c. For the year ended March 31, 1998, enterprise tax of ¥1,033 million was reclassified from selling, general and
administrative expenses to income taxes.
d. For the year ended March 31, 1998, amortization of consolidation adjustments of ¥5,532 million was reclassified to
selling, general and administrative expenses.
e. For the year ended March 31, 1998, equity in losses of unconsolidated subsidiaries and affiliates of ¥254 million was
reclassified to other non-operating expenses.
2.
Changes in Accounting Policies
a. Effective April 1, 1998, certain domestic subsidiaries changed their method of computing depreciation on
buildings from the declining-balance method to the straight-line method in order to achieve a more appropriate
allocation of cost reflecting their long-term stable usage. This effect of this change was to decrease ordinary loss
by ¥1,769 million ($14,674 thousand) and to increase income before income taxes by the same amount for the year
ended March 31, 1999.
b. Most of MMC's domestic subsidiaries calculated the accrual for employees' bonuses based on the actual amount
paid in the prior period. For the year ended March 31, 1999, however, due to a recent revision to the Corporation
Tax Law of Japan as well as to the implementation of the current compensation scheme which is more dependent
on performance, these subsidiaries began calculating accrued bonuses based on the best estimate of the amounts to
be paid. Given the current business circumstances, this change was made to achieve a more accurate accrual of
employees' bonuses. The effect of this change was to decrease ordinary loss by ¥2,400 million ($19,909 thousand)
and to increase income before income taxes by the same amount for the year ended March 31, 1999.
44
3.
4.
U.S. Dollar Amounts
The U.S. dollar amounts in the accompanying consolidated financial statements are included, solely for convenience,
at ¥120.55 = U.S.$1.00, the exchange rate prevailing on March 31, 1999. The translation should not be construed as a
representation that the yen amounts represent or have been, or could be, converted into U.S. dollars at that or any other
rate.
Liquidation of Accounts and Loans Receivable
At March 31, 1999 the outstanding balances of the accounts receivable and short-term and long-term loans receivable
sold to others without recause which have been deducted from the respective accounts amounted ¥32,583 million
($270,286 thousand) and ¥202,816 million ($41,682,422 thousand), respectively.
5.
Inventories
Inventories at March 31, 1999 and 1998 consisted of the following:
1999
March 31,
1998
Finished products
Raw materials
Work in process
6.
¥ 254,648
25,261
100,786
¥ 380,696
¥ 387,040
32,961
117,814
¥ 537,816
1999
(In thousands of
U.S. dollars)
$ 2,112,385
209,548
836,051
$ 3,157,993
Short-Term Borrowings and Long-Term Debt
Short-term borrowings at March 31, 1999 and 1998 consisted of the following:
1999
March 31,
1998
Loans, principally from banks
Commercial paper
¥ 853,183
74,090
¥ 927,274
45
¥ 906,950
198,965
¥1,105,915
1999
(In thousands of
U.S. dollars)
$ 7,077,420
614,600
$ 7,692,028
Long-term debt at March 31, 1999 and 1998 consisted of the following:
1999
March 31,
1998
Loans, principally from banks and insurance companies
due through 2022 at rates ranging from 0.39% to 11.75 %:
Secured
Unsecured
6.0% bonds due 1998
6.2% bonds due 1999
2.15% bonds due 2001
1.9% bonds due 2001
4.4% bonds due 2001
2.25% bonds due 2002
2.4% bonds due 2003
2.7% bonds due 2004
3.1% bonds due 2007
3.3% bonds due 2009
4.3% bonds with warrants due 1999
0.4% convertible bonds due 2003
Euro medium term notes due through 2002
at rates ranging from 3.33% to 8.14%
Less current portion
¥
68,100
279,544
–
–
20,000
30,000
100
20,000
30,000
20,000
10,000
30,000
50,000
89,760
197,174
844,678
(233,498)
¥ 611,179
¥
1999
(In thousands of
U.S. dollars)
57,387
315,114
5,855
200
–
30,000
100
20,000
30,000
20,000
10,000
30,000
50,000
98,918
239,804
907,380
(179,513)
¥ 727,866
$
564,910
2,318,905
–
–
165,906
248,859
830
165,906
248,859
165,906
82,953
248,859
414,766
744,587
1,635,620
7,006,868
(1,936,939)
$ 5,069,921
Assets pledged as collateral for short-term borrowings of ¥98,893 million ($820,348 thousand) and ¥111,263 at March
31, 1999 and 1998, respectively, and for long-term debt at March 31, 1999 and 1998 were as follows:
March 31,
1999
1998
1999
Notes receivable
Marketable securities
Property, plant and equipment, at net
book value
Others
¥
71,388
21,750
134,793
760
¥ 228,692
46
¥
(In thousands of
U.S. dollars)
87,017
3,699
134,577
1,562
¥ 226,856
$
592,186
180,423
1,118,150
6,304
$ 1,897,071
The warrants issued with the 4.3% bonds due 1999 entitle the holders to subscribe for shares of common stock of MMC
at ¥817 ($6.78) per share. The rights were exercisable through June 23, 1999. If all the warrants outstanding at March
31, 1999 had been exercised, approximately 61,153 thousand new shares would have been issuable.
The 0.4% unsecured convertible bonds due 2003 are convertible through March 28, 2003 into shares of common stock
of MMC at ¥887 ($7.36) per share. At March 31, 1999, if all the outstanding convertible bonds had been converted at
the current conversion price, 101,195 thousand new shares would have been issuable.
The exercise price was, and the conversion prices is, subject to adjustments in certain cases including stock splits.
7.
Gain (Loss) on Sales or Disposal of Property, Plant and Equipment, Net
Gain (loss) on sales and disposal of property, plant and equipment, net for the year ended March 31, 1999 induded gain
on sales of land of ¥30,348 million ($251,746 thousand).
8.
Income Taxes
MMC and its domestic consolidated subsidiaries are subject to corporation, inhabitants' and enterprise taxes based on
taxable income, which, in the aggregate, resulted in statutory tax rates of approximately 46% and 51% for the years
ended March 31, 1999 and 1998, respectively.
9.
Contingent Liabilities
Notes discounted in the ordinary course of business at March 31, 1999 amounted to ¥366 million ($3,036 thousand).
Loans guaranteed and agreements similar to guarantees given in the ordinary course of business at March 31, 1999
amounted to ¥56,136 million ($465,666 thousand) and ¥3,567 million ($29,589 thousand), respectively.
47
10. Segment Information
MMC and its consolidated subsidiaries are primarily engaged, in Japan and abroad, in the manufacture and sales of
products in the automobile segment, which includes passenger vehicles, buses and trucks as well as the related
components.
The geographical segment information for MMC and its consolidated subsidiaries for the year ended March 31, 1999
and 1998 is summarized as follows:
Year ended March 31, 1999
Japan
North America
Europe
Sales to third parties
Interarea sales and transfers
Total sales
Operating expenses
Total assets
¥
¥
¥
1,999,396
676,463
2,675,860
2,668,031
7,829
2,213,368
¥
¥
¥
758,594
8,867
767,462
728,033
39,429
629,528
¥ 438,684
637
439,321
435,949
¥
3,371
¥ 209,167
Japan
North America
Europe
Total sales
Operating expenses
Total assets
¥
¥
¥
2,409,729
519,210
2,928,940
2,942,656
(13,716)
2,382,086
¥
¥
¥
696,481
10,819
707,300
694,292
13,008
743,519
¥ 237,665
3,518
241,183
249,236
¥
(8,052)
¥ 200,989
Japan
North America
Europe
(In thousands of U.S. dollars)
Total sales
Operating expenses
Total assets
$ 16,585,616
5,611,472
22,197,097
22,132,153
$
64,944
$ 18,360,581
48
$ 6,292,775
73,555
6,366,338
6,039,262
$ 327,076
$ 5,222,132
$ 3,639,021
5,284
3,644,305
3,616,333
$ 27,964
$ 1,735,106
Asia
Others
Corporate
and
Eliminations
Total
Consolidated
¥
46,424
85,498
131,923
135,609
¥
(3,685)
¥ 116,532
¥ 269,506
26,394
295,900
291,454
¥
4,446
¥ 137,534
¥ 3,512,606
797,862
4,310,469
4,259,078
¥ 51,391
¥ 3,306,132
–
¥ (797,862)
(797,862)
(802,415)
¥
4,553
¥ (245,746)
¥ 3,512,606
–
3,512,606
3,456,662
¥
55,944
¥ 3,060,386
Asia
Others
Corporate
and
Eliminations
Total
Consolidated
¥ 104,861
62,318
167,180
167,811
¥
(631)
¥ 134,183
¥ 286,491
44,179
330,670
317,626
¥ 13,044
¥ 157,022
¥ 3,735,228
640,046
4,375,275
4,371,622
¥
3,652
¥ 3,617,801
–
¥ (640,046)
(640,046)
(635,092)
¥
(4,954)
¥ (247,275)
¥ 3,735,228
–
3,735,228
3,736,530
¥
(1,301)
¥ 3,370,526
Asia
Others
$ 385,102
709,233
1,094,343
1,124,919
$ (30,568)
$ 966,669
$ 2,235,637
218,946
2,454,583
2,417,702
$ 36,881
$ 1,140,888
Corporate
and
Eliminations
Total
Consolidated
$29,138,167
6,618,515
35,756,691
35,330,386
$ 426,304
$27,425,400
–
$ (6,618,515)
(6,618,515)
(6,656,284)
$
37,769
$ (2,038,540)
49
$29,138,167
–
29,138,167
28,674,094
$ 464,073
$25,386,852
Overseas sales,which include export sales of MMC and its domestic consolidated subsidiaries and sales (other than
exports to Japan) of its foreign consolidated subsidiaries for the year ended March 31, 1999 and 1998 were as follows:
North America
Europe
Overseas sales
Consolidated net sales
Ratio of overseas sales to consolidated net sales
¥ 796,758
¥ 516,524
22.7%
14.7%
North America
Europe
Overseas sales
Ratio of overseas sales to consolidated net sales
¥ 747,706
¥ 471,924
20.0%
12.6%
North America
Europe
Overseas sales
$ 6,609,357
$ 4,284,728
11. Pension Assets
The aggregate assets of the pension funds of MMC and its domestic consolidated subsidiaries as of the most recent valuation date (March 31, 1999 or September 30, 1998) amounted to ¥41,537 million ($344,562 thousand).
50
Asia
Others
Total
¥
230,295
¥ 486,494
6.6%
13.8%
Asia
Others
¥ 2,030,073
¥ 3,512,606
57.8%
Total
¥
396,020
¥ 489,765
10.6%
13.1%
Asia
Others
¥ 2,105,418
¥ 3,735,228
56.4%
Total
$ 1,910,369
$ 4,035,620
$16,840,091
$29,138,167
51
12. Leases
As lessee
MMC and its subsidiaries lease certain property, plant and equipment. For the years ended March 31, 1999 and 1998,
finance lease transactions, except for agreements which stipulate transfer of the title of the assets to the lessee were as
follows:
March 31,
1999
1998
1999
Finance lease obligations:
Due within 1 year
Due after 1 year
Total
¥ 25,631
46,443
¥ 72,074
(In thousands of
U.S. dollars)
¥ 27,752
41,921
¥ 69,673
$ 212,617
385,259
$ 597,876
At March 31, 1999, the equivalent of the acquisition cost of finance lease transactions, except for agreements which
stipulate transfer of the title of the assets to the lessee, amounted to ¥108,303 million ($898,407 thousand) for tools
and equipment and ¥19,848 million ($164,645 thousand) for others. The total equivalent of the related net book value,
which is less than the related accumulated depreciation of ¥76,639 million ($635,746 thousand) was ¥51,512 million
($427,308 thousand).
For the years ended March 31, 1999 and 1998, lease payments for finance lease transactions, except for agreements
which stipulate transfer of the title of the assets to the lessee, amounted to ¥31,038 million ($257,470 thousand) and
¥34,251 million, respectively. The equivalent of the related depreciation and interest expense for the year ended March
31, 1999 amounted to ¥27,743 million ($230,137 thousand) and ¥2,915 million ($24,181 thousand), respectively.
Operating lease transactions entered into as lessee by MMC and its consolidated subsidiaries for the years ended March
31, 1999 and 1998 were as follows:
March 31,
1999
1998
1999
Future minimum lease expanses
on operating leases:
Due within 1 year
Due after 1 year
Total
¥ 17,313
82,542
¥ 99,855
(In thousands of
U.S. dollars)
¥ 18,670
94,880
¥113,550
$ 143,617
684,712
$ 828,328
As lessor
Operating lease transactions entered into as lessor by MMC and its consolidated subsidiaries for the year ended March
31, 1999 and 1998 were as follows:
March 31,
1999
1998
1999
Future minimum lease revenue
on operating leases:
Due within 1 year
Due after 1 year
Total
¥ 47,276
56,531
¥103,808
52
(In thousands of
U.S. dollars)
¥ 38,634
50,381
¥ 89,016
$ 392,169
468,942
$ 861,120
53
Corporate information
(As of March 31, 1998. Board members were newly elected on June 25, 1998)
Date of establishment
Securities traded
April 22, 1970
All stock exchanges in Japan: Tokyo, Osaka, Nagoya, Kyoto,
Hiroshima, Fukuoka, Niigata and Sapporo
Paid in capital
Transfer agent and register
136,224,171,926
Issued and outstanding: 921,791,624 shares
The Mitsubishi Trust & Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005,
Japan
Number of shareholders
Accounting auditor
38,490
Showa Ota & Co.
Common stock
Number of employees
26,749 ; (MMC)
Major shareholders
% of total
Mitsubishi Heavy Industries Ltd.
Mitsubishi Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
The Mitsubishi Trust & Banking Corp.
Meiji Life Insurance Company
The Chase Manhattan Bank, NA London
Mitsubishi Jiko Employees Shareholding Association
Pension Fund, The Mitsubishi Trust & Banking
The Tokio Marine & Fire Insurance Co., Ltd.
The Sumitomo Trust & Banking Corporation
Japan Bankers Trust Company, Ltd.
Chuo Trust & Banking Corporation
Mitsubishi Jiko Torihikisaki Shareholding Association
The Taiyo Life Insurance Company
Mitsubishi Materials Corporation
23.85
8.39
4.67
3.16
2.47
2.27
2.20
1.94
1.85
1.63
1.52
1.34
1.09
1.03
0.98
Tamachi Building Corporation Ltd.
Nippon Life Insurance Company
The Industral Bank of Japan, Ltd.
The Norinchukin Bank
Mitsubishi Estate Company, Ltd.
Mitsubishi Electric Corporation
Asahi Glass Co., Ltd.
Nippon Yusen Kabushiki Kaisha
The Tokai Bank, Ltd.
Toyo Trust & Banking Corporation, Trust Accounting A
The Long-Term Credit Bank of Japan, Ltd.
Mitsubishi Chemical Corporation
Toyo Trust & Banking Corporation, Trust Accounting B
Pension Fund, The Mitsui Trust & Banking
Kirin Brewery Co., Ltd.
0.97
0.87
0.76
0.76
0.76
0.76
0.76
0.76
0.75
0.74
0.71
0.66
0.65
0.62
0.54
Monthly stock prices on Tokyo Stock Exchange
¥800
665
610
¥600
508
470
¥400
394
330
414
374
333
330
360
APR
MAY
JUN
JUL
371
320
276
303
¥200
0
375
241
241
225
208
228
AUG
1997
SEP
OCT
NOV
401
346
310
299
DEC
JAN
418
371
325
FEB
MAR
APR
1998
Corporate information
54
550
500
MAY
JUN
Board of directors
Chairman of the board
Takemune Kimura
Takahiko Tsuyuno
International Car Operations
Yasutoshi Shizukawa
Service Parts
Akio Hanawa
Truck & Bus Operations
Atsushi Saruhashi
Kazumi Maeda
Car Production
Motoaki Inukai
Domestic Car Sales
Kensaku Miyake
Car Research & Development
Takashi Tsukamoto
General Administration, Legal & Public Relations
Junji Midorikawa
Accounting & Finance
Financial Officer
Hideaki Yoshizawa
Car Design
Kuniaki Taira
Car Production
Tatsuro Nakagami
Quality & Technical Affairs
Masakatsu Suzuki
Car Strategy
Hirohisa Saito
Truck & Bus Sales
Akira Kijima
Hisashi Watanabe
Truck & Bus Research & Development
Yasuo Fujisawa
Domestic Car Sales
Yoshinobu Tadai
Car Production
President & CEO (representative director)
Katsuhiko Kawasoe
Executive vice presidents (representative directors)
Yuzo Murata
Fumikazu Yokogawa
Administrative Organization
Chief Business Ethics Officer
Satoru Toyama
Quality & Technical Affairs
Katsuhisa Sato
Managing directors
Shohei Tanaka
Purchasing
Shoichi Yamamoto
Domestic Car Sales
Takashi Usami
Yuhiko Kiyota
Hirotoshi Suzuki
Car Production
Yoshisuke Kondo
International Car Sales
Yoshio Kaneyasu
Truck & Bus Production
Naomitsu Umino
Corporate Planning & Strategy
Chief Information Officer
Katsuhito Kato
Production Engineering
Takashi Sonobe
North American Car Operations
Statutory auditors
Kenzo Inoue
Soichi Uemura
Tsuneo Wakai
Senior Advisor, The Bank of Tokyo Mitsubishi
Yoshihisa Tsuda
Executive Vice President, Mitsubishi Heavy Industries
Directors of the board
Kentaro Aikawa
Chairman of the Board, Mitsubishi Heavy Industries
Minoru Makihara
Chairman of the Board, Mitsubishi Corporation
Board of directors
55
Officies and works
Head office
5-33-8, Shiba, Minato-ku, Tokyo 108-8410, Japan
Telephone: +81-3-3456-1111 Telefax: +81-3-5232-7731
Engineering centers
Car Research & Development Center
1, Nakashinkiri, Hashime-cho, Okazaki, Aichi 444-8501, Japan
Telephone: +81-564-31-3100
Tokachi Proving Ground
22-1, Osarushi, Otofuke-cho, Kato-gun, Hokkaido 080-0271, Japan
Telephone: +81-155-32-7111
Truck & Bus Research & Development Center
10, Okura-cho, Nakahara-ku, Kawasaki, Kanagawa 211-8522, Japan
Telephone: +81-44-587-2000
Kitsuregawa Proving Ground
4300, Washijuku, Kitsuregawa-cho, Shioya-gun, Tochigi 329-1411, Japan
Telephone: +81-286-86-4711
Works (Passenger cars)
Nagoya Plant-Oye
2, Oye-cho, Minato-ku, Nagoya, Aichi 455-8501, Japan
Telephone: +81-52-611-9100
Nagoya Plant-Okazaki
1, Nakashinkiri, Hashime-cho, Okazaki, Aichi 444-8501, Japan
Telephone: +81-564-31-3100
Mizushima Plant
1-1, Mizushima Kaigandori, Kurashiki, Okayama 712-8501, Japan
Telephone: +81-86-444-4114
(Engines & transmissions)
(Trucks)
Kyoto Plant-Kyoto
1, Uzumasa Tatsumi-cho, Ukyo-ku, Kyoto 616-8501, Japan
Telephone: +81-75-864-8000
Kyoto Plant-Shiga
2-1, Kosunacho, Kosei-cho, Koga-gun, Shiga 520-3212, Japan
Telephone: +81-748-75-3131
Tokyo Plant-Kawasaki
10, Okura-cho, Nakahara-ku, Kawasaki, Kanagawa 211-8522, Japan
Telephone: +81-44-587-2000
Tokyo Plant-Maruko
21-1, Shimomaruko 4-chome, Ohta-ku, Tokyo 146-0092, Japan
Telephone: +81-3-3757-7300
Tokyo Plant-Nakatsu
4001, Nakatsu Aza Sakuradai, Aikawa-cho, Aiko-gun, Kanagawa 243-0303, Japan
Telephone: +81-462-86-8111
Officies and works
56
The MMC group of companies
Ownership
(%)
Japan
Mitsubishi Automotive Tecno-Metal Co.,Ltd.
100.00
Mitsubishi Automotive Bus Manufacturing Co.,Ltd.
100.00
Mitsubishi Motors Training Center Co.,Ltd.
PABCO Co.,Ltd.
100.00
100.00
Pajero Manufacturing Co.,Ltd.
Mitsubishi Automotive Tecno-Service Co.,Ltd.
66.59
100.00
Paid-in capital
(millions)
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
Sales
(billions)
Employees
¥
¥
22.26
804
900
33.38
917
1,413
600
¥
¥
1.70
22.35
151
722
610
2,638
¥
¥
35.95
13.26
1,371
599
450
¥
34.80
2,164
300
1,700
¥
¥
32.05
19,169
248
462
2,800
1,700
¥
¥
16,185
14,073
462
369
1,800
¥
9,815
267
¥
1,400
3,000
¥
¥
26,827
57,487
580
1,077
1,940
Mitsubishi Automotive Engineering Co.,Ltd.
100.00
Mitsubishi Automotive Logistics Co.,Ltd.
Hokkaidou Mitsubishi Motor Sales Co.
75.00
100.00
Tokyo Mitsubishi Motor Sales Co.
West Tokyo Mitsubishi Motor Sales Co.
100.00
100.00
North Tokyo Mitsubishi Motor Sales Co.
100.00
Hokkaidou Mitsubishi Fuso Sales Co.
Tokyo Mitsubishi Fuso Sales Co.
100.00
100.00
Osaka Mitsubishi Fuso Sales Co.
Hiroshima Mitsubishi Fuso Sales Co.
100.00
100.00
¥
¥
1,000
1,350
¥
¥
28,431
19,702
538
376
Kyuushuu Mitsubishi Fuso Sales Co.
100.00
¥
1,600
¥
20,065
587
Overseas
•U.S.A
Mitsubishi Motors Manufacturing of America, Inc.
USD 17.94
USD
2.433
3,482
Mitsubishi Motor Sales of America, Inc.
Mitsubishi Motors America, Inc.
97.20
100.00
97.12
USD
USD
50.0
5.7
USD
USD
4.678
0.054
762
30
Mitsubishi Motor Sales of Caribbean, Inc.
100.00
USD
13
USD
0.576
97
•The Netherlands
Mitsubishi Motors Europe B.V.
100.00
NLG
117
NLG
0.061
6
82.00
50.00
NLG
NLG
3.5
551
NLG
NLG
5.113
6.505
273
6,268
Mitsubishi Trucks Europe, S.A.
•The Philippines
99.00
PTE
1,500
PTE
27.9
362
Mitsubishi Motors Philippines Corp.
51.00
PHP 1,464
PHP
8.373
1,372
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
32.30
IDR 11,451
IDR
184.4
529
•Australia
Mitsubishi Motors Australia, Ltd.
60.00
AUD
AUD
2.44
5,070
Mitsubishi Motor Sales Europe B.V.
Netherlands Car B.V.
•Portugal
•Indonesia
The MMC group of companies
57
74
Financial summary
Mitsubishi Motors Corporation and its Consolidated Subsidaries.
1990
Net Sales
Operating income
Net income (loss)
Net income (loss):
Basic
Fully diluted
Cash dividends
At March 31
Total assets
1991
1992
¥
2,360,702
63,270
50,228
21,133
¥
¥
26.59
–
5.50
¥
¥
1,771,504
485,166
336,801
¥
2,797,770
89,725
55,750
25,852
¥
(in yen)
30.28
¥
–
6.50
1993
3,087,136
86,802
60,541
29,514
¥
3,180,430
77,091
50,225
25,832
34.56
–
7.00
¥
30.25
–
7.00
¥
2,388,753
805,106
401,475
2,039,608
¥ 2,284,928
625,420
722,444
357,672
382,260
Non-consolidated summary
Mitsubishi Motors Corporation
1990
Net Sales
Net income (loss)
Net income (loss):
Basic
Fully diluted
Cash dividends
At March 31
Total assets
1991
1992
¥
2,025,715
48,774
41,419
20,242
¥
¥
25.47
–
5.50
¥
¥
1,352,076
331,941
324,164
¥
2,313,636
65,822
50,214
25,208
¥
(in yen)
29.52
¥
–
6.50
1993
2,554,055
56,186
50,540
27,023
¥
2,615,959
57,493
46,567
20,232
31.65
–
7.00
¥
23.69
–
7.00
¥
1,731,985
491,010
379,140
1,554,119
¥ 1,667,680
395,545
462,220
344,135
365,041
Financial summary
58
The Japanese economy has floundered since the collapse of
the asset-driven bubble in 1990. Today, the birth pains conMitsubishi Motors Corporation and its Consolidated Subsidaries.
tinue as it shifts from a bureaucracy-managed pattern to
something more akin to the market-driven economies of the
United States and Europe.
Years
ended
March
31
In
fiscal
1998,
Mitsubishi
Motors Corporation(MMC)
Net
Sales
made good its pledge to turn the deficit incurred in fiscal¥
Operating income
1997–the result of slack sales on the Japanese market and inOrdinary income (loss)
creased costs–into a profit. This achievement is the result of
Net income (loss)
major reforms implemented under the RM2001 (Renewal
Mitsubishi) Net
mid-term
plan, which provides the
incomemanagement
(loss):
blueprint for MMC's
transformation
into a sound and prof-¥
Basic
itable company
at the
earliest possible date.
Fully
diluted
Details of
RM2001
and of the progress achieved to date
Cash
dividends
are given elsewhere in this report. In a nutshell, however,
At March
31 thrust is directed at major reductions in
RM2001's
principal
Total
assets
costs, at the same time as charting strategies for bolstering its¥
production and sales organizations, for giving added impetus
to new model development, and for promoting the ongoing
1990
1991
2,360,702
63,270
50,228
21,133
¥
26.59
–
5.50
¥
1,771,504
485,166
336,801
¥
1992
2,797,770
¥ 3,087,136
89,725
86,802
55,750
60,541
25,852
29,514
(in yen)
30.28
¥
–
6.50
34.56
–
7.00
2,039,608
¥ 2,284,928
625,420
722,444
357,672
382,260
1993
1994
1995
1996
¥
3,180,430
77,091
50,225
25,832
¥
2,946,932
40,758
21,250
5,584
¥
3,414,133
95,912
53,296
12,615
¥
¥
30.25
–
7.00
¥
6.54
–
7.00
¥
13.70
–
7.00
¥
¥
2,388,753
805,106
401,475
¥
2,414,829
948,032
408,483
¥
2,826,446
1,096,766
479,174
3,537,018
71,911
31,305
12,736
(in yen)
13.84
13.72
7.00
¥ 3,007,736
1,194,612
483,268
1997
1998
1999
1999
(in thousands of
U.S. dollars)
$ 29,138,167
464,073
(34,641)
47,018
¥
3,672,085
45,660
9,524
11,599
¥
3,735,228
(1,301)
(59,274)
(101,846)
¥
3,512,606
55,944
(4,176)
5,668
¥
12.59
11.34
7.00
¥
(110.49)
–
3.50
¥
6.15
5.93
–
(in U.S. dollars)
$
0.05
0.05
–
¥
3,233,239
1,213,614
486,457
¥
3,370,526
1,314,124
349,747
¥
3,060,385
1,312,303
353,613
$ 25,386,852
10,885,964
2,933,331
evolution
the GDI(Gasoline
Direct
engine
techNote 1 : of
U.S.dollar
amounts in this annual
report Injection)
are translated from
yen, for
convenience only, at the rate of
¥120.55=U.S.$1, the exchange rate prevailing on March 31, 1999.
nology
hasdiluted
gained
a significant
edge
foris not
theavailable due to the loss for the period.
Notethat
3 : Fully
net income
per share for competitive
the year ended March
1998
Contents
company. Other reforms currently under consideration in-
Highlights
1
clude:
the setting up of a holding
company; the outsourcing
Non-consolidated
summary
Mitsubishi
Motors
of corporate
functions;
and Corporation
greater management emphasis on
2
Senior officers
5
consolidated performance, on market-price accounting and
RM2001
6
on earnings.
The reforms piloted by RM2001 extend beyond the
shores of Japan, while giving due consideration to differNet Sales
¥
ences in Operating
cultures and
approaches
encountered
in
all
countries
income (loss)
where the
company
operates.
Ordinary
income
(loss) "Customer satisfaction",
"Innovative
creative",
Net and
income
(loss) "Fair and open", "Speedy and simPer share
of common
stockthe
(in company's
yen):
ple": these
keywords
epitomize
corporate
Net incomeworldwide.
(loss):
ideals in its operations
MMC hasBasic
a mission: To extend its global presence in the¥
auto industry.Fully
To bediluted
fair and open in all aspects of its busiCash dividends
ness. To continue to strengthen its financial base and achieve
sustainable
profitability.
The company is focused on this
At March
31
mission Total
so thatassets
it may earn maximum customer satisfaction,¥
create value
and reward
its stockholders
Property,
plant and
equipment and employees.
1990 On the analyst's
1991couch
1992
1993 8
Environment
2,025,715
¥ 2,313,636
¥ 2,554,055
Models
48,774
65,822
56,186
Operational review
41,419
50,214
50,540
Financial review25,208
20,242
27,023
1994
1995
12
¥
(in yen)
Consolidated statements
of operations
25.47
¥
29.52
¥ stockholders'
31.65 equity
¥
Consolidated statements of
–
–
Consolidated
statements
of cash flows –
5.50
6.50
7.00
14
2,615,959
20
57,493
22
46,567
32
20,232
1996
¥
2,455,928
40,085
35,354
15,952
¥
2,652,517
67,745
48,046
18,826
¥
¥
18.68
–
7.00
¥
20.45
–
7.00
¥
2,522,559
62,359
55,393
20,468
1997
1998
1999
¥
2,585,940
57,148
58,035
15,067
¥
2,500,614
(15,512)
(22,157)
(25,656)
¥
2,333,971
21,750
5,231
22,138
¥
16.36
14.68
7.00
¥
(27.83)
–
3.50
¥
24.02
22.03
–
1999
(in thousands of
U.S. dollars)
$ 19,361,020
180,423
43,393
183,642
36
38
23.69
39
40 –
7.00
42
53
Corporate data
54
1,352,076
¥ 1,554,119
¥ 1,667,680
¥ 1,731,985
Financial
summary
58
331,941
395,545
462,220
491,010
The
report is printed on recycled
and recyclable paper.
324,164
344,135
365,041
379,140
¥
1,636,646
515,705
388,959
¥
(in yen)
22.24
22.04
7.00
1,669,599
¥ 1,637,038
507,415
514,486
453,864
467,734
¥
1,705,910
517,543
477,308
Note 1 : U.S.dollar amounts in this annual report are translated from yen, for convenience only, at the rate of ¥120.55=U.S.$1, the exchange rate prevailing on March 31, 1999.
Financial summary
59
¥
1,724,254
535,081
445,032
¥
(in U.S. dollars)
$
0.2
0.18
–
1,637,233
$ 13,581,360
534,592
4,434,608
467,171
3,875,330
http://www.mitsubishi-motors.co.jp
5-33-8, Shiba, Minato-ku, Tokyo
108-8410
Japan
Corporate Public Relations Department
Tel: +81-3-5232-7176 (Investor Relations)
+81-3-5232-7165 (Media Relations)
fax: +81-3-5232-7747

Annual 1999 Report - Mitsubishi Motors

Transcription

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