Mitsubishi Motors to develop new SUV

Mitsubishi Motor Philippines Corp. (MMPC) will invest an additional P2 billion for the development of a new small sports utility vehicle under the Automobile Export Program (AEP).

This was assured yesterday by MMPC president and chief executive officer Kengo Takase in a memorandum to MMPC’s business partners and employees dated April 26.

"MMPC will continue its operations based on its current product line up and the launch of products in 2004 to 2006 which are already in the current MMC line up but will be new to the Philippine market such as the Grandis, Montero Sport and others," Takase said.

"A new small SUV to be manufactured at MMPC from 2006 for the Philippine market and export to ASEAN countries is already in the program and funding for which is not contingent on the revitalization plan for MMC," he added.

Takase confirmed that due to losses incurred by MMC in its North American operations, MMC cash flow projections for its 2004-2005 fiscal year cannot support new product developments scheduled for launching in 2006 onwards.

"A financial plan to generate some $6.5 billilion to continue the revitalization of MMC with new products was proposed," Takase said.

While the Daimler Chrysler Group, which owns 37 percent of MMC, has rejected further capital infusion into MMC, Takase explained, "the leading companies of the Mitsubishi Group and major MMC shareholders such as Mitsubishi Heavy Industries, Mitsubishi Motors Corp. and the Bank of Tokyo-Mitsubishi have announced their commitment to support Mitsubishi Motors’ financial requirements and to develop a new revitalization plan by the end of this May."

Takase further assured that in spite of Daimler Chrysler’s position on the capital infusion, the alliance between Daimler Chrysler and MMC "will continue due to the advanced stage of joint product development and parts design and manufacturing sharing with Daimler Chrysler."

Takase, thus, stressed that "given the above situation, I have the confidence that MMPC operations in the Philippines will continue to be competitive and profitable."

MMC’s troubles stem from a combination of high levels of debt as well as falling sales due to lack of "hit" products.

MMPC last year had revealed plans to manufacture spare parts for Daimler-Chrysler cars.

Daimler Chrysler, at that time, had reportedly eyed the Philippines as a hub for such parts manufacturing.

Mitsubishi and Daimler-Chrysler had formed a tie-up in March 2000.