Mitsubishi Motors Corporation - Overview

OVERVIEW

Mitsubishi Motors Corporation (MMC), Tokyo, has a long history of producing innovative and technologically advanced vehicles. The parent company of Mitsubishi Motors' North American operations, MMC is an acknowledged leader in automotive technology and one of the world's leading automotive manufacturers.

With affiliated businesses in more than 170 countries, MMC is a global company and one of the five largest automakers in Japan, with domestic sales of 359,000 units in FY 2003. Worldwide sales for the same year totaled some 1.53 million units. Employees of Mitsubishi Motors group of companies around the world (consolidated basis) totaled approximately 43,600 as of March 2004.

BUSINESS ACTIVITIES

In response to market and financial challenges in 2003 and 2004, including the decision of alliance partner DaimlerChrysler not to participate in another round of capital enhancement in Mitsubishi Motors Corporation, MMC undertook significant restructuring activities in 2004 and received a capital injection of some 496 billion Yen (approximately $4.2 billion) from various outside private investors, including other Mitsubishi group companies. With this new vote of confidence and financial backing, Mitsubishi Motors unveiled in May 2004 its Business Revitalization Plan, which called for a myriad of actions, including operational restructuring, cost-cutting measures and new product strategies. One of the foremost measures in the new plan was the entrenchment of business ethics as a core value of the company.

The company forecasts call for a return to ordinary profitability in 2005 and net profits in 2006. These figures will be achieved on the basis of new products, the first of which are being released in Japan and in Europe, with other new models set to debut in North America through the coming year. Cost reductions also will be achieved through a reorganization of the company's platform strategy, which will see the number of platforms in use decreasing from the present 15 to six by the year 2007. Combined with headcount adjustments and other reductions to fixed and variable costs, the company has set achievable targets that will see it prosper in the future.

RESEARCH AND DEVELOPMENT

MMC has several research and design centers located around the world. Mitsubishi Motors R&D of America, Inc. (MRDA) is headquartered in Ann Arbor, Michigan, and has a studio in Cypress, California. MMC's Tama Design Center is in Tama City, Japan, and Mitsubishi Motors R&D of Europe is in Trebur, Germany.

GLOBAL OPERATION OVERVIEW

Mitsubishi Motors is a globally focused player in the automotive marketplace. In addition to its plant and distribution network in North America, Mitsubishi Motors has production facilities in Asia, Oceania and Europe, and distributes product in 170 markets around the world. There are few regions where the company does not operate.

MMC's first forays into Europe date back to 1974, with the introduction of the Lancer. Now based in Amsterdam, Mitsubishi Motors Europe (MME) handles sales, marketing and distribution of Mitsubishi passenger cars, parts and accessories in more than 30 countries in Europe, as well as all local production of cars through Netherlands Car B.V. (NedCar) in Holland and Industrie Pininfarina S.p.A. (IPF) in Italy. NedCar started in 1991 as a joint venture with Volvo Car Corporation and the Dutch state. A 100 percent MMC subsidiary as of April 2001, NedCar produces the European versions of the Colt, which was launched in May of 2004. With previous business partner Volvo discontinuing production in the facility as of 2004, MMC will continue to operate the NedCar production facility to exclusively produce Mitsubishi cars such as the Colt and the Space Star, as well as models for Smart of DaimlerChrysler. MME is also MMC's representative in the joint engine plant MDC Power GmbH, in collaboration with DaimlerChrysler, which produces a range of engines for use in Europe.

MMC continues to be a strong player in Asian and ASEAN countries with production affiliates in Thailand, Philippines, Indonesia, Malaysia, Taiwan and Vietnam. But the company also has a new strong focus in China.

Today, MMC has production agreements with many of China's leading car manufacturers. These partnerships pave the way for enhanced use of local production capacity and extend the MMC brand to new models sold in China, creating a strong product lineup. An example of the success of this focus is the Pajero Sport, which entered production in March 2003 as the first Mitsubishi-branded passenger car model to be made locally in China. The Pajero Sport was manufactured in partnership with Beijing Jeep Corporation (BJC). In 2004, BJC introduced another new model, the Outlander. MMC's aim is to achieve annual sales of Mitsubishi-derived cars in China of 310,000 units by 2008, including both locally manufactured models and BU vehicle imports.

RESEARCH

Mitsubishi Motors has long been a leader in automotive technology, contributing award-winning developments such as the Gasoline Direct Injection (GDI) engine to the marketplace. Other Mitsubishi innovations include the Mitsubishi Innovative Valve-Timing Electronic Control System (MIVEC), which boosts engine performance through variable valve timing. MMC has also turned its know-how to suspensions as well, with renowned developments such as the Super Active Yaw Control (Super AYC) system, as found on the Lancer Evolution MR. By monitoring and modulating power output to all four wheels, Super AYC permits superior grip and control on a variety of road surfaces, inspiring confidence in drivers.

Likewise, the Active Center Differential (ACD) system makes it possible to control the flow of power through a limited-slip differential, going from a non-drive state to a direct drive 4WD state via a center differential limited-slip mechanism (internal transfer) that electronically controls a hydraulic multiple-disc clutch. As with the Super AYC, the ACD system provides a level of control unmatched by competitors' vehicles.

Research also continues into alternate fuel vehicles, as evidenced by the Fuel Cell Vehicle Project, which was undertaken in cooperation with DaimlerChrysler. Outfitting a standard Grandis minivan with a hydrogen fuel cell powered engine, MMC has been able to conduct significant research into this promising area of environmentally friendly technologies.

ENVIRONMENTAL ACTIVITIES

In 2003, MMC continued its Environmental Sustainability Plan, a five-year plan with action programs in environmental management, recycling, global warming prevention and pollution prevention as part of its commitment to preserve the environment.

MMC has developed models that are 90 percent recyclable and is implementing measures to achieve a recycling rate of 95 percent for its products. Mitsubishi production facilities also are committed to recycling by reusing materials whenever possible, often by reforming them for use in different capacities. All MMC plants in Japan and many in other areas are ISO 14001 certified.

COMPANY HISTORY

When Mitsubishi built the Model A in 1917 it became the first Japanese production-car manufacturer, decades ahead of Toyota, Nissan, Mazda and Honda. Subsequently, Mitsubishi recognized the value of marketing commercial vehicles. In 1925, the company's first gravel trucks played an integral role in rebuilding Tokyo after the destructive Kanto earthquake. In 1932, the Mitsubishi Fuso bus was introduced, followed by Mitsubishi's production of Japan's first diesel-engine commercial vehicle in 1935.

In 1959, Mitsubishi focused again on volume passenger car production, and by 1964, the model line had expanded into a complete range of passenger vehicles. In 1970, an independent automotive company was established: Mitsubishi Motors Corporation (MMC). In 1984, MMC was integrated with its sales subsidiary, Mitsubishi Motor Sales Co., Ltd. of Japan. It was listed on the first section of the Tokyo, Osaka, Nagoya and other stock exchanges in 1988 and has since operated as an independent public company. In March 2000, MMC and

DaimlerChrysler reached a strategic alliance in the area of passenger cars. In May 2004, Mitsubishi Motors launched its Business Revitalization Plan, which lays out a complete plan for the company's future growth.

MMC Select International Factory Locations

MMC BOARD MEMBERS

Yoichiro Okazaki- Chairman, Chief Executive Officer
Koji Furukawa- Vice Chairman, Chief Business Ethics Officer
Hideyasu Tagaya- President, Chief Operating Officer
Hiizu Ichikawa- Managing Director, Chief Financial Officer
Akaira Kijima- Managing Director, Product Operations
Fujio Cho- Managing Director, Domestic Operations
Osamu Masuko- Managing Director, Overseas Operations
Eckhard Cordes- Member of the Board
Rudiger Grubes- Member of the Board
Takashi Nishioka- Member of the Board
Mikio Sasaki- Member of the Board
Yasushi Ando- Member of the Board

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