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Mitsubishi cuts jobs but still confident

Mitsubishi is still tipping a 380 turnaround - despite more job cuts, supply issues

17 Aug 2006

MITSUBISHI Motors Australia’s move this week to shed another 100 jobs at its Tonsley Park assembly plant in Adelaide was not a sign that its manufacturing operations were heading towards closure.

Mitsubishi Australia spokesman Kevin Taylor said the company was attempting to get its manning levels "down to the volume levels we see in the short-term".

"We have more corporate campaigns to come with the 380 and we still believe the market will turn around," he told GoAuto this week.

In February, Mitsubishi Australia axed 250 workers and said it had no further redundancy plans. However, lower-than-expected 380 sales and model mix issues have prompted these further job cuts.

Mr Taylor said Tonsley Park was continuing to build 1200 cars a month – albeit at a lower line rate of 65 cars a day – and was managing its inventory better.

However, he acknowledged that when the 380 Series II was launched in May the plant concentrated on EX and SX models, which in turn has left the VRX and other upper-spec models in short supply.

Mr Taylor said that because some components came from Japan, with a three-month lead-time, the company was committed to its current model mix. But he anticipated the availability issue being sorted by October.

21 center imageLast month just 826 380s were sold, down from its target of 1500 a month. In April the company slashed the 380’s entry price to $27,990 – a $2000 cut from its launch price – and has embarked on an aggressive marketing campaign for the car.

Mr Taylor said he was confident the 380’s appeal would lift on the back of the sales momentum of the new VE Commodore, Toyota Aurion and the Ford Falcon MkII.

"We’ve said all along that this will happen," he said. "If you look at historical information, every time there’s been a significant new-car launch like a VT (Commodore) or a BA (Falcon) or whatever, the market comes back up again.

"What we want is more shoppers in the segment."Mr Taylor said the 380 was the only car that had been increasing its market share in the large-car segment, albeit off a small base.

Since 1998, Mitsubishi’s Adelaide workforce has dropped from 4500 to under 2000. In 2004, Mitsubishi slashed its workforce by 1000 when it closed its Lonsdale engine plant.

Nonetheless, Mitsubishi Australia earlier this month made another cash repayment – its second this year – to its parent in Japan, which according to Mr Taylor was worth "tens of millions". Mitsubishi Motors Corp has also managed to lift its investment rating in the past month to well beyond junk-bond status.

"This has an effect on us – when their investment rating improves that gives us the ability to be able to borrow better," Mr Taylor said.

Mitsubishi Australia continues to track ahead of its plan for the first quarter of its financial year (ending March 31), and with new products such as the revised Colt range is confident of continuing the general trend upward.

No 380 diesel, ESP
MITSUBISHI Australia has hit a brick wall in sourcing a suitable diesel engine – in either four- or six-cylinder guise – for its 380 large sedan.

"There’s not one that’s the right size," president and CEO Rob McEniry told GoAuto. He said the 3.2-litre DiD found in the Pajero 4WD, and the 2.0-litre TDI that Mitsubishi in Europe was using in some of its small cars, were unsuitable.

Meanwhile, Mr McEniry also said there were no plans to offer stability control in the 380 in light of its introduction across the VE Commodore range.

"We’re investigating it ... I think progressively over time it will become a standard feature in most cars ... (but) when will that be is an issue," he said.

Other Mitsubishi diesels
STRONG overseas demand for diesel engines across Mitsubishi’s range of small vehicles, including the new Outlander (due in October) and the next-generation Lancer sedan and hatch (due in 2007), will restrict Australian releases.

"Diesel for smaller passenger cars is a no for us at this stage," Mitsubishi Australia president Rob McEniry told GoAuto.

"That doesn’t mean I wouldn’t love one, by the way," he added, blaming overseas demand. Interestingly, that might not be an issue for forthcoming vehicles such as the Dodge Caliber and Nitro, which are built on the same small-car platform and use the same (VW-supplied) turbo-diesel engines in Europe.

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