Date: Nov. 13, 2000

Management Policy

1. Basic management policy

Mitsubishi Motors Corporation's management policy stands on the following three principles:

  1. To adopt the customer's viewpoint and win and retain long-running customer loyalty through excellence in product and service;
  2. To be innovative with a global perspective;
  3. To act with integrity as an open and clean corporation

In view of the situation the Company finds itself in today, certain fundamental changes must be made. To ensure that we supply vehicles and services that inspire full confidence in our customers, and to show that Mitsubishi Motors really has changed for the better, the following three principles will be driven home throughout the whole organization:

  • To provide customers with products and service of the highest quality, allowing no room for compromise;
  • To ensure that all corporate investments result in higher levels of customer satisfaction, and generate a profit;
  • To conduct our business in a fair and rational manner, and always in obedience with laws and regulations.

2. Policy on appropriation of surplus

MMC considers returning profits to shareholders to be a management objective of the first order. The Company makes the maintenance of a stable dividend its first principle, giving due consideration to the need to achieve a balance between this and to securing sufficient funds for the future development of its business. Such monies are required for the development of new products, of environmental technologies and for funding other avenues through which the Company may fortify its operational base, and thereby enable it to maintain and boost its fighting strength in the intensely competitive automotive industry. Company policy is to apportion the fruits of its operations to its shareholders, taking into account developments in the consolidated results.

3. Mid- and long-term management strategy

Through its strategic alliances with DaimlerChrysler and AB Volvo, MMC is working to revolutionize its management and to accelerate its transformation into a profitable organization. The aim is to establish a business foundation that will enable both its passenger car and its commercial vehicle operations to stand alone and to offer, in a timely manner, competitive products that are eagerly sought on global markets.

MMC is firmly committed to increasing corporate value and is doing so by seeking to return profits on a consistent basis, by driving home its Selection and Concentration philosophy through the entire organization, and through the optimal allocation of management resources.

MMC has formed global and strategic alliances with AB Volvo in the commercial vehicle sector and with DaimlerBenz in the passenger car sector. These alliances will enable the company to deal better with the substantial changes seen in the automotive industry today, and including environmental issues, globalization of management and advances in information technology, as well as with global changes in the paradigms governing development, procurement and production.

On the basis of the corporate philosophy and strategies outlined above, the Company will reassess its new Heart-Beat 21 mid-term management plan and will complete a detailed action plan by the spring of 2001. Every company in the MMC group will devote its full energies to achieving the goals to be set out in the new action plan: (1) to move into the black in FY2001 and, (2) to re-engineer the group so that it produces consistent profits from FY2003 onwards.

4. Management structure

MMC has implemented major changes to its management structure recently. These include the smooth introduction of the internal-company system with the setting up of the Truck & Bus Company on 1 April this year, with a view to spinning it off as a separate company by July 2001; and the formation of alliances with DaimlerChrysler and AB Volvo. In order to speed up the management process further and to make the alliances effective and meaningful, the Company has implemented a radical reorganization of the Board of Directors.

In a step designed to revitalize the board, the number of directors on the board have been reduced, with more seats occupied by outside directors. The Company has also introduced a system of Executive Officers.

The member of the Board will retain responsibility for formulation of management strategy, for key management decisions, and for supervision of execution of operations. Executive officers will be responsible for the execution of business. This will help clarify responsibilities and authority in individual areas of operation.

These reforms to the management structure will speed up the decision-making process and bring greater clarity to issues of accountability, and realize a structure that is better able to focus on delivering results faster.

Mr Rolf Eckrodt of DaimlerChrysler is due to assume the Member of the Board at an extraordinary shareholders meeting due to be convened on 19 January 2001.

5. Issues to be addressed

Mitsubishi Motors was disciplined by the relevant authorities over a series of problems relating to its processing of customer claims. The Company deeply regrets that it has betrayed the trust of its customers and of the general public and will implement far-reaching remedial measures to prevent any recurrence and to raise quality levels in all areas, including development, production, and vehicle servicing.

In addition, all members of the Mitsubishi Motors group of companies will devote their combined energies to supplying products and providing services that win genuine customer satisfaction, by taking the customer's standpoint and re-examining the whole vehicle building process giving top priority to quality.

MMC signed a Master Alliance Agreement with DaimlerChrysler in July, and in October made a new issue of 499,856,000 shares to give DaimlerChrysler a 34% equity holding in the Company. This now opens the way for the Company to roll out a number of collaborative projects. These include the Z-car global strategy model to be jointly developed by the two companies, as well as projects involving collaboration in the areas of development, production, sales and purchasing operations in various parts of the world. Ensuring the success of these projects is the second issue to be addressed.

In its alliance with AB Volvo, the challenge for MMC is to spin off its commercial vehicle operations at an early date, and to start benefiting from the various synergies that will stem from the joint development of a medium truck, as well as from collaboration in worldwide production and sales activities.

In this rapidly changing business environment, MMC is purposefully applying its resources to swiftly establish a corporate brand-oriented management, to internal reforms, and to the globalization of its management.



5-33-8, Shiba, Minato-ku, Tokyo, 108-8410, Japan

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