Date: May. 18, 2001

1. 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. Management structure

The Company implemented major reforms in its management structure last year. In a step designed to speed up management and revitalize the board, the number of board directors was reduced, with more seats being given to outside directors. The Company also introduced a system of Executive Officers.

The Board retains responsibility for formulation of management strategy, for key management decisions, and for supervision of execution of operations. Executive officers are responsible for the execution of business operations. This has helped clarify responsibilities and authority in individual areas of operation.

As a result of these reforms, at the end of March this year the Board comprised 11 members, with three outside directors, and there were 38 executive officers.

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.

3. Policy on Dividend payment

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.

4. Mid- and long-term management strategy

The Company announced "The MMC Turnaround Plan" in February this year. Based around the Company's strategic alliance with DaimlerChrysler, this new management vision charts a path to stable growth, and thereby the restoration of customer trust and confidence. Implementation of specific measures and initiatives detailed under the Plan commenced at the beginning of April.

In its commercial vehicle operations, the Company is working to maximize the effective utilization of managerial resources in order to build up its business base. The Company is striving to achieve its targets in this sector against a backdrop of a sluggish domestic economy and increasingly stringent emission regulations, which include a new NOx law as well as local ordinances introduced by the Tokyo metropolitan government.

In April this year, the Company unified its strategic alliance relationships in the commercial vehicle sector when it formed a new and exclusive partnership with DaimlerChrysler. As a result, the Company is now working hand-in-hand with its alliance partner as it pushes forward its passenger car and commercial vehicle operations. The Company will not be spinning off its commercial vehicle business into a separate company by the end of the year, as originally planned, but will be working out the scope and other details of its collaboration with DaimlerChrysler in this area as quickly as possible.

5. Issues to be addressed

The Company apologizes deeply for its betrayal of customer and public trust stemming from the series of events related to the processing of customer claims, and which resulted in the imposition of an administrative ruling by the competent authorities in October last year, and in criminal proceedings in the form of a summary order in May this year.

Viewing the whole incident with the utmost gravity and with a deep sense of remorse, the Company and all members of the MMC group are currently making every effort to introduce sweeping reforms in order to prevent any recurrence. These efforts include: a strengthening of internal supervisory functions; improvements to the customer claim processing system; and the establishment of a Quality Matters Advisory Committee that includes experts from outside the Company among its members.

In addition, the Company has given absolute priority to working to restore public trust and ensure it never again loses sight of the importance of conducting its operations in a law-abiding manner.

Towards this end, the Company is currently making an exhaustive reexamination of the fundamentals of car building and, adopting the customer's standpoint in an uncompromising approach to quality, is devoting all its energies to supplying products and services that win genuine customer satisfaction.

The MMC Turnaround Plan currently being energetically promoted by the MMC group of companies sets a target of achieving an operating profit margin of 4.5% in FY2003. The following are some of the Plan's major initiatives:

  • Introduction of sweeping structural reforms in June 2001: including clearer identification of duties and accountability; fewer layers in the management hierarchy; establishment of a human resources and remuneration committee

  • Abolition of the Executive Advisory System in June 2001

  • 15% lowering of material costs through the creation of unified purchasing, combining global sourcing and implementation of the Common Supplier and MMC Operation System (COSMOS) concept to strengthen fair and result-oriented cooperation with suppliers

  • 14% reduction of the MMC group headcount (equivalent to approximately 9,500 persons) by the end of FY2003 to realize a substantial reduction in fixed costs;

  • Implementation of a new quality control system, in which vehicles undergo rigorous audits at quality check gates throughout the development-to-production chain, to ensure customers are supplied with products of the highest quality

  • Provision of the highest levels of customer service by building up stronger and closer with sales companies

  • 20% reduction in production capacity by FY2003 (first step in this program will be the closing down of the Nagoya Plant Oye body assembly line in September 2001)

  • Reduce number of platforms by half and cut model lineup to optimize the balance with the development process

  • Concentrate on core business through outsourcing of non-core operations

To achieve target of the MMC Turnaround Plan the company will make major investments in such areas as IT (information technology), human resource training, and development of new technologies.

Fired by an indomitable resolve, the Company is fully aware that regeneration will come only through achievement of the Turnaround Plan's targets and goals. In order to realize maximum market effectiveness and maximum corporate benefits, all members of the MMC group of companies are working hand-in-hand to execute the MMC Turnaround Plan speedily and faithfully, and to reap the synergistic benefits flowing from the DaimlerChrysler alliance.



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

[ Results Index | News Release Index | Entrance ]

cCopyright 2001 by Mitsubishi Motors Corporation.