Consolidated net sales had been on a continuous decline since FY1997. Now for the first six months of FY2002, consolidated net sales increased 5.6 percent from a year earlier to a total of 1.6 trillion yen. Driven by steady progress in its turnaround, MMC reported operating profit of 23.5 billion yen, ordinary income of 18.9 billion yen, and net income of 6.6 billion yen. This represents year-on-year increases of 36.6 billion yen, 46.3 billion yen, and 38.1 billion yen, respectively.

Despite the continuing severity of market conditions, MMC forecasts that for the full-year ending March 31, 2003, an acceleration in turnaround-driven improvements will lead to sales of 3.4 trillion yen, operating profit of 77 billion yen, ordinary income of 55 billion yen, and net income of 38 billion yen.

Passenger Car Operations

In place since FY2001, MMC's Turnaround has been successful in bringing the company back to profitability. Turnaround initiatives continue to gain momentum; further gains will be seen in reducing costs, focusing on core activities, optimizing processes, improving brand power, and developing new products.

"The second year of our turnaround is making steady progress. We're well positioned to increase profits over last year and are on track to reach our fiscal 2002 targets," said MMC President and CEO Rolf Eckrodt. "The launch of the Colt and the spin-off of our truck and bus operations mark the next phase of our plan for sustainable growth," he added.

Cost reduction
MMC expects overall improvements of 265 billion yen in FY2002, beating its original cost saving target of 175 billion yen. The target to reduce material costs by 15 percent by FY2003 is expected to be reached much earlier. MMC took a major step in accelerating the globalization and efficiency of its procurement activities when it dissolved its Kashiwa-Kai cooperative suppliers organization in June in favor of establishing a more open relationship with suppliers globally.

FY2002 full-year outlook by region
On a worldwide basis, sales are expected to increase to 2.7 trillion yen, up 180 billion yen from FY2001. MMC forecasts that operating profit will more than double from the 30.7 billion yen in FY2001 to 67 billion yen in FY2002, representing an operating profit margin of 2.5 percent.

Japan
Having sold 163,000 vehicles in the first half of the year, MMC forecasts to achieve 374,000 units over the full-year period. The acceleration of the domestic turnaround is based on both the recent launch of the Colt as well as on the reform of MMC's domestic dealer network due to start in January 2003.

North America
MMC forecasts a 12 percent rise in unit sales to 360,000 units in the NAFTA region for FY2002. Growth and profit gains are being driven by the October launch of the Outlander crossover SUV and a clear overall brand positioning, which allows keeping incentives at a continuously low level. MMC successfully entered the Canadian market in September this year and plans to start selling in Mexico in early 2003 to further grow in the NAFTA region.

Europe
The European Turnaround is making steady progress. Despite an overall European market decline, MMC forecasts full-year sales to stabilize above the 200,000 unit level. By focusing on profit-generating models, reorganizing its sales network and reorganizing production at its NedCar plant in the Netherlands, MMC expects to halve its losses in FY2002 compared to FY2001.

Asia and Rest-Of-World (ROW)
Unit sales in Asia and ROW for the first half of FY2002 increased by 25 percent to 354,000 units, over the full-year MMC forecasts sales of 695,000 vehicles. MMC's business in China continues to expand. As part of its alliance with DaimlerChrysler (DC), MMC has agreed to produce its Pajero Sport and Outlander at Beijing Jeep Corporation.

Introduction of new models
MMC is carrying out an active product launch program to strengthen and reposition its passenger car operations for long-term growth. Between 2002 and 2007, MMC plans to launch 15 new models in Japan, 12 in North America, 14 in Europe, and 12 in Asia and other parts of the world.

Joint initiatives with DaimlerChrysler
In the area of development, MMC and Smart of DC are closely working together on new compact cars for both companies due in Europe in 2004. Huge synergies are expected by the use of the same platform and common parts and components. MMC's NedCar plant in the Netherlands is set to produce both MMC and Smart cars. An equally MMC/DC-owned engine plant-currently under construction in Germany-will provide state-of-the art gasoline engines for these vehicles.

Similar cooperation on the use of common platforms and components is currently underway between MMC and the Chrysler Group of DaimlerChrysler for C and D segment vehicles. Another example of the efficient leverage of scale effects is the joint design, development and engineering of gasoline engines with Hyundai Motor and Chrysler Group. A combined production volume of 1.5 million units annually will assure huge cost benefits for all partners including MMC.

The recently announced production of two MMC vehicles at Beijing Jeep Corporation in China will accelerate MMC's expansion strategy into this growth market. Overseas expansion is further facilitated for MMC by using DC's distributor and sales network in South Africa and Eastern Europe as well as in Canada and Mexico.

Truck and Bus Operations

Due to the prolonged slump in demand for commercial vehicles in Japan, consolidated net sales of MMC trucks and buses saw a slight decrease to 342.5 billion yen for the first-half of FY2002, still generating an operating profit of 2 billion yen.

On the back of new product launches in Japan and a recovery of sales to Asia and the Middle East, MMC forecasts an increase in consolidated sales to 700 billion yen and an operating profit of 10 billion yen for the full year. After a successful turnaround and return to profitability in FY2000, FY2002 marks the start of a second phase in the turnaround activities of truck and bus operations.

"The strong turnaround of our truck and bus operations has allowed us to maintain our position as Japan's leading truck maker despite the difficult market conditions," said Takashi Usami, COO for Truck and Bus Operations. "Now with our planned spin-off in January next year we will be able to speed up our alliance with DaimlerChrysler to be a true global player."

The spin-off of truck and bus operations and the establishment of Mitsubishi Fuso Truck and Bus Cooperation (MFTBC) is scheduled for January 6, 2003. MFTBC is expected to gain a better market position in Japan and overseas thanks to improved cost performance, quality control, and overall product marketability. Supported by the direct alliance with DaimlerChrysler, costs will be reduced further by expanding global purchasing capabilities, jointly investing in new areas such as environmental technologies, collaborating on the development of vehicle chassis and components, and sharing common powertrains, in addition to a strengthening of global sales and distribution networks.

This document contains forward-looking statements that reflect the current view of Mitsubishi Motors Corporation management with respect to future events. The words anticipate, believe, estimate, expect, intend, may, plan, project, and should and other similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: changes in general economic and business conditions; changes in currency exchange rates and interest rates; introduction of competing products; lack of acceptance of new products or services, including increased competitive pressures on the general level of sales incentives and pricing flexibility; and decline in resale prices of used vehicles. If any of these or other risks and uncertainties occur, or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Mitsubishi Motors Corporation does not intend or assume any obligation to update these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made.