• FY2001 first half sees 22.6 billion yen and 18.5 billion yen improvement in ordinary income and net income respectively over initial forecasts
• Turnaround making steady progress; firm prospect of achieving break-even in FY2001

Tokyo, November 14,2001 -- Mitsubishi Motors Corporation (MMC) today reported a consolidated net loss of 31.5 billion yen for the first half of fiscal 2001, about 20 billion yen less than earlier forecasts. MMC also announced details of its FY2001 first half results, FY2001 full year forecast and details of the progress made in the implementation of the MMC Turnaround so far.

President and CEO Takashi Sonobe said the results show that "The overall turnaround of MMC is clearly on track toward achieving break-even in fiscal year 2001 as we previously announced."

Chief Operating Officer for Passenger Cars Rolf Eckrodt said, "The massive changes and progress made in the first 6 months, especially in the area of cost reductions, confirm that our ambitious turnaround targets are realistic".

COO for Truck and Bus Operations Takashi Usami said, "Our division continues to be a healthy contributor to MMC's overall profits."

I  FY2001 first half results and FY2001 full year forecast

• In its consolidated operations in the first half of fiscal 2001, MMC reported sales of 1,532.6 billion yen. This is a 0.6% decrease from the same period in fiscal 2000, due mainly to a drop in domestic car sales.
• MMC reported an operating loss of 13.1 billion yen, an ordinary loss of 27.4 billion yen and a net loss of 31.5 billion yen for the period. These results represent an improvement of 26.9 billion yen, 22.6 billion yen and 18.5 billion yen over operating profit, ordinary income and net income forecasts respectively for the half year, which initially estimated operating loss of 40 billion yen and ordinary and net losses of 50 billion yen.
• MMC forecasts that it will achieve the announced target of breaking even for total fiscal year 2001 despite the severe domestic market environment and the negative impact up to now resulting from the terrorist attacks in the United States. Due to improved cost competitiveness, the Company expects an ordinary income of 10 billion yen and an operating profit of 35 billion yen for the full year period, an improvement of 10 billion yen over breakeven ordinary income and of 15 billion yen over the 20 billion yen operating profit announced in May.

II  Turnaround progress

MMC is making steady improvement in the implementation of its Turnaround. The Company has achieved major progress in cost reduction, streamlining of production capacity, process optimization, focus on core business, as well as product and brand development as laid out in the Turnaround plan announced earlier this year. In some areas, the Company is clearly exceeding former targets as detailed below.

1. Car Operations
   
   
   1. Cost reductions
      
      
      • Measures to meet the Turnaround target of a 15% reduction in material costs over three years are on track. The progress is result of implementation of the Common Supplier and MMC Operation System (COSMOS) based on intensive cooperation and joint value analysis with suppliers, plus 3,500 different cost reduction activities that are under evaluation or implementation. The Company has met the first half target in its efforts to achieve the fiscal 2001 full year target of a 5% reduction in material costs and identified further saving potentials exceeding the overall target.
      • In the first half, MMC implemented structural cost reductions equivalent to 30% of the target for the full year. With the major part of savings to be realized in the second half as a result of such recent measures as major reductions in production capacity and headcount, MMC is clearly on track to achieve its announced savings target of 40 billion yen for fiscal 2001. Structural cost reduction activities are being pursued on a global operation basis with about 35% of the contributions for fiscal year 2001 forecasted to stem from overseas.
   
   
   2. Streamlining of production capacity in Japan
      
      
      • With the closure of the Oye plant assembly at the end of September this year (equivalent to 18% of domestic production capacity), MMC has nearly achieved its target of 20% or more capacity reduction as announced in February this year. The Company expects to exceed this target significantly next year, as it plans to further reduce capacity by 10% through merging the four car body assembly lines at its Mizushima plant into three.
   
   
   3. Cutbacks in headcount
      
      
      • As a vital step in its drive to reduce structural costs, MMC announced in February that it would trim its group headcount by 9,500 persons by the end of fiscal 2003. The Company has already achieved a reduction of 6,400 persons as of October this year compared to April 2000 through the implementation of early retirement programs, natural attrition and other measures. This figure exceeds by more than 50% the target of 4,100 persons set for October 2001.
   
   
   4. Focusing on core business
      
      
      • MMC is reviewing its traditional operational framework as it focuses management resources on its core business. The first major action was the formation of an operational alliance with JATCO TransTechnology under which MMC will spin off its automatic and continuously variable transmission operations into a new company. MMC has also outsourced components formerly manufactured at the Oye plant.
   
   
   5. Improving process efficiency
      
      
      • MMC has established a totally new corporate organization in June that enables speedier and more efficient decision-making worldwide.
      
      
      
      • The Company is tailoring its corporate organization to the increasingly global nature of its corporate activities. It has totally revamped the quality management, for example, by adopting the Quality Gate System of DaimlerChrysler. Rapid investment and upgrading of IT infrastructure has been implemented to promote greater efficiency in work processes.
   
   
   6. Product strategy
      
      
      • At the recent 35th Tokyo Motor Show, MMC - based on the brand positioning within the alliance family- unveiled a new design identity introducing four concept cars that drew very positive reactions from the media and the public.
      
      
      
      • In the Japanese market, MMC introduced two new models, the Airtrek and the eK Wagon in June and October respectively. The eK Wagon turned out to be an immediate success with customer orders of more than 28,000 as of November 11 exceeding the monthly sales target set for the first six months. Over the 3-year period until the end of fiscal 2003, The Company plans to introduce 16 new models worldwide (13 in Japan).
   
   
   7. FY2001 worldwide sales and profit forecasts
      
      

      MMC forecasts that its full year sales volume will decline in Japan and Europe but will increase in the United States, Asia and the rest of world. Total revenue of the passenger car sales is expected to amount to 2,580 billion yen (from 2,558 billion yen in fiscal year 2000).
      

      The operating profit of the cars operations for the full year is expected to rise from a loss of 83.3 billion yen in fiscal year 2000 to an operating profit of 21 billion yen in the current year.

      
      
      1. Japan
         • The Company expects sales and profits in Japan to recover with a return of customer confidence and interest generated by improved quality, elimination of low profit models, brand-building marketing activities, increased sales of mini-car models and the on-going restructuring of sales companies.
      
      
      2. United States
         • The Company enjoys continuing sales success in the U.S. market as the result of an on-going successful marketing approach by professional local management that has raised the brand awareness from 38% in 1999 to 60% in 2001. At the same time, the profit situation could be further improved by continuously lowering incentive levels to far below the industry average in 2001.
      
      
      3. Europe
         • MMC has implemented successfully the first restructuring steps that are based on a thorough localization of the management in Europe and which aim to improve efficiencies and profitability in both wholesale and retail organizations. A Cross-functional task force has been established to increase profitability at the operations of the NedCar production facility in the Netherlands. The Company optimizes its products lineup for European market.
      
      
      4. Asia / Rest of World
         • MMC will further consolidate its strong position in Asia where it is benefiting from a strong local presence resulting in high market shares and brand awareness. The Company will do so among others by strengthening local production in Thailand as export base. The Company's operations in Australia are expected to return to profit in fiscal 2001 as the result of a thorough restructuring program.
   
   
   8. Alliance with DaimlerChrysler
      
      

      MMC is engaged in collaborative projects with DaimlerChrysler in a number of areas.

      
      
      • Sharing of systems, processes and information in the fields of purchasing, electric/electronics car architecture and IT.
      
      
      
      • Co-sharing of platforms. These include a compact car (B segment) due to be introduced in Europe in 2004 under MMC and Smart Car badges, and small (C segment) and mid-size models (D segment) with the Chrysler Group.
      
      
      
      • MMC also is looking at using the DaimlerChrysler wholesale network in the start-up of sales operations in selected old and new markets.


2. Truck & Bus Operations
   
   

   After a successful turnaround in fiscal 2000, MMC truck and bus operations are now profitable. Although demand for commercial vehicles remained low in Japan and declined in other Asian markets in the first half of fiscal 2001, the Company's sales remained stable, at 352.4 billion yen. For fiscal 2001, the Company forecasts that sales will remain on a similar level with fiscal 2000. As a result of improved cost competitiveness, it expects to return an operating profit of 14 billion yen, an increase of 50% over fiscal 2000.
   

   To strengthen profitability in its truck and bus operations, MMC will focus on the following areas:

   
   
   • Further cost reductions
   • Better quality levels to boost brand strength
   • R&D efforts to enable Mitsubishi commercial vehicles to meet environment, safety, economy and other market needs more precisely
   • Improve in marketing activities
   • Further improvements in sales companies' profitability
   
   

   MMC truck and bus operations is studying collaboration with DaimlerChrysler in such areas as: procurement, commonization of parts and components, R&D in emission and safety related areas, development of next-generation models, quality control organization, and increase of sales opportunities in Europe and Africa.

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