• Company on track to achieve break-even in FY 2001
• Total costs savings to total about 200 billion Yen in FY 2003
• Return to break-even in the Japanese and European market in FY 2002/03

May 18, 2001 - Mitsubishi Motors Corporation (MMC) today announced net losses of 278 billion yen for FY2000, but forecasted that the company will break-even in FY2001, achieve an operating profit margin of 2.5% by FY2002 and improve that to 4.5% by FY2003.

1. Financial Results for FY 2000 and Outlook

Due to the declining Japanese market, increased losses especially in Europe and restructuring costs such as the provisions for pension funds and recalls, net losses for FY 2000 were 278 billion yen. Net sales for FY 2000 were 32,767 billion yen, 1.8 % down compared to FY1999.

Rolf Eckrodt, Chief Operating Officer COO (Car Operations), reported that substantial costs savings will enable MMC to break even in FY2001 and return to profitability in FY2002. Fixed costs savings will be 40 billion Yen in FY 2001, while material cost savings will be 60 billion Yen in FY 2001.

Takashi Sonobe, Chief Executive Officer CEO, expressed confidence that the following Operating Profit Margin targets will be achieved:

• Break-Even for FY 2001
• Operating Profit Margin of 2.5 % by FY 2002 (93 billion Yen)
• Operating Profit Margin of 4.5% by FY 2003 (175 billion Yen)

2. Development of Truck and Bus Division

MMC's Truck and Bus Division returned to profitability in FY 2000. Takashi Usami, COO (Truck and Bus Division) reported that the division's mid-term management program with measures such as the closing of the Maruko Plant in Tokyo, the reduction of sales companies from 45 to 36 and a reduction of headcount by 14% led to a successful restructuring of the division resulting in a lower break even point of 149,000 units in FY 2000 as compared to 165,000 units in FY 1998.

COO Usami reported that the strategic alliance talks between MMC and DaimlerChrysler have begun regarding the truck and bus division, and that the first results are expected in the near future.

3. Turnaround Plan Progress

Rolf Eckrodt announced the key developments of the MMC Turnaround Plan: New Product Drive The company will introduce an exciting product portfolio as the core of its new strategy. New models will include:

• A new-age crossover vehicle "Airtrek": This model will be introduced in Japan next month, targeting young customers. The Airtrek will be the first vehicle marketed under the standardized DaimlerChrysler Quality Gate System that MMC has adopted.
  It will also be launched in the US and Europe in the future.
• A new concept mini-car, to be launched late this year and to be distributed via both sales channels.
• The first Z-car, to be launched late in 2002 in Japan as the first model to evolve directly out of the alliance with DaimlerChrysler.
• New concept cars, to be introduced at the Tokyo Motor Show in October

These models will be the first from MMC's new design team, headed by former Mercedes Benz designer Olivier Boulay, who was appointed on May 1 to sharpen the company's brand identity.

To support the new product strategy, the R&D and marketing budgets will be increased by 30 billion Yen in FY 2001, non-profitable products will be discontinued, and the company will focus on products which achieve a significant volume per model.

Synergies with DaimlerChrysler will be achieved through platform sharing between Chrysler and Mitsubishi Motors vehicles in the small and midsize car segment. One example of such synergy is the Z-car, mentioned above.

The new products will be supported by a new corporate campaign called "New History" launched in Japan in May to illustrate the new evolution of Mitsubishi Motors.

Domestic Market

Several restructuring measures to streamline the dealer network will be conducted. In a first step, four dealers of the Tokyo area will be combined under one holding company, two dealerships will be merged into one, and two further ones will be sold. All these measures will be taken in July.

Investments in IT, Training and Customer Relationship Management (CRM) will increase and the two-way communication with MMC dealers will intensify. The company forecasts that these measures will help MMC's domestic operations to return to break-even by FY 2002.

European Market

An excellent basis exists for a turnaround in Europe, where MMC has a good image, a strong production pillar (the Nedcar plant in the Netherlands) and a state of the art design center in Germany.

Restructuring of the sales network will be facilitated by the wholesale potential of DaimlerChrysler and by the introduction of the Z-car as well as far-reaching organizational changes and a new long-term product strategy.

Based on all these actions, the company forecasts a return to break-even in Europe by FY 2003.

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