MMC currently holds a 66.6 percent stake in PMC. To see the transaction through, MMC will issue about 3.8 million common shares, which represents 0.3 percent of its outstanding shares.

"Pajero Manufacturing is an important member of the Mitsubishi Motors group. By making it a wholly owned subsidiary, we will be able to integrate functions to further streamline operations and improve product quality," said MMC President and CEO Rolf Eckrodt.

PMC is responsible for assembling sports utility vehicles, one of MMC's main product segments. In 2002, capacity utilization at PMC reached 130 percent and it produced a record 170,000 vehicles, driven mainly by strong demand from overseas markets. MMC's 2002 overseas sales increased to 1.2 million units, up more than 4 percent on 2001.

The move marks the latest step in MMC's drive to focus on its core businesses as part of its ongoing Turnaround. With PMC as a wholly owned subsidiary, MMC will achieve even greater competitiveness in terms of quality and cost while continuing to produce spirited products for spirited people.