First-Half FY 2003

During the first half of fiscal 2003, unit sales, net sales and operating results in all regions except North America improved against last year's figures. Operating losses in Japan were reduced year-on-year while European operations turned positive for the first time in MMC's history. Profits in Asia and the rest of the world increased again. The operating result in North America turned negative due to weaker retail and net sales coupled with higher incentive costs and high credit loss provisions taken by the company's U.S. financing unit Mitsubishi Motors Credit of America, Inc. (MMCA) in the first half of fiscal 2003.

Worldwide unit sales in the first half of fiscal 2003 rose by 10,000 from the same period a year ago to 773,000 units. Consolidated net sales decreased slightly from 1.276 trillion yen to 1.207 trillion yen (US$10.85 billion, euro 9.34 billion)* this period. MMC reported an overall operating loss of 76.4 billion yen (US$687 million, euro 591 million) (+21.5 billion yen in FY02/1H). This figure includes charges in the U.S. for credit loss provisions of 50.6 billion yen (US$454 million, euro 392 million). These charges are also reflected in the ordinary result of –85.8 billion yen (US$ –771 million, euro –664 million) (+18.9 billion yen in FY02/1H).

The net result stood at –80.2 billion yen (US$ –721 million, euro –621 million) (+6.6 billion yen in FY02/1H). The net result also includes 2.5 billion yen (US$22 million, euro 19 million) related to the company's 42 percent participation in Mitsubishi Fuso Truck & Bus Corporation (MFTBC), which was spun-off from MMC in January 2003.

"We have made significant progress and improved results in each region except North America," said MMC President and CEO Rolf Eckrodt. "This year's negative result for North America will delay but not derail our company's path to profitable growth in the future."

"Aggressive countermeasures to correct the current business situation in North America are being implemented by the new management," Eckrodt continued. "We have launched a comprehensive business review to ensure a quick return to profitability in this region and thus worldwide."

Full-year 2003 Outlook

For the second half of fiscal 2003, MMC expects the North American operations to become profitable again. Overall, MMC foresees an operating profit of 31 billion yen (US$279 million, euro 240 million) worldwide for the second half of fiscal 2003.

Despite this return to overall profitability in the second half of fiscal 2003, MMC expects an operating loss of 45 billion yen (US$404 million, euro 348 million) and an ordinary result of –62 billion yen (US$ –557 million, euro –480 million) for the full fiscal year after recognizing high credit loss provisions in North America during the first half of the year. Net income is expected at –11 billion yen (US$ –99 million, euro –85 million). This forecast takes into account recent trends in foreign exchange markets. MMC has adjusted its assumption for the yen/dollar rate in the second half of fiscal 2003 from 120 yen per dollar to 110 yen while keeping the yen/euro assumption unchanged at 125 yen per euro. Net sales for the full fiscal year 2003 are forecasted at 2.60 trillion yen (US$23.37 billion, euro 20.13 billion), compared to 2.74 trillion yen in fiscal 2002.

FY 2003 First-Half Results and Full-Year Outlook by Region

Worldwide unit sales in the second half of fiscal 2003 are expected to grow by 27,000 against the second half of fiscal 2002 to a total of 807,000 units. For the full fiscal year 2003, MMC expects worldwide unit sales to reach 1,580,000 units, an increase of 37,000 units or 2.4 percent over fiscal 2002.

Japan

Unit sales in Japan during the first half of fiscal 2003 increased by 8,000 units year-on-year to 171,000 units. This marked the first increase over a six-month-period for 4 years, mainly driven by higher passenger car sales of the new Colt compact and Grandis minivan. For the full year, MMC forecasts unit sales of 355,000 units versus 354,000 in fiscal 2002.

Operating losses for the full fiscal year are expected at 40.0 billion yen (US$360 million, euro 31 million), a significant improvement over FY02 (-66.8 billion yen).

North America

North American unit sales declined by 15 percent from 177,000 units in the first half of fiscal 2002 to 150,000 units during this year's first half. The main reason for this development in an overall difficult market was a tightening of the company's credit policies in the U.S. Unit sales for the full year are expected at 320,000 units (against 343,000 units in fiscal 2002), backed among others by strong sales of the all-new Galant launched in November 2003 and the first full-year of sales in Canada and Mexico.

While North America showed an operating loss of 104.0 billion yen (US$935 million, euro 805 million) in the first half of fiscal 2003, MMC expects to return to an operating profit of 4.0 billion yen (US$36 million, euro 31 million) in this region during the second half of fiscal 2003. The main factors behind the low first-half year result - other than reduced retail sales - were one-time effects, i.e. the impact of stock reduction and high credit loss provisions. Both factors are not expected to continue in the second-half of fiscal 2003 after the implementation of various countermeasures over the last few months. U.S. dealer inventories have been reduced from 91,000 to 54,000 units between April and September. The ratio of special credit instruments (balloon, deferred loans) has been reduced from 62 percent in September 2002 to 1 percent in September 2003. As a further countermeasure to ensure profitability, MMC has suspended the planned expansion of its U.S. manufacturing facility in Normal, Illinois, until market conditions and product needs change.

Europe

After a continued decline in sales since 1999, European unit sales rose again during the first half of fiscal 2003 to 104,000 units. Over the full year, MMC expects unit sales at 205,000 units, an increase of 5,000 units over fiscal 2002. This forecasted sales increase in a difficult overall market is based on better-than-expected sales of the recently launched Outlander, Lancer and Lancer Wagon and the company's strong market position in the rapidly growing Eastern European market.

Operating profit for the full fiscal year is expected at 25 billion yen (US$224 million, euro 193 million), a massive improvement of more than 45 billion yen (US$404 million, euro 348 million) against fiscal 2002 (-20.4 billion yen) and the first year in the history of Mitsubishi Motors to be profitable in the European market.

Asia and Rest of the World

MMC continued to expand its strong Asian position by raising unit sales in Asia and the rest of the world from 322,000 units in the first half of fiscal year 2002 to 348,000 units in the same period this year. Sales growth was especially strong in China, where 72,000 MMC derived vehicles were sold between April and September this year – for the full year the company expects this figure to rise to 150,000 units. Overall unit sales in Asia and the rest of the world for fiscal 2003 are expected at 700,000 units, an 8 percent increase over fiscal 2002.

MMC forecasts operating profit in Asia and the rest of the world during the full fiscal year to be 70 billion yen (US$629 million, euro 541 million), a slight increase over fiscal year 2002 (+69.6 billion yen) and the best-ever result for the company in this region.

* US dollar and euro amounts are translated from yen for convenience only at the rates of 111.25 yen/dollar and 129.19 yen/euro, the exchange rates prevailing on September 30, 2003.

Note on forward-looking statements
This document contains forward-looking statements about Mitsubishi Motors Corporation's plans, strategies, beliefs and performance that are not historical facts. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which Mitsubishi Motors Corporation operates, management's beliefs, and assumptions made by management. As the expectations, estimates, forecasts and projections are subject to a number of risks, uncertainties and assumptions, they may cause actual results to differ materially from those projected. Mitsubishi Motors Corporation, therefore, wishes to caution readers not to place undue reliance on forward-looking statements. Furthermore, Mitsubishi Motors Corporation undertakes no obligation to update any forward-looking statements as a result of new information, future events or other developments.