Despite announcing sweeping restructuring steps along with a R26 billion emergency rescue package last month, Mitsubishi Motors has announced further cost-cutting plans.

Despite announcing sweeping restructuring steps along with a R26 billion emergency rescue package last month, Mitsubishi Motors has announced further cost-cutting plans.


CARtoday.com reported recently that the manufacturer was already facing a shaky future after 37 per cent stakeholder DaimlerChrysler gave up on its rehabilitation, leaving Mitsubishi at the mercy of the Mitsubishi group and investment funds.


But according to , prospects for a turnaround became bleaker as evidence of past defect cover-ups surfaced at both Mitsubishi and truck affiliate Mitsubishi Fuso Truck and Bus Corp, dealing a blow to weakening sales in Japan.


"Because of the recalls, it became necessary to take into account further risks (of a fall in domestic sales)," chief executive Yoichiro Okazaki said. Sales of Mitsubishi cars (excluding superminis) plunged 56 per cent in May from the year before.


Mitsubishi reportedly stuck to its official target of selling 300 000 cars in Japan this business year but said sales could actually fall short by 80 000 units.


According to , Mitsubishi said it would do more to slash costs, such as cut employee salaries and forego retirement allowances for executives, as well as make further reductions in marketing, development and other costs.


It will also bring forward plans to reduce fixed costs, including job cuts. The timing for other plans such as plant closures is still undecided, Mitsubishi reportedly said.


Through these steps, Japan's fourth-largest manufacturer aims to slash another R2 billion in costs in the business year to next March. "We believe that through these cost cuts, we will be able to sufficiently absorb the risks to domestic sales for 2004/05 and 2005/06, and secure our initial profit targets," Okazaki said.