ALL DaimlerChrysler - Mitsubishi's Financial Standpoint/Restructuring in HERE!
DaimlerChrysler Shares Jump as Mitsubishi Aid Dropped (Update2)
April 23 (Bloomberg) -- Shares of DaimlerChrysler AG, the world's fifth-biggest automaker, surged as the German company abandoned a $6.4 billion rescue of Mitsubishi Motors Corp.
The stock rose as much as 9.1 percent after Chief Financial Officer Manfred Gentz said on a conference call the bailout plan was ``not sufficient'' to return the Japanese automaker to profit. Andreas Renschler, tapped April 5 to head Mitsubishi, won't move to Japan, the Stuttgart, Germany-based company said.
``This is a 180-degree turn in strategy,'' said Markus Brueck, a fund manager at Metzler Investment in Frankfurt, which oversees $12 billion and holds 500,000 DaimlerChrysler shares.
The decision is a blow to Chief Executive Juergen Schrempp's vision of a global automaker. Schrempp, 59, bought 37 percent of Mitsubishi Motors three years ago for $2 billion, extending a push overseas that began with the $36 billion acquisition of Chrysler in 1998. Mitsubishi forecasts a loss of 72 billion yen ($660 million) for the year ended March 31.
The German carmaker won't hold onto its Mitsubishi Motors holding ``forever,'' said Gentz, adding that the company isn't looking for a buyer for the stake. What happens next to Mitsubishi Motors is up to its other shareholders, he said.
The Mitsubishi group of companies will ``do their best'' to revive the Japanese carmaker, according to a joint press release that didn't give further details. The statement was issued by Mitsubishi Heavy Industry Ltd., Mitsubishi Corp. and Bank of Tokyo-Mitsubishi Ltd., which later said they will draw up a new ``mid-term'' business plan for Mitsubishi Motors.
`Best Decision'
``This is one of the best decisions DaimlerChrysler has made recently,'' said Susan Levermann, a fund manager at DWS Investment, which holds 3.5 million DaimlerChrysler shares.
Shares of DaimlerChrysler rose as much as 3.27 euros, the biggest percentage gain since June 2002, to 39.36 euros and closed up 5.7 percent at 38.15 euros in Frankfurt. The U.S. shares of the of the German carmaker rose $1.77, or 4.1 percent, to $45.01 at 11:52 a.m. in New York. Mitsubishi Motors fell by its 80-yen daily limit, or 25 percent, to 241 yen in Tokyo.
Mitsubishi Motors' brand image was hurt after it recalled 2 million vehicles in 2000 and 2001. The carmaker's sales slumped 26 percent in the U.S. last year after it tightened lending policies in response to rising defaults by customers. The carmaker hasn't made a major revamp to any of its models since November 2002.
Model Lineup
Japan's fourth-largest automaker had planned to reduce its lineup of models from 29 to about 20 and was considering closing a factory in central Japan, Mitsubishi executives said earlier this month.
The decision to abandon Mitsubishi was an abrupt turnaround for DaimlerChrysler. Schrempp said in April 2002 that the German carmaker might exercise its option to take over the Japanese company if it returned to profit and reduced debt. Mitsubishi Motors still has about $10 billion of debt.
When Schrempp announced his intention to take over Mitsubishi on March 27, 2000, he said, ``We have closed the circle, we have covered all the markets of the world.''
DaimlerChrysler and Mitsubishi will continue to ``cooperate at least on projects underway,'' said Gentz. ``We can't exclude that some Mitsubishi partners may be disappointed, but we're business people -- continuing on projects makes sense.''
``Mitsubishi Motors is a walking disaster and simply pumping more money into it is not the answer,'' said Alex Muromcew, who helps manage $600 million in global stocks at Loomis Sayles & Co. in San Francisco.
Hyundai Exit
Hyundai Motor Co., South Korea's biggest carmaker and 10.5 percent owned by DaimlerChrysler, wants to sever its relations with the German carmaker, after their four-year plan to make heavy trucks and cars in the country stalled, three Hyundai Motors executives said.
``It's important for DaimlerChrysler to form alliances with the Asian players to do business in Asia,'' said Atsushi Osa, who helps manage the equivalent of $47 billion at Sumitomo Mitsui Asset Management Co.
The remainder of DaimlerChrysler's Asia strategy is in China, the region's second biggest automobile market.
``We're confident that new and existing projects with Mitsubishi will go ahead,'' Gentz said. DaimlerChrysler's venture with truckmaker Mitsubishi Fuso will be integrated into the carmaker's commercial-vehicle division.
Rescue Plan
DaimlerChrysler and the Mitsubishi group of companies had been discussing a plan to sell up to 5.93 billion new common and preferred Mitsubishi Motors shares, or four times its outstanding stock, to fund the carmaker's revival. As part of the plan, Renschler, head of Daimler's Smart unit, was to replace Rolf Eckrodt as head of Mitsubishi.
The stock sale was part of a 700 billion-yen plan to revive Mitsubishi Motors. The Tokyo-based carmaker plans to trim its model range and overhaul management, according to executives from both companies.
``My concern is how the company is going to survive,'' said Makoto Sakuma, who helps manage $3.6 billion at Asahi Life Asset Management Co. in Tokyo. ``It's going to be difficult for them to get foreign investments unless they have a better plan of reorganization, which Mitsubishi Motors lacks.''
Mitsubishi Fuso Truck & Bus Co., Japan's third-biggest maker of heavy vehicles, recalled 130,000 vehicles at a cost of 700 billion yen to fix faulty wheel hubs. The faulty hubs have been linked to 50 accidents, including one death.
Bonds Rise
Bonds of DaimlerChrysler rose. The extra yield, or spread, investors demand to hold Daimler's 2.5 billion euros of 1.125 percent bonds due in 2006 instead of benchmark government debt, tightened to 63 basis points from 66 basis points as of 12:45 p.m. in London, according to Fortis Bank prices on Bloomberg. A basis point is 0.01 percentage point.
Standard & Poor's cut Mitsubishi Motors' long-term credit rating by three steps to CCC-, nine levels below investment grade.
Mitsubishi Motors' bonds fell, with the five-year note dropping to 85 yen from 90 yen, based on indicative prices from Kiyotoshi Yasuda, a trader at J.P. Morgan Securities Asia Ltd. in Tokyo. The price was as high as 96 in February, Bloomberg data show.
To contact the reporter on this story:
Alan Ohnsman in Los Angeles
To contact the editor of this story:
Steve Geimann in Washington, or sgeimann@bloomberg.net
Last Updated: April 23, 2004 12:23 EDT
April 23 (Bloomberg) -- Shares of DaimlerChrysler AG, the world's fifth-biggest automaker, surged as the German company abandoned a $6.4 billion rescue of Mitsubishi Motors Corp.
The stock rose as much as 9.1 percent after Chief Financial Officer Manfred Gentz said on a conference call the bailout plan was ``not sufficient'' to return the Japanese automaker to profit. Andreas Renschler, tapped April 5 to head Mitsubishi, won't move to Japan, the Stuttgart, Germany-based company said.
``This is a 180-degree turn in strategy,'' said Markus Brueck, a fund manager at Metzler Investment in Frankfurt, which oversees $12 billion and holds 500,000 DaimlerChrysler shares.
The decision is a blow to Chief Executive Juergen Schrempp's vision of a global automaker. Schrempp, 59, bought 37 percent of Mitsubishi Motors three years ago for $2 billion, extending a push overseas that began with the $36 billion acquisition of Chrysler in 1998. Mitsubishi forecasts a loss of 72 billion yen ($660 million) for the year ended March 31.
The German carmaker won't hold onto its Mitsubishi Motors holding ``forever,'' said Gentz, adding that the company isn't looking for a buyer for the stake. What happens next to Mitsubishi Motors is up to its other shareholders, he said.
The Mitsubishi group of companies will ``do their best'' to revive the Japanese carmaker, according to a joint press release that didn't give further details. The statement was issued by Mitsubishi Heavy Industry Ltd., Mitsubishi Corp. and Bank of Tokyo-Mitsubishi Ltd., which later said they will draw up a new ``mid-term'' business plan for Mitsubishi Motors.
`Best Decision'
``This is one of the best decisions DaimlerChrysler has made recently,'' said Susan Levermann, a fund manager at DWS Investment, which holds 3.5 million DaimlerChrysler shares.
Shares of DaimlerChrysler rose as much as 3.27 euros, the biggest percentage gain since June 2002, to 39.36 euros and closed up 5.7 percent at 38.15 euros in Frankfurt. The U.S. shares of the of the German carmaker rose $1.77, or 4.1 percent, to $45.01 at 11:52 a.m. in New York. Mitsubishi Motors fell by its 80-yen daily limit, or 25 percent, to 241 yen in Tokyo.
Mitsubishi Motors' brand image was hurt after it recalled 2 million vehicles in 2000 and 2001. The carmaker's sales slumped 26 percent in the U.S. last year after it tightened lending policies in response to rising defaults by customers. The carmaker hasn't made a major revamp to any of its models since November 2002.
Model Lineup
Japan's fourth-largest automaker had planned to reduce its lineup of models from 29 to about 20 and was considering closing a factory in central Japan, Mitsubishi executives said earlier this month.
The decision to abandon Mitsubishi was an abrupt turnaround for DaimlerChrysler. Schrempp said in April 2002 that the German carmaker might exercise its option to take over the Japanese company if it returned to profit and reduced debt. Mitsubishi Motors still has about $10 billion of debt.
When Schrempp announced his intention to take over Mitsubishi on March 27, 2000, he said, ``We have closed the circle, we have covered all the markets of the world.''
DaimlerChrysler and Mitsubishi will continue to ``cooperate at least on projects underway,'' said Gentz. ``We can't exclude that some Mitsubishi partners may be disappointed, but we're business people -- continuing on projects makes sense.''
``Mitsubishi Motors is a walking disaster and simply pumping more money into it is not the answer,'' said Alex Muromcew, who helps manage $600 million in global stocks at Loomis Sayles & Co. in San Francisco.
Hyundai Exit
Hyundai Motor Co., South Korea's biggest carmaker and 10.5 percent owned by DaimlerChrysler, wants to sever its relations with the German carmaker, after their four-year plan to make heavy trucks and cars in the country stalled, three Hyundai Motors executives said.
``It's important for DaimlerChrysler to form alliances with the Asian players to do business in Asia,'' said Atsushi Osa, who helps manage the equivalent of $47 billion at Sumitomo Mitsui Asset Management Co.
The remainder of DaimlerChrysler's Asia strategy is in China, the region's second biggest automobile market.
``We're confident that new and existing projects with Mitsubishi will go ahead,'' Gentz said. DaimlerChrysler's venture with truckmaker Mitsubishi Fuso will be integrated into the carmaker's commercial-vehicle division.
Rescue Plan
DaimlerChrysler and the Mitsubishi group of companies had been discussing a plan to sell up to 5.93 billion new common and preferred Mitsubishi Motors shares, or four times its outstanding stock, to fund the carmaker's revival. As part of the plan, Renschler, head of Daimler's Smart unit, was to replace Rolf Eckrodt as head of Mitsubishi.
The stock sale was part of a 700 billion-yen plan to revive Mitsubishi Motors. The Tokyo-based carmaker plans to trim its model range and overhaul management, according to executives from both companies.
``My concern is how the company is going to survive,'' said Makoto Sakuma, who helps manage $3.6 billion at Asahi Life Asset Management Co. in Tokyo. ``It's going to be difficult for them to get foreign investments unless they have a better plan of reorganization, which Mitsubishi Motors lacks.''
Mitsubishi Fuso Truck & Bus Co., Japan's third-biggest maker of heavy vehicles, recalled 130,000 vehicles at a cost of 700 billion yen to fix faulty wheel hubs. The faulty hubs have been linked to 50 accidents, including one death.
Bonds Rise
Bonds of DaimlerChrysler rose. The extra yield, or spread, investors demand to hold Daimler's 2.5 billion euros of 1.125 percent bonds due in 2006 instead of benchmark government debt, tightened to 63 basis points from 66 basis points as of 12:45 p.m. in London, according to Fortis Bank prices on Bloomberg. A basis point is 0.01 percentage point.
Standard & Poor's cut Mitsubishi Motors' long-term credit rating by three steps to CCC-, nine levels below investment grade.
Mitsubishi Motors' bonds fell, with the five-year note dropping to 85 yen from 90 yen, based on indicative prices from Kiyotoshi Yasuda, a trader at J.P. Morgan Securities Asia Ltd. in Tokyo. The price was as high as 96 in February, Bloomberg data show.
To contact the reporter on this story:
Alan Ohnsman in Los Angeles
To contact the editor of this story:
Steve Geimann in Washington, or sgeimann@bloomberg.net
Last Updated: April 23, 2004 12:23 EDT
Evolved Member
Joined: Apr 2002
Posts: 2,167
Likes: 0
From: TB, FL
Hell, Bank of Tokyo-Mitsubishi could buy the 37% tomorrow if they wanted to.
=====================
That's not going to happen if it kills the bank credit worthiness. The only way they could do it is by floating tons of junk bonds. Yes, they still exist in the America since the scandals of the late 80's.
I'm seeing this picture:
37% = DC
23% = Mitsu franchise
40% = bulk of individual shareholders
Rememer GM's CEO Roger Smith in the 80's buying tons of red ink companies before shareholders forced him out in the early 90's. DC is following the path but not crazy spending like GM.
=====================
That's not going to happen if it kills the bank credit worthiness. The only way they could do it is by floating tons of junk bonds. Yes, they still exist in the America since the scandals of the late 80's.
I'm seeing this picture:
37% = DC
23% = Mitsu franchise
40% = bulk of individual shareholders
Rememer GM's CEO Roger Smith in the 80's buying tons of red ink companies before shareholders forced him out in the early 90's. DC is following the path but not crazy spending like GM.
Evolving Member
Joined: Feb 2003
Posts: 143
Likes: 0
Originally posted by bahamut
Hell, Bank of Tokyo-Mitsubishi could buy the 37% tomorrow if they wanted to.
=====================
That's not going to happen if it kills the bank credit worthiness. The only way they could do it is by floating tons of junk bonds. Yes, they still exist in the America since the scandals of the late 80's.
I'm seeing this picture:
37% = DC
23% = Mitsu franchise
40% = bulk of individual shareholders
Rememer GM's CEO Roger Smith in the 80's buying tons of red ink companies before shareholders forced him out in the early 90's. DC is following the path but not crazy spending like GM.
Hell, Bank of Tokyo-Mitsubishi could buy the 37% tomorrow if they wanted to.
=====================
That's not going to happen if it kills the bank credit worthiness. The only way they could do it is by floating tons of junk bonds. Yes, they still exist in the America since the scandals of the late 80's.
I'm seeing this picture:
37% = DC
23% = Mitsu franchise
40% = bulk of individual shareholders
Rememer GM's CEO Roger Smith in the 80's buying tons of red ink companies before shareholders forced him out in the early 90's. DC is following the path but not crazy spending like GM.
DC obviously wants out, but they can't just disappear they have to find a buyer, and that will likely include some kind of bailout with it.
Evolved Member
Joined: Apr 2002
Posts: 2,167
Likes: 0
From: TB, FL
It's getting worse by the hour.
We, all, know DC just can't dump Mitsu's stocks to the abyss. DC claimed its stock value is about the same when they have bought it. There lies the problem. Who's willing buy their stocks, and how much undervaluing will it be? Definately, DC will loses tons of money. There is no doubt in my mind.
Individual shareholders won't take up the slack, knowing their own nervous portfolio. There has to be either 1 major buyer or several minor corporate buyers to take up the slack, so they can bring new loans/capital from a new investing sources - floating new bank bonds. Damn, it's getting really risky.
We, all, know DC just can't dump Mitsu's stocks to the abyss. DC claimed its stock value is about the same when they have bought it. There lies the problem. Who's willing buy their stocks, and how much undervaluing will it be? Definately, DC will loses tons of money. There is no doubt in my mind.
Individual shareholders won't take up the slack, knowing their own nervous portfolio. There has to be either 1 major buyer or several minor corporate buyers to take up the slack, so they can bring new loans/capital from a new investing sources - floating new bank bonds. Damn, it's getting really risky.
Do we really care if mitsubishi goes under? This is a company that has been making embarrassingly crappy products for quite some time now. The Evo is an exception, an almost bastard child that with the exception of the crappy interior (and I love my car anyway, aesthetic deficiencies aside), should have been manufacutured by a quality company like Nissan or Honda. you'll still be able to get parts for your car regardless, and the value of the Evo would SKYROCKET if there was no chance that any more would ever be made past this year for example. Whether they survive or not, it's the last mits product for me. It's almost embarrasing that such an amazing car was made by such a ****ty company in the first place.
Percy
Percy
Evolving Member
Joined: Feb 2003
Posts: 143
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Originally posted by bahamut
It's getting worse by the hour.
We, all, know DC just can't dump Mitsu's stocks to the abyss. DC claimed its stock value is about the same when they have bought it. There lies the problem. Who's willing buy their stocks, and how much undervaluing will it be? Definately, DC will loses tons of money. There is no doubt in my mind.
Individual shareholders won't take up the slack, knowing their own nervous portfolio. There has to be either 1 major buyer or several minor corporate buyers to take up the slack, so they can bring new loans/capital from a new investing sources - floating new bank bonds. Damn, it's getting really risky.
It's getting worse by the hour.
We, all, know DC just can't dump Mitsu's stocks to the abyss. DC claimed its stock value is about the same when they have bought it. There lies the problem. Who's willing buy their stocks, and how much undervaluing will it be? Definately, DC will loses tons of money. There is no doubt in my mind.
Individual shareholders won't take up the slack, knowing their own nervous portfolio. There has to be either 1 major buyer or several minor corporate buyers to take up the slack, so they can bring new loans/capital from a new investing sources - floating new bank bonds. Damn, it's getting really risky.
Evolving Member
Joined: Apr 2002
Posts: 275
Likes: 0
From: Ann Arbor, Michigan
Mitsu has been losing market share in Japan since '00 secondary to issues of quality and reliability. In fact, the truck division, who's reputation was supposedly bullet-proof, knowingly released faulty products secondary to decreased resources for R&D, which were being siphoned away to Mitsu Motors.
The strength and longevity of any foreign manufacturer is intimately dependent upon their strength in their home market, especially is they're losing sales abroad.
Mitsu is losing Japanese market share, and doing so rapidly.
In addition, the pullout by DaimlerChrysler comes at a pivitol time when their was hope of a "German" rescue by both Mitsu, the Japanese and the market.
MMC does not have the ability to weather $6-8billion dollars of investment/debt in a negative market environment.
The only hope is for another 3rd party investor needing a foothold in Asia... maybe VW.
DaimlerChrysler is infact, by not investing at a crucial time, beginning to cut ties with Mitsu. They can only fight one losing battle, and that's a faltering Chrysler. How long do you think D-C and Mitsu will be able to maintain amicable, professional ties?
Why would a company, that owns 37% of Mitsu, stop investment, devalue the shares and ultimately their own worth?
Because Mitsu's situation must be uglier than being relayed by the media... in essence, DaimlerChrysler's stance is equivalent to saying its cheaper to lose their investment, than to invest more.
So, yeah the MR maybe made, but is it worth the retooling, advertising, etc for a company that is trying to stay afloat... or is it more important for them to focus on big sellers?
By the way, if things go as planned and the MR comes, Mitsu is really doing no one any favors by delaying the release from the '04 by 4-5months. They are halting sales of the Evo, as people wait. Not smart when you need money.
g
The strength and longevity of any foreign manufacturer is intimately dependent upon their strength in their home market, especially is they're losing sales abroad.
Mitsu is losing Japanese market share, and doing so rapidly.
In addition, the pullout by DaimlerChrysler comes at a pivitol time when their was hope of a "German" rescue by both Mitsu, the Japanese and the market.
MMC does not have the ability to weather $6-8billion dollars of investment/debt in a negative market environment.
The only hope is for another 3rd party investor needing a foothold in Asia... maybe VW.
DaimlerChrysler is infact, by not investing at a crucial time, beginning to cut ties with Mitsu. They can only fight one losing battle, and that's a faltering Chrysler. How long do you think D-C and Mitsu will be able to maintain amicable, professional ties?
Why would a company, that owns 37% of Mitsu, stop investment, devalue the shares and ultimately their own worth?
Because Mitsu's situation must be uglier than being relayed by the media... in essence, DaimlerChrysler's stance is equivalent to saying its cheaper to lose their investment, than to invest more.
So, yeah the MR maybe made, but is it worth the retooling, advertising, etc for a company that is trying to stay afloat... or is it more important for them to focus on big sellers?
By the way, if things go as planned and the MR comes, Mitsu is really doing no one any favors by delaying the release from the '04 by 4-5months. They are halting sales of the Evo, as people wait. Not smart when you need money.
g
Last edited by pjork-master; Apr 23, 2004 at 12:58 PM.
Evolving Member
Joined: Apr 2002
Posts: 275
Likes: 0
From: Ann Arbor, Michigan
Guys, really don't compare Nissan to Mitsubishi with respect to turn-around prospects.
Because your all forgetting a very important and crucial point,
Renault is owned by the French government.
That's why they could turn Nissan around... Goshen is savy, but he had unlimited financial resources.
DaimlerChrysler, MMC do not.
And, pulling out of the US market is a one way trip... to never returning. Only one car company has done it, and that was Maserati. Where's Renault? Alpha Romeao? Fiat? MG? Rover? Exactly.
g
Because your all forgetting a very important and crucial point,
Renault is owned by the French government.
That's why they could turn Nissan around... Goshen is savy, but he had unlimited financial resources.
DaimlerChrysler, MMC do not.
And, pulling out of the US market is a one way trip... to never returning. Only one car company has done it, and that was Maserati. Where's Renault? Alpha Romeao? Fiat? MG? Rover? Exactly.
g
Newbie
Joined: Jul 2003
Posts: 17
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I am not sure where MMC has been profitable is coming from. I quick search found these numbers. While sales has been up, Profits have steadily decreased because of over capital investements and some poor returns.
According to the MMC Operating Profits:
1999 YE -2%
2001 YE +2.5
2002 YE -19%
2003 YE -25%
And then there are quotes such as:
I think it's bad when the Press release says the loss wasn't as bad as last year.
According to the MMC Operating Profits:
1999 YE -2%
2001 YE +2.5
2002 YE -19%
2003 YE -25%
And then there are quotes such as:
In the first half of the 2001/2002 financial year, which ends on March 31, 2002, Mitsubishi Motors Corporation achieved unit sales of 658,000 vehicles and revenues of 1.533 billion yen ($12.6 billion). As expected, MMC recorded an operating loss in the first half of 2001/2002 of 13.1 billion yen ($108 million). However, this loss was 44% lower than that in the first half of the previous year (23.2 billion yen).
Evolving Member
Joined: Sep 2001
Posts: 213
Likes: 0
From: Queens, NY
Hey why don't Microsoft bail out 
They earned another 3 billion this quarter which makes their cash at 56 billion just sitting in the bank
Since they like to conquer everything why not try their hands at cars
They earned another 3 billion this quarter which makes their cash at 56 billion just sitting in the bank
Since they like to conquer everything why not try their hands at cars
Evolving Member
Joined: Feb 2003
Posts: 143
Likes: 0
Originally posted by mhoward1
I am not sure where MMC has been profitable is coming from. I quick search found these numbers. While sales has been up, Profits have steadily decreased because of over capital investements and some poor returns.
According to the MMC Operating Profits:
1999 YE -2%
2001 YE +2.5
2002 YE -19%
2003 YE -25%
And then there are quotes such as:
I think it's bad when the Press release says the loss wasn't as bad as last year.
I am not sure where MMC has been profitable is coming from. I quick search found these numbers. While sales has been up, Profits have steadily decreased because of over capital investements and some poor returns.
According to the MMC Operating Profits:
1999 YE -2%
2001 YE +2.5
2002 YE -19%
2003 YE -25%
And then there are quotes such as:
I think it's bad when the Press release says the loss wasn't as bad as last year.
Also consider that those are just percentages they do not indicate whether the company was profitable or not.
Evolved Member
iTrader: (2)
Joined: Oct 2002
Posts: 2,367
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From: Between the Blue and the Sand
Originally posted by migs
....
could you imagine if all boards got together and bought that 37% stake on Mitsu?
better customer service
mods would be "legal"
heck! we'd offer mods too
full line of accessories
.............
would be nice to turn it around
....
could you imagine if all
boards got together and bought that 37% stake on Mitsu? better customer service
mods would be "legal"
heck! we'd offer mods too
full line of accessories
.............
would be nice to turn it around
So I guess we won't have to worry about the next Evo platform sharing with the next Neon anymore!
SC~
Ok, so I am new to the forums, but I have my Master's Degree in Accounting and Finance. I have been reading the statements made by individuals at prospects of Mitsu leaving the US, and Mitsu not producing the EVO anymore. Here are my thougthts.
1) The EVO is made solely in Japan with Japanese parts. In Japan the EVO does very well, and is in much higher production than here in the states. It's simply a better version of the Lancer for them. Therefore, whether they stay in the United States or not the EVO will live on, as Mitsu as a whole isn't going away.
2) The issue of whether to produce a niche car is not a question of profits/losses, nor is it a question of the status it brings the corporation. Rather, it is a capacity question to start. The optimal question for niche cars is, do we have the space to produce it, and what are the opportunity costs we will give up to produce it. So, I say this. The EVO is made in the same facilities as the Lancer is. The market for Lancer cars is probably defined at this point, and shows little growth. Therefore, the room currently used for the EVO is probably free capacity. After you decide whether they have capacity or not, then you question the profit of the vehicle and the status. If the vehicle is in the black, then great you produce it. If the vehicle is in the red, then you have to ask whether it is more expensive than normal advertising. If it is not, then you internally view it as a cost of advertising. If it is, then you do not produce. My point is this... 1) They have the capacity 2) The opportunity cost does not outweight the gains of the vehicle 3) It currently is making small profits.... they will continue to make the EVO.
3) The US problems right now are from management issues. It's an internal problem that can be rectified. May take a year or so, but all it takes is a change in strategy and focus. It's not a death sentence at this point.
Anyways, I'm tired of thinking about it. I personally think that this means nothing for us for at least the next year or so. So I say, "Enjoy your EVO's... keep reading... but why waste your time bickering over it in a forum, when you could be out driving and enjoying.... hell, drive now so that if Mitsu goes under and something brakes on your car, that it can be fixed while Mitsu is still around"
I love my EVO!
And Mitsu is too big to go away. So I'm leaving to go cruise... care to join me?
1) The EVO is made solely in Japan with Japanese parts. In Japan the EVO does very well, and is in much higher production than here in the states. It's simply a better version of the Lancer for them. Therefore, whether they stay in the United States or not the EVO will live on, as Mitsu as a whole isn't going away.
2) The issue of whether to produce a niche car is not a question of profits/losses, nor is it a question of the status it brings the corporation. Rather, it is a capacity question to start. The optimal question for niche cars is, do we have the space to produce it, and what are the opportunity costs we will give up to produce it. So, I say this. The EVO is made in the same facilities as the Lancer is. The market for Lancer cars is probably defined at this point, and shows little growth. Therefore, the room currently used for the EVO is probably free capacity. After you decide whether they have capacity or not, then you question the profit of the vehicle and the status. If the vehicle is in the black, then great you produce it. If the vehicle is in the red, then you have to ask whether it is more expensive than normal advertising. If it is not, then you internally view it as a cost of advertising. If it is, then you do not produce. My point is this... 1) They have the capacity 2) The opportunity cost does not outweight the gains of the vehicle 3) It currently is making small profits.... they will continue to make the EVO.
3) The US problems right now are from management issues. It's an internal problem that can be rectified. May take a year or so, but all it takes is a change in strategy and focus. It's not a death sentence at this point.
Anyways, I'm tired of thinking about it. I personally think that this means nothing for us for at least the next year or so. So I say, "Enjoy your EVO's... keep reading... but why waste your time bickering over it in a forum, when you could be out driving and enjoying.... hell, drive now so that if Mitsu goes under and something brakes on your car, that it can be fixed while Mitsu is still around"
I love my EVO!
And Mitsu is too big to go away. So I'm leaving to go cruise... care to join me?
Evolving Member
Joined: Apr 2002
Posts: 275
Likes: 0
From: Ann Arbor, Michigan
Man, I aplaud your optimism.
But, there are crucial differences between American and Japanese buyers... for one, the later favors performance, and high turnover for products. We in general don't. However,
Mitsu sales are down in Japan. The public has lost their trust in the company.
Economies of scale only exist when the company is profitable. Questions of which niches and capacities are only viable when their is profit... look at Toyota. Without financial backing, defining niche products are a waste of resources that could be used to revitalize a product that appeals to a larger market.
Unfortunately, the issues are both managerial and financial. They made very bad decisions, and now have enormous debt to contend with... more than DaimlerChrysler is willing to absorb.
Mitsu is in a tough position. Even with financial backing, Daimler estimated 4yrs until it would be out of the black.
This is the same tailspin Chrysler was in... even with investment, the company needs to break the cycle of limited resources to test and develop the product as well as to bring it to market. Otherwise, yeah you make a new Colt (or K car in Chrysler's situation), but it's reliability is terrible and you fall even further downward since you lose sales and resources based on word of mouth and meeting warranties.
Why do you think Chrysler is still a pain in the a## for Daimler? They saved them from financial ruin, but they need to pump more and more money and talent into making reliable products, or sales will cont to drop... like they have been.
Without a blank check, like Nissan received from France through Renault, or at least half their debt settled by a third party, I wouldn't bank on Mitsu staying in the US market or being around in Japan.
At the end of the day MMC won't lose its shirt to save a sinking ship.
g
But, there are crucial differences between American and Japanese buyers... for one, the later favors performance, and high turnover for products. We in general don't. However,
Mitsu sales are down in Japan. The public has lost their trust in the company.
Economies of scale only exist when the company is profitable. Questions of which niches and capacities are only viable when their is profit... look at Toyota. Without financial backing, defining niche products are a waste of resources that could be used to revitalize a product that appeals to a larger market.
Unfortunately, the issues are both managerial and financial. They made very bad decisions, and now have enormous debt to contend with... more than DaimlerChrysler is willing to absorb.
Mitsu is in a tough position. Even with financial backing, Daimler estimated 4yrs until it would be out of the black.
This is the same tailspin Chrysler was in... even with investment, the company needs to break the cycle of limited resources to test and develop the product as well as to bring it to market. Otherwise, yeah you make a new Colt (or K car in Chrysler's situation), but it's reliability is terrible and you fall even further downward since you lose sales and resources based on word of mouth and meeting warranties.
Why do you think Chrysler is still a pain in the a## for Daimler? They saved them from financial ruin, but they need to pump more and more money and talent into making reliable products, or sales will cont to drop... like they have been.
Without a blank check, like Nissan received from France through Renault, or at least half their debt settled by a third party, I wouldn't bank on Mitsu staying in the US market or being around in Japan.
At the end of the day MMC won't lose its shirt to save a sinking ship.
g
Last edited by pjork-master; Apr 23, 2004 at 02:27 PM.
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The Number are confusing and seem contradictory, but also the percetages shown are for Operation Profits, not Net or Gross.
These numbers in Sales report are interesting too
2003 2002
Sales Y1.877 tln Y1.849 tln
Operating Profit 50.12 bln 16.70 bln
Pretax Profit 47.76 bln 4.73 bln
Net Loss 2.65 bln 70.51 bln
Showing both Profit and Net loss.
Then there's the debt for the 4 years before 2001:
Reading the sales reports (http://www.mitsubishi-motors.com/corporate/e/index.html), it appears there were losses between 200-400 BillY each year between 1996-2000. 2001 was a break even year, and 2002 was a year of 40 BillY profit. 2003 has been a very bad year:
These numbers in Sales report are interesting too
2003 2002
Sales Y1.877 tln Y1.849 tln
Operating Profit 50.12 bln 16.70 bln
Pretax Profit 47.76 bln 4.73 bln
Net Loss 2.65 bln 70.51 bln
Showing both Profit and Net loss.
Then there's the debt for the 4 years before 2001:
Reading the sales reports (http://www.mitsubishi-motors.com/corporate/e/index.html), it appears there were losses between 200-400 BillY each year between 1996-2000. 2001 was a break even year, and 2002 was a year of 40 BillY profit. 2003 has been a very bad year:
Mitsubishi Motors posted a group net loss of 80.22 billion yen (735.96 million dollars) in the April-September 2003 period, reversing a net profit of 6.64 billion yen a year earlier.