Mitsubishi Motors Corp. plans to close one of its three main domestic car assembly plants during fiscal 2001, which begins next April, company sources said Tuesday.
The move comes amid a sharp drop in the firm's vehicle sales following a recent coverup scandal over defects.
The company hopes the closure of the Oe plant in Nagoya, which mainly produces recreational vehicles, will enable it to restore its sagging earnings, the sources said.
About 2,600 workers at the Oe plant will either be relocated to other factories or divisions within the company, or will be asked to apply for early retirement.
The carmaker will discuss the proposed closure with DaimlerChrysler AG, which has a 34 percent stake in Mitsubishi Motors, and announce it formally along with a new midterm business plan to be compiled by the end of March, they added.
Mitsubishi Motors had planned to use the Oe plant to manufacture a new strategic compact Z car, developed jointly with DaimlerChrysler, during fiscal 2002.
That plan has now been withdrawn, however, and the new car will probably be produced at a plant in Okayama Prefecture, the sources said.
MMC has an annual car production capacity of 1,348,000 units but produced only 908,000 units in the year to March 31 due to slumping sales. The Oe plant alone has an annual production capacity of 228,000 units.
The vacated Oe plant will be sold or used for other purposes, the sources said. The company had already sold about 160,000 sq. meters -- or 40 percent -- of the plant's land, by June to Mitsubishi Heavy Industries Ltd. and other concerns.
MMC in engine tieup
FRANKFURT (Kyodo) German-U.S. automaker DaimlerChrysler AG and Mitsubishi Motors Corp. said Monday they will jointly manufacture gasoline engines for their Z-Car compact vehicles at a new plant in Europe.
The location of the new plant, which will make 1100cc and 1500cc engines, has yet to be decided, but preliminary studies point to either eastern Germany or Hungary, they said.
The companies plan to invest 200 million euros (about 20 billion yen) in the new plant.
The automakers have agreed to jointly manufacture 250,000 compact Z-Cars a year at MMC's plant in the Netherlands beginning in 2004. DaimlerChrysler and Mitsubishi Motors will market the four-seaters under their respective names. DaimlerChrysler acquired a 34 percent stake in Mitsubishi Motors this spring to utilize the carmaker's technologies for compact cars to expand its popular smart-car lines.
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