Mitsubishi Motors Corp. killed speculation Friday that it would halt its Australian production by announcing it will upgrade and redesign the Magna/Verada model lineup produced at its plant in Adelaide, South Australia.

This lineup is produced by MMC’s Australian unit, Mitsubishi Motors Australia Ltd.

Rolf Eckrodt, chief operating officer of MMC, said the decision to invest a further A$70 million into the unit reflects MMC’s analysis of business opportunities in Australia and its confidence in its Australian subsidiary.

Eckrodt said he had informed visiting Australian Prime Minister John Howard of the decision.

“The redesigned Magna and Verada products will be sensational. The Australian public is going to love them,” Eckrodt said in a release issued in the wake of his 30-minute meeting with Howard.

Eckrodt said he is pleased to have been given the opportunity to inform the prime minister of the move, adding that he hopes that the Australian public will be reassured over MMC’s commitment to the Australian market.

This latest maneuver came amid mounting speculation that MMC, 34 percent of which is owned by Germany’s DaimlerChrysler AG, was considering closing the loss-making Australian plant.

This speculation had intensified after DaimlerChrysler embarked on a global restructuring crusade to slash costs and cut its workforce by 14 percent.

On Wednesday, the Australian government reportedly offered to fork out subsidies worth around 20 million Australian dollars to keep the debt-ridden Mitsubishi Australia afloat and to protect its 4,000-strong workforce and the local economy.

Mitsubishi Australia manufactures sedans and wagons based on the Diamante model for export to the United States and other countries.

Despite an annual production capacity of 70,000 units, its output last year stood at just 38,000 units.

Mitsubishi Motors, which concluded a capital tieup with DaimlerChrysler last year, has been promoting its corporate rehabilitation program since the beginning of fiscal 2001.

This program includes plans to cut about 9,500 jobs and to shut down a plant in Nagoya.

Mitsubishi Australia was a production arm of Chrysler Corp. until it was acquired by Mitsubishi Motors and Mitsubishi Corp. in 1980.

It is capitalized at A$280 million, of which Mitsubishi Motors owns 88 percent and the major trading house the remainder.

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