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Mitsubishi Motors to Merge North American Divisions

July 17, 2002|ALAN OHNSMAN | BLOOMBERG NEWS

Mitsubishi Motors Corp. said Tuesday that it would combine North American production and sales units into a single company to give local managers more influence in developing and selling cars and trucks.

Starting early next year, the new company, Mitsubishi Motors North America, based in Cypress, will manage sales, Mitsubishi's plant in Normal, Ill., its finance company and the U.S. research and development unit, said Steve Torok, Mitsubishi's executive vice president.

No jobs will be cut, he said. He didn't provide costs or expected savings from the move.

Tokyo-based Mitsubishi, which is 37% owned by DaimlerChrysler, has increased sales in North America as demand falls in Japan. Japanese sales of Mitsubishi passenger cars and light trucks slid 13% to 221,950 this year through June, while U.S. sales rose 13% to 173,590 in the same period. The eighth-largest auto maker in the U.S. expects sales of 350,000 for all of 2002.

"Among the Asian brands they're still a second-tier company," said Dennis Virag, president of Automotive Consulting Group Inc. "They have to keep improving product quality and image, and that's going to take time."

The company announced the consolidation Tuesday at a meeting with Mitsubishi dealers in Las Vegas. Pierre Gagnon, president and chief operating officer of Mitsubishi Motor Sales of America, will be president and chief executive of the new company.

"It's time for Mitsubishi to move up to the next level of operations in North America," Torok said.

No other Asian or European auto maker has integrated all North American operations into a single company. Mitsubishi's move is aimed at helping it respond faster to changes in consumer preferences.

The reorganization also suggests that traditional management practices in Japan are evolving, said William Ouchi, a professor at UCLA's Anderson School. "Management has been loath to give up control to regional units," Ouchi said. "This may be a cutting of the apron strings at Mitsubishi."

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