DaimlerChrysler may increase its shares in Mitsubishi after Japanese carmaker manages a turnaround in Europe

Geneva. Rolf Eckrodt had a rare experience at the Geneva auto show: The man who has overseen DaimlerChrysler AG's troubled investment in Mitsubishi Motors Corp. in Tokyo was able to announce good news for a change.

Mitsubishi Motors Europe, for the first time in its 30-year history and after significant losses in previous years, will break even with an estimated operating profit of approximately 194 million euros in the fiscal year ending March 31.

Eckrodt, 61, said that the turnaround in Europe had been managed one year earlier than planned.

But Mitsubishi still has a long way to go. Because of the failed strategy to boost US sales with easy financing deals, Mitsubishi has had significant losses in that country, and in Japan it has been in the red for years.

DaimlerChrysler, which owns 37 percent of Mitsubishi, has sent a 10-person team to Tokyo. Under the guidance of Smart boss Andreas Renschler, 46, the team will develop a new business plan for Mitsubishi.

Automobilwoche, was told by members of the delegation that DaimlerChrysler now plans to keep its share in Mitsubishi and even increase it. It seems likely that Eckrodt will leave his post when his contract expires and will be replaced by Renschler.

DaimlerChrysler also is encouraged by Mitsubishi's European results after its radical austerity plan.

Thomas Weigand, who has been CEO of Mitsubishi Europe since Stefan Jacoby left for Volkswagen Jan. 31, told Automobilwoche some details of the program, which started two years ago.

"The changes took place mainly within two areas: personnel and the positioning of the brand," Weigand said.

For example, 60 percent of the staff at the Amsterdam headquarters have been replaced with new people who understand the markets. These were sent to the 32 European markets.

Weigand said the new positioning of the brand in Europe was just as important. For the first time, it was communicated to the 2,500 importers that Mitsubishi stands for "spirit and design, creative engineering, dynamic performance and Japanese heritage."

Each country had been responsible for its own marketing. Now, with one general advertising concept that can be changed only marginally for each country, there is potential for more cost savings.

Synergies with DaimlerChrysler in purchasing, engineering, logistics and production also brought huge savings.

Weigand's targets for further brand development are ambitious. Mitsubishi hopes to increase its European market share of 1.2 percent by 2 percent by 2007.

Weigand, a former Mercedes and Chrysler manager, also has high hopes for eastern Europe. Mitsubishi's market share there is already more than 2 percent.

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