Mitsubishi to make Outlander Sport at Illinois plant
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TOKYO -- Mitsubishi Motors Corp. said today it will invest $100 million to build the Outlander Sport crossover at its Normal, Ill., plant starting in the summer of 2012.
Mitsubishi expects annual output of 50,000 units, with half dedicated to North America and the rest for export to Russia, Latin America and the Middle East.
Mitsubishi Motors North America President Shinichi Kurihara, Illinois Gov. Patrick Quinn and UAW President Bob King made the announcement at the plant this morning.
The Outlander Sport, which went on sale in the United States in late October, will replace all local production of the Endeavor SUV, Galant sedan and Eclipse and Eclipse Spyder sporty cars.
Those models will be phased out by the end of 2013.
“The market is undergoing great transformation,” President Osamu Masuko said in remarks that were prepared before the announcement. “It is downsizing, and sports cars are very difficult to sell. There is a change in customers' needs. So we'd like to shift production to compact SUVs.”
The decision to introduce the Outlander Sport ends months of uncertainty about what Mitsubishi would do with the Normal factory -- its only North America assembly plant.The 25-year-old factory had annual capacity for 240,000 vehicles when it was operated jointly by Mitsubishi and Chrysler. But Chrysler long ago pulled out, and the Japanese carmaker produced just 29,375 vehicles there in 2010.
Masuko said last summer that Mitsubishi slashed costs, partly through job cuts, to bring the plant's break-even point down to around 70,000 units a year.
Early projections
In the United States, Mitsubishi sold 30 Outlander Sport units in October; 688 in November; and 972 in December for a total of 1,690 vehicles last year. But in January, it sold 1,065.
“This is the newest vehicle that we have,” Masuko said. “It is being very well received and highly evaluated worldwide and volume is rising. I think production can be accelerated.”
Mitsubishi sells the Outlander Sport in 80 countries. The company has produced 97,520 units since the model went on sale in Japan in February 2010.
Mitsubishi expects to lose no Outlander Sport production from its Okazaki plant in Japan, where the Outlander Sport currently is made alongside the Colt small car.
Mitsubishi won't need to interrupt production at Normal to retool the plant. And it plans to keep the labor force steady at its current level of around 1,300.
New UAW deal
Masuko credited a new labor pact reached with UAW for breathing new life into the factory. Under the deal announced in December, workers agreed to lower wages to keep the plant open.
“No job cuts,” Masuko said. “It was decided there would be a reduction in worker income, and that's why we were able to continue on. It was a concerted effort by everyone involved.”
The state of Illinois is also awarding Mitsubishi $29 million in tax breaks over 10 years as an incentive to keep the plant open.
Mitsubishi may eventually add other models to the plant's lineup, Masuko said.
“After we evaluate the market situation and sales situation, if possible we would like to expand and maybe in the future there is the possibility of overtime,” he said.
Green car plans
The loss of Mitsubishi's current U.S.-made lineup eliminates four models that account for just over a third of the company's domestic sales. But Masuko says sales shouldn't be dented because Mitsubishi has several electric and hybrid vehicles in its pipeline.
The first new arrival will be the low-volume i electric vehicle due this year. A Thailand-made global small car is scheduled to arrive in early 2013, and from 2012-15 Mitsubishi plans to bring five more models or variations: an additional electric vehicle and four plug-in hybrids.
If the overhaul works, Masuko says Mitsubishi could nearly double U.S. sales to 100,000 units in the fiscal year ending March 31, 2014, from 55,683 units in 2010.
PRESS RELEASE: Mitsubishi Motors Announces Outlander Sport Will Be Built in Normal, Illinois Plant
NORMAL, Ill., Feb. 4, 2011 /PRNewswire/ -- Mitsubishi Motors Corporation (MMC) today announced that production of the Outlander Sport Crossover Utility vehicle will begin in mid-2012 at the Mitsubishi Motors North America (MMNA) plant in Normal, Illinois.
(Photo: http://photos.prnewswire.com/prnh/20110204/LA42488)
An announcement ceremony at the plant this morning was attended by dignitaries including MMNA President Shinichi Kurihara, Illinois Governor Patrick Quinn, and UAW International President Bob King. Prior to the media announcement, a separate event for all MMNA employees was held on the factory floor with the same dignitaries in attendance.
The Outlander Sport went on sale in North America in November of 2010. Outlander Sport is a very well-equipped entry-level crossover that offers desirable features such as standard Bluetooth, available 40 gigabyte hard drive navigation, and available all-wheel drive. Outside of the United States, Outlander Sport is also badged as RVR and ASX, and represents Mitsubishi Motors' latest offering to the globe's fastest growing automotive segment, entry-level crossover. The vehicle is built upon the same highly flexible vehicle platform that underpins the Lancer compact car and Outlander SUV which are sold globally. Mitsubishi Motors North America anticipates adding production of Outlander Sport by mid-2012. Kurihara added "With the new model, the plant will have better utilization, and, of course we will see improved efficiency when we eventually consolidate to one model with higher production volume. I fully expect this plant will strongly improve its performance further down the road."
President Kurihara noted that bringing production of the Outlander Sport, currently built in Japan, to the Normal plant reinforces MMC's commitment to the U.S. market. "Mitsubishi Motors remains fully committed to producing vehicles in Normal. We will build vehicles here not just for the United States, but for many nations around the world." Kurihara estimated that about half of the Outlanders produced will be exported.
Kurihara also expressed appreciation to the State of Illinois for approximately $29 million in EDGE Grant support over the next ten years. Governor Quinn expressed his pleasure at the ceremony. "Mitsubishi's decision to produce a new generation of automobile here in Illinois is a strong testament to the strength of our workforce and the state's appealing business climate," said Governor Quinn. "By working to stabilize our economy and investing in companies that are investing in Illinois, we're helping to keep thousands of jobs in Illinois, helping reinvigorate our automobile industry and continuing our economic recovery."
MMNA is the only Asian or European auto manufacturer currently partnering with the UAW. About 1,000 of MMNA's 1,300 employees are members of the UAW.
Mitsubishi Motors North America, Inc., (MMNA) is responsible for all manufacturing, finance, sales, marketing, research and development operations for Mitsubishi Motors in the United States. MMNA sells coupes, convertibles, sedans, and sport utility vehicles through a network of approximately 400 dealers. For more information, contact the Mitsubishi Motors News Bureau at (888) 560-6672 or visit media.mitsubishicars.com.
You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on 
