Mitsubishi Motors Corp. President Katsuhiko Kawasoe has a lot on his plate these days: A sweeping platform reduction program, cost cutting and new products are all taking place against the backdrop of industry consolidation.
In an interview last week with the editor of Automotive News International, James R. Crate, and Automotive News Staff Reporter Mark Rechtin, Kawasoe spoke about the future of Japan's No. 4 vehicle maker. Edited excerpts follow.
It suddenly has become conventional wisdom in the auto industry that you need production of at least 4 million units a year to survive as an independent. Do you agree? You are not even close to that threshold.
Sure, I recognize the merits of economies of scale. However, more volume is not necessarily a reflection of the soundness of the business. ... Look at GM. But it's not necessarily a question of survival. The kind of (cross-ownership) arrangement that Nissan and Renault have formed is an example of something we are paying close attention to. In fact, because of our past equity relationship with Chrysler, Mitsubishi has more experience than any other Japanese corporation in this type of arrangement.
Are you in talks with someone right now?
Ah, I wish you hadn't asked that question. This is a top-secret area, and I'm not free to talk frankly about it. Even within the company, the issue is confined to the president's office.
Are you positioning Mitsubishi truck operations for sale?
We take it very hard, this talk of 'selling.' But if an offer is meaningful, we could consider a close tie-up relationship with someone or a cross-ownership of shares.
What has the downgrading of your debt rating to 'junk' status done to your costs?
We don't expect to feel any impact at home because of our strong relationship with Tokyo Mitsubishi Bank, but our overseas operations in Asia, Europe and North America may feel it because of their dependence on (non-Japanese) banks for capital. Therefore, we are paying close attention to the situation. In the short term, our intention is to cover the financing needs of our overseas operations by issuing convertible bonds.
Your platform restructuring plan makes no mention of large sedans. What does that say about the future of the Australian plant that makes the Diamante?
This is a terrible problem for me. ... It makes my head ache. Because of the lower import tariffs recently put in place by Australia, the trend is against us there. ... The local plant can no longer compete with cars and parts imported from Japan. Therefore, although I hate to shock our Australian employees, it will be necessary to drastically restructure our operations there.
Does that mean closure?
I cannot say anything further.
You talk of more U.S. product development autonomy, yet the upcoming Montero was developed almost entirely in Japan. When will this sort of decision-making end?
I put Takashi Sonobe in charge of U.S. operations for precisely that reason, to ensure autonomy and to end this bondage to Japan. I know Mr. Sonobe will do a good job with that. The fourth core product will be heavily oriented toward American tastes.
Why has it taken so long for the Illinois plant to achieve better quality and productivity?
I don't want to use it as an excuse, but the sexual harassment problems there diverted our attention and prevented us from doing what we knew had to be done. The managers knew what had to be done but could not execute the changes at the line level.