TOKYO -- Mitsubishi Motors Corp. (MMC) may cut its U.S. production capacity by up to a third, or to 120,000 units a year, as part of its efforts to chip away at loss-making operations, the Japanese carmaker said on Friday.
Plans will be finalized by September, an MMC spokesman said.
As a result, 600 to 700 workers out of the 3,000-strong workforce at Mitsubishi's U.S. plant in Normal, Ill., could lose their jobs, the Nihon Keizai newspaper reported, without citing any sources.
MMC is struggling to rebuild itself after partner DaimlerChrysler AG abandoned plans to rescue it earlier this year, but sales have tumbled further after revelations of a series of vehicle defect cover-ups.
Its U.S. sales in June plunged 48 percent from a year earlier and the slide in Japan has been even worse.
Japan's fourth-largest automaker had one bit of good news on Friday when the government allowed it to be covered by a law that helps struggling companies rehabilitate.
The Industrial Revitalization Law would, among other things, allow MMC to pay lower taxes on the issuance of 496 billion yen ($4.52 billion) in new shares to pay for sweeping restructuring measures to rebuild the company.
Tax savings would amount to 550 million yen ($5 million), a company spokesman said.
MMC issued a combined 201 billion yen in new shares on Friday to J.P. Morgan Chase, Tokyo-based investment fund Phoenix Capital and Nippon Oil Corp.
Chief Executive Yoichiro Okazaki said MMC would also consider asking state-backed Development Bank of Japan for low-interest loans, permitted for firms covered by the law.
"We will do our utmost to repair our business by working to regain customers' trust," Okazaki told a small group of reporters after receiving approval from the Ministry of Economy, Trade and Industry.
MMC has made use of the rehabilitation law twice in the past, when it issued shares for capital tie-ups with Sweden's Volvo AB and DaimlerChrysler in 1999 and 2000 respectively.
MMC's shares plunged 25 percent to 103 yen at one stage on Friday, extending Thursday's 14 percent drop when they were hit by news that the transport ministry had raided a plant of its truck affiliate over its concealment of defective parts.