TOKYO -- Mitsubishi Motors Corp. is placing a big bet on its new Outlander Sport, the small crossover that went on sale in the United States in October.
Within three years it will be the only vehicle built at Mitsubishi's assembly plant in Normal, Ill., replacing four models that will be phased out by the end of 2013.
Mitsubishi announced last week that it will invest $100 million to build the crossover at the plant starting in the summer of 2012. Last month it said it would end production of the Endeavor SUV, Galant sedan and Eclipse and Eclipse Spyder at the plant.
To make the overhaul work, Mitsubishi is counting on North American sales of around 25,000 units a year for the Outlander Sport.
Mitsubishi sold only 2,491 Outlander Sports in North America between the vehicle's late October debut and the end of 2010. That was about 700 units a month off Mitsubishi's target pace of 2,000 units a month. But U.S. sales are picking up -- from 972 in December to 1,065 in January.
The plan for the Normal plant calls for ramping up Outlander Sport output to 50,000 units a year. Half of the units are scheduled for North America. The rest are expected to be exported to Russia, Latin America, the Middle East and other countries.
"This is the newest vehicle that we have," President Osamu Masuko said. "It is being very well received and highly evaluated worldwide, and volume is rising. I think production can be accelerated."
Mitsubishi may have to leverage overseas demand if North America sales don't pan out. Mitsubishi sells the Outlander Sport in 80 countries. Global sales were unavailable, but the company has produced 97,520 units since the vehicle went on sale in Japan in February 2010.
James Haskell, president of Bell Mitsubishi in Rahway, N.J., expects the Outlander Sport to hit Mitsubishi's annual sales target of 25,000 units in North America.
"This could be a significant volume producer for Mitsubishi," said Haskell, whose store has sold about 10 Outlander Sports a month since November. "I think that it could really be one-third of our total sales."
Mitsubishi decided to build the Outlander Sport in the United States after years of internal debate about what to do with its underused 25-year-old Normal factory, its only North America assembly plant.
The plant had annual capacity for 240,000 vehicles when it was operated jointly by Mitsubishi and Chrysler. But Chrysler long ago pulled out, and Mitsubishi 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 breakeven point down to around 70,000 units a year.
Last month, Masuko credited a new labor pact reached with the UAW for breathing new life into the factory. Under the deal announced in December, workers agreed to lower wages to keep the plant open.
Mitsubishi's money-losing North American operations are undercutting the company's fragile financial recovery, and the red ink is expected to increase.
Last year Mitsubishi's U.S. sales rose just 3 percent to 55,683 vehicles, in a market up 11 percent. In January, sales surged 37 percent to 5,714 vehicles. But 43 percent of Mitsubishi's January total were fleet sales, including a sale of 2,183 Galants, according to spokesman Dan Irvin. But he said retail sales also topped those of January 2010.
Mitsubishi announced a business plan last month that, along with bringing Outlander Sport production to Illinois, will slash Mitsubishi's U.S. lineup and introduce several new electric and plug-in hybrid vehicles through 2015.
Ryan Beene contributed