Steane Klose | Feb 5, 2008

Mitsubishi Motors Australia Ltd (MMAL) together with its parent company Mitsubishi Motors Corporation (MMC) has confirmed that while it is committed to being a long-term participant in the Australian car market, regretfully its Tonsley Park production facility in Adelaide, which manufactures the 380 sedan, will cease operations.

Mitsubishi Motors Australia Ltd President and CEO Robert McEniry said: "We are focused on growth in Australia, notwithstanding the decision to cease local manufacture.

The overwhelming issue for Mitsubishi in Australia, is the fact that their 380 sedan has failed to excite buyers and sell in the quantities required to make it a worthwhile business case. The rest of Mitsubishi's range in Australia is doing well, in fact MMAL actually increased their sales growth over the past 12 months by 20.7 percent, an increase driven by their imported passenger, light commercial and SUV range. The increase in sales gave MMAL a 6.2 percent market share, enough to place them in the top five selling brands in Australia.

"Over the last few months, we have been working closely with MMC to determine the best business model to secure Mitsubishi's long term aspirations for the Australian market. After a searching analysis of the current business structure and extensive review of the available options for the Adelaide plant, a decision has been made to cease production and focus on a full import approach. We can see no path for a return to viable production levels of the 380 sedan, or a commercial case for developing any replacement production,” said Robert McEniry.

MMAL say that the closure will directly affect 930 employees who will receive favourable separation packages based on those provided to the Lonsdale Engine Plant employees in 2005. Mitsubishi Motors Australia has ensured that all employee entitlements are protected and guaranteed when the plant ceases production at the end of March 2008. MMAL will also be working closely with Government agencies in the provision of comprehensive counselling, job seeking, retraining, and other support services

"This has been a very difficult decision. We have a deep appreciation of the commitment and loyalty of our workforce, suppliers and other business partners who have given the plant a proven track record of flexibility, cost efficiency and excellent quality control".

MMAL have also confirmed that they will refund a $35 million grant received from the South Australian government in 2002 in relation to development of the 380 model, following the closure of the Tonsley Park plant. It also acknowledges and appreciates the support it has received from the Federal Government in the form of partial relief from import tariffs under the Automotive Competitiveness and Investment Scheme (ACIS), a scheme which is tapped into by all local manufacturers.

"Over the last ten years, MMC has gone beyond the call of duty in supporting manufacturing in Australia through major capital investment, in addition to covering significant operating losses. Having persevered for so long, it is simply not rational to contemplate continuing such losses. To invest in further models for local production cannot be justified.

MMAL says it plans to expand its dealer network of over 200 sites across Australia, providing full parts, warranty and service support for all Mitsubishi products including the 380. They also confirmed that past and future private buyers of new 380’s will be provided with a one year extension of their standard factory warranty, taking the warranty period to six years.

"This clearly demonstrates our ongoing support for this multi-award winning car."

Mitsubishi will now focus on furthering their growth in the Australian market, through their imported model range, which includes Lancer, Colt, Grandis, Pajero, Outlander, Triton and the Express Van, which together account for 90 percent of current sales. With new products expected, Mitsubishi are planning to continue to expand their market share in Australia.

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