Mitsubishi Gets $686 Million in Loans to Support Restructuring Plan

New Outlander Turbo Boosts Performance and Morale within MMC

Ever had a loan called in ahead of schedule? Japanese automaker Mitsubishi Motors Corp. (MMC) has, which is why it will now receive

Mitsubishi Motors will receive $686 million from Mitsubishi Tokyo Financial Group and other lenders to help pay for new products like the Outlander Turbo shown in Paris this week. (Photo: Mitsubishi Motors North America)

$686 million in syndicated loans from Mitsubishi Tokyo Financial Group and other lenders by the end of the month. The previous loan that MMC was forced to repay in late June came to a total of $674 million.

According to a Reuters report, Mitsubishi's two banking units, which include Bank of Tokyo-Mitsubishi and Mitsubishi Trust & Banking Corp., will kick in the initial amount while approximately 30 institutions will follow.

The money is integral for the automaker to continue its restructuring plan, which will include shuttering plants in its domestic Japanese market and downgrading production in others, as well as dropping slow selling models from its lineup in order to streamline production and reduce costs.

While reports state MMC, which is Japan's fourth largest automaker, is in danger of losing its ranking to Ford Motor Company's

MMC's August sales were down 45.2 percent from last year and the automaker reported a group net loss of $1.95 billion in the fiscal year ending in March, 2004. (Photo: Trevor Hofmann, Canadian Auto Press)

Mazda division, Mitsubishi is repositioning its marketing strategy towards profitability rather than merely production volume. Whether the automaker will be successful in making its turnaround will remain to be seen, although both Mazda and Nissan have seen 180 degree shifts to the positive in recent years.

Part of this process is the elimination of fleet sales, which, among other variables has MMC's August sales down 45.2 percent from last year. The automaker reported a group net loss of $1.95 billion in the fiscal year ending in March, 2004, yet still plans on meeting profitability objectives by fiscal year end 2005, next March.