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Mitsubishi eyes car production in Myanmar

Automaker focuses on ASEAN while scaling back Europe operations

Traffic is seen behind a pedestrian bridge in downtown Yangon. Mitsubishi Motors is leaning toward assembling cars in Myanmar as part of its Southeast Asia strategy.   © Reuters

TOKYO -- Mitsubishi Motors is considering building vehicles in Myanmar, as the Japanese automaker deepens its commitment to Southeast Asia, CEO Takao Kato told Nikkei, charting a way forward in a market battered by the coronavirus pandemic.

Kato said his company hopes to "collaborate" with Mitsubishi Corp., the trading house that owns a 20% stake in the automaker and is well-versed in the local market. Details, such as the timing and the form of the business, have yet to be decided.

CEO Takao Kato tells Nikkei that the automaker hopes to collaborate with trading house Mitsubishi on establishing production in Myanmar. (Photo by Kosuke Terai)

Mitsubishi Motors reversed its drive for broader expansion to focus instead on the 10-member Association of Southeast Asian Nations under a medium-term plan released late last month. The automaker will allocate resources to the region, which generates about one-quarter of the company's sales.

The Japanese automaker already has a production base in Vietnam, as well as in Thailand, Indonesia and the Philippines. Another Vietnamese plant is also under consideration. The plan is to add Myanmar to the list. 

Operations in Europe and other key regions will be scaled back through workforce reductions. Combined with hiring curbs and a review of the compensation system, the automaker aims to slash labor costs on the administrative side by 15% by the end of fiscal 2021 from fiscal 2019.

Mitsubishi Motors is grappling with the fallout from the expansion promoted by disgraced former Chairman Carlos Ghosn, who doubled as chairman of large shareholder Nissan Motor.

The medium-term plan calls for the closing of a plant of sport utility vehicle subsidiary Pajero Manufacturing and freezing new model releases in Europe. These streamlining efforts will enable the company to "achieve the (20% fixed-cost) reduction target," Kato said.

Asked about the company's three-member alliance with Nissan and French player Renault, Kato said Mitsubishi Motors will "participate in talks for areas where win-win deals can be made." At the same time, "it's not realistic to force ourselves to look for areas of collaboration," he said.

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