By TAKEHIRO TOMODA/ Staff Writer
July 23, 2020 at 16:41 JST
The Pajero, a popular SUV manufactured by Mitsubishi Motors Corp. (Asahi Shimbun file photo)
Mitsubishi Motors Corp. is nearing a decision to shut down a factory that manufactures its popular Pajero SUV, with the novel coronavirus pandemic taking a toll on the company's sales as a factor.
The struggling automaker is discussing the plan to close the factory that subsidiary Pajero Manufacturing Co. operates in Sakahogi, Gifu Prefecture, in fiscal 2021.
The Mitsubishi Motors executive board is expected to make a final decision on July 27 and include it in the medium-term management plan to be released that day if the closure is approved.
After its closure, the automaker will operate only two domestic factories for assembling vehicles.
Pajero Manufacturing manufactures Mitsubishi’s signature SUVs Pajero and Outlander, as well as the Delica D:5 minivan.
In 2018, the plant produced about 86,000 units, which accounted for little more than 10 percent of Mitsubishi’s domestic production.
Pajero comprised almost half of the manufactured vehicles.
However, the factory's production scale is smaller and less efficient compared to Mitsubishi’s other facilities in Okazaki, Aichi Prefecture, where SUVs are produced, and Kurashiki, Okayama Prefecture, where minivehicles are manufactured.
Equipment has been outdated and operation rates have been on a downturn at the Gifu plant.
Starting from 2019, hours of operation at the production plant have been limited to daytime only.
The factory stopped manufacturing the Pajero for the domestic market in summer 2019.
About 1,000 employees are expected to be reassigned once the factory is closed.
The vehicle models currently manufactured at the factory will be shifted to other factories such as the one in Okazaki.
Mitsubishi declared a net loss of 25.7 billion yen ($240 million) in the business year ending in March, citing the decline of sales due in part to the novel coronavirus.
The company has continued expanding since 2016 when it went under the umbrella of Nissan Motor Co., racking up increasing labor and sales operating costs.
The executive board will hold a meeting on July 27 to come up with a plan to restructure the company, including the shutdown of the factory in Gifu Prefecture.
In May, Mitsubishi, Nissan and Renault of France announced plans to strengthen their alliance. In the plans, one will take the initiative in a particular region or a specific technology field. Factories will be consolidated to reduce operating costs, the three automakers decided.
Mitsubishi is expected to lead the alliance in Southeast Asia and Oceania. The company will concentrate its main management resources in the regions.
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