Mitsubishi Motors' new European business model

A first example was the recent consolidation of its Design & Engineering functions to a central location in Japan, reflecting a fundamental shift in its long-term product strategy from regional cars to global cars.

Along those lines, MMC proposes to implement a new business model for its European subsidiary, Mitsubishi Motors Europe B.V. (MME). This alignment with MMC's global organisation is meant to better develop MMC's presence in its most important global business region through better efficiencies and a direct connection with the European markets and customers.

As a reminder, what is now MME started as a small liaison office in 1977, based in Rotterdam. Since then, it has grown to a 335 strong operation fulfilling all expected manufacturer's functions in the region, on behalf of MMC. Whilst successful (and non-stop profitable between FY2003 and FY2007), MME sales1 were nonetheless down 18% between CY2007 and CY2008 (from 200, 045 units to 164,462 units) with a further decrease expected for CY2009, in line with forecasts for the industry in the region.

Furthermore, in order to better fulfil its long-term mission, MME should accompany Mitsubishi Motors' strategic shift from being an SUV-focused nameplate to being a supplier of environment-friendly passenger cars / crossovers with a SUV presence - itself pre-empting pro-actively structural changes in market demand.

Translated into business model terms, it is clear that the size and scope of the current MME is no longer suited to both the fundamental evolution of the automotive industry and the strategic re-deployment Mitsubishi Motors has decided to embrace in this new context.

[B]As a result:[/B]

* MMC proposes to take over and repatriate to Japan all vehicle-related functions (Sales, Marketing, Product Management, Business Planning, etc,...), liaising and coordinating directly with MME's 34 European distributors.

* In parallel, support functions (Logistics, Planning & Ordering, Finance, Human Resources, IM, etc,...) would stay within this "New MME", albeit leaner.

* Furthermore, the heavily logistics-biased After-Sales Management functions (Sales & Marketing of parts and accessories, Technical service & training), would logically move to Mitsubishi Motors' European Parts Distribution Centre located in Born, near Maastricht (The Netherlands), streamlined as well.

* Lastly, the New MME would vacate the current headquarters building in Schiphol-Rijk, near Amsterdam and regroup its functions in Born.

After having fulfilled all necessary statutory and other legal requirements, among which the procedure concerning the right of participation of the Works Council, and after implementation, this proposal would unfortunately translate into a reduction of 45% of today's white-collar headcount.

These proposed changes would not affect Mitsubishi Motors' European production hub, NedCar.

The proposal is still subject to all necessary statutory and other legal requirements. It will only take effect as soon as the aforementioned has been concluded.

Credits: JRC