Mitsubishi Motor Corp, the embattled Japanese automaker, said that it will announce a plan to reshuffle its fragmented businesses in China in the near future.

"We have many Chinese partners at present, and we will concentrate on main partners according to the expected plan," said Kenichi Miki, corporate general manager of Mitsubishi Motor's North Asian operations.

But Miki declined to reveal details of the plan.

Mitsubishi Motor holds a 16-per-cent stake in a sport utility vehicle (SUV) joint venture with Changfeng Group in Central China's Hunan Province.

The Japanese firm also has technical licensing deals with Southeast Motor Corp, a Chinese mainland-Taiwan joint venture in eastern Fujian Province; Beijing Benz-DaimlerChrysler Automotive Co Ltd, DaimlerChrylser's joint venture with Beijing Automotive Holding Corp; and Harbin Aviation Industry Group (Hafei), one of China's biggest mini vehicle makers in northeastern Heilongjiang Province.

Asked which partners Mitsubishi Motor will focus on, Miki said: "It's a very sensitive issue as China's policy permits us to have only two joint ventures with local partners. We are still studying the issue."

China's new auto policy, launched in June, restricted foreign auto makers to a maximum of two joint venture with different Chinese partners to produce the same categories of vehicles.

"Mitsubishi Motor has many operations in China, but these are small. It should put them in order," said Xia Jun, an auto analyst with CCID Consulting Co Ltd, the Hong Kong-listed and Beijing-based industry consultancy.

"The signs are showing that Mitsubishi Motor is leaning towards Changfeng," Xia said.

The joint venture with Changfeng started to produce Mitsubishi's Pajero V73 SUV earlier this month, widely seen as a move to cement ties between the two sides.

The venture previously only manufactured SUVs under the Changfeng-owned Liebao and Feiteng brands, based on Mitsubishi Pajero models.

It is reported that Mitsubishi Motor intends to increase its stake in the venture to 50 percent, but Miki declined to confirm this.

The venture now has an annual production capacity of 80,000 SUVs.

"Mitsubishi Motor has no chance of having an equity stake in Beijing Benz-DaimlerChrysler (formerly named Beijing Jeep) as a result of DaimlerChrysler's deeper engagement in the joint venture," Miki said.

A senior executive from Beijing Jeep, renamed Beijing Benz-DaimlerChrysler at the beginning of this month, told China Daily last year that the joint venture expects Mitsubishi Motor to have an equity stake in it.

DaimlerChrysler and Beijing Automotive will add an investment of 143.7 million euros (US$191.1 million) in the venture, which is building a new plant and will start to assemble Mercedes-Benz E and C Class sedans next July with an annual production capacity of 25,000 units.

Both DaimlerChrysler and Beijing Automotive will have a 50-per-cent stake in the venture.

DaimlerChrysler and Beijing Automotive currently hold a 42.4 percent and 57.6 percent shares in the venture.

The venture now produces Mitsubishi Motor's Pajero Sport and Outlander, and Chrysler's Jeep SUVs.

"It's almost impossible for Mitsubishi Motor to build synergies with DaimlerChrysler in China as the latter appears not to take care of the former," Xia said.

DaimlerChrysler has pulled the plug on further financial aid to Mitsubishi Motor and also intends to cut its stake in the scandal-hit Japanese automaker to 20-25 per cent from the current 37 percent.

Mitsubishi Motor is in "final talks" with Southeast to have an equity stake directly in the venture jointly held by the Chinese mainland's Fujian Automotive Industry Corp and Zhonghua Motor Corp based in Taiwan Province, according to sources close to Southeast.

Southeast, in East China's Fujian Province, will produce Mitsubishi brand cars, sources said.

Both Zhonghua -- 25 per cent owned by Mitsubishi Motor -- and Fujian Automotive control a 50-per-cent stake in Southeast.

Southeast makes own-brand Lioncel compact sedans and Lingshen multi-purpose vehicles (MPV), which are based on Mitsubishi Motor's Lancer and Soveran models.

Fujian Automotive, China Motor and DaimlerChrysler have also formed a joint venture in Fujian Province to produce Mercedes-Benz vans.

The tripartite joint venture will begin making Mercedes-Benz's Viano, Vito and Sprinter vans in 2006 with an annual production capacity of 40,000 units.

Miki refused to comment on the prospects for Mitsubishi Motor's relationship with Hafei, which produces its own-brand Sigma mini van based on Mitsubishi Motor's Dingo.

Miki said Mitsubishi Corp (Shanghai) Ltd will replace Mitsubishi Motor's four agents in China to sell its vehicles in China as imports.

"This is part of our cost-cutting efforts and Mitsubishi Corp (Shanghai) Ltd is our partner within Mitsubishi Group," said Koichiro Uchida, a public relations official at Mitsubishi Motor.

Miki said Mitsubishi Motor's total sales in China, including those of local brands produced under its technical licenses, will amount to around 100,000 vehicles this year, down from last year's 151,000 units.

He attributed the decline largely to the falling sales of those local brands as a result of China's macroeconomic control measures.

Mitsubishi Motor's sales in China will stand between 100,000 and 151,000 units next year, he said.

"The most important thing for automakers is to have low-priced new models in China's competitive auto market," Miki said.

Growth in vehicle sales has decelerated sharply in China this year due to banks' controls on car loans, rocketing oil prices and customers' reluctance to buy cars given further anticipated price cuts.

Statistics showed that the sales of China-made vehicles rose by 16.81 percent year-on-year to 4.58 million units from January to November 2004.

This growth was down from 34 percent last year. The growth in passenger car sales in China declined to 16.90 percent during the period from last year's 75 percent.

Mitsubishi Motor last week launched the Grandis MPV in Shanghai as an imported model.

The 2.4-litre Grandis will retail between 300,000 yuan (US$36,230) and 310,000 yuan (US$37,440) in China.

Mitsubishi Motor said that it expects sales of Grandis to reach 1,000 units in China next year.

(Business Weekly December 28, 2004)