Mitsubishi Motors announces FY 2005 first-half financial results and forecasts for full year

Tokyo, November 10, 2005 — Mitsubishi Motors Corporation (MMC) today announced its first-half financial results for fiscal year 2005, ending March 31, 2006, and outlined its forecasts for the full year.

1. FY 2005 first-half results

(1)

Performance overview

Mitsubishi Motors consolidated net sales for the first half of fiscal 2005 (April 1 through September 30) totalled 991.3 billion yen, down 79.5 billion yen from the same period last year (1,070.8 billion yen) mainly as a result of lower OEM supply volumes in overseas markets.

Mitsubishi Motors posted an operating loss of 19.8 billion yen, an improvement of 56.6 billion yen over the same period last year. Negative factors such as the drop in OEM supply volume stated above were offset by a number of favourable factors, including: lower depreciation costs as a result of asset impairment charges taken in the U.S. and Australia during the previous fiscal year; non-recurrence of one time charges resulting from the sales of sales-finance receivables in the U.S. financial services subsidiary; lower sales promotion costs, mainly advertising, in the U.S. and Europe; and lower warranty expenses.

Mitsubishi Motors posted an ordinary loss of 33.6 billion yen, a year-on-year improvement of 77.0 billion yen, and a net loss of 63.8 billion yen, an improvement of 115.0 billion yen. The improvement in net loss was realized despite extraordinary losses stemming from asset impairment charges in Japan relating to new asset impairment accounting standards. Factors contributing to the improvement include the non-recurrence of the extraordinary losses booked last year, including costs for special measures (a free vehicle inspection program) and also the reduction in losses from the cancellation of new model development programs.

(2)

Sales volume

Global market sales of Mitsubishi Motors vehicles in the first half of fiscal 2005 totalled 659,000 vehicles, an increase of 13,000 on the 646,000 sold in the same period last year.

In Japan, Mitsubishi Motors sold 108,000 vehicles, an increase of 12,000 over the same period last year. Year-on-year increases in every month since May underscore the firm tone to the recovery in the company's performance in the domestic market.

In North America, Mitsubishi Motors sold 81,000 vehicles, a decline of 11,000 over the same period last year. The decrease was mainly due to curbs on fleet sales and slower than expected sales of existing models. On a bright note, the new Eclipse introduced in May has made an encouraging start.

In Europe, Mitsubishi Motors sold 131,000 vehicles, an increase of 19,000 over the same period last year. The increase was driven by robust sales in markets such as Russia, Germany and the U.K., assisted by the addition of two new models to the Colt line-up in March.

In Asia and other markets, Mitsubishi Motors sold 339,000 vehicles, a slight decline of 7,000 over the same period last year. Sales increases in Oceania, Latin America, the Middle East, and Africa failed to counter a downturn in markets such as North Asia.

2. Progress in FY 2005 business plan (announced May 23)

(1) Financial results

- First-half net sales exceeded the announced forecast of 980 billion yen.

- First-half operating, ordinary and net losses were all smaller than the announced forecasts.

(2) Sales performance

- Global sales volume was 2% higher than the announced forecast of 647,000 vehicles.

- Sales volume in Japan was 3% higher than the announced forecast of 105,000 vehicles.

- Sales volume in North America was 8% below the announced forecast of 88,000 vehicles due to slow sales of existing models, despite encouraging initial sales of the new Eclipse model launched in May.

- Sales volume in Europe slightly exceeded the announced forecast of 130,000 vehicles, while volume in Asia and other regions was 5% higher than the announced forecast of 324,000 vehicles.

3. Full-year forecasts

In a year-on-year comparison, the first half of fiscal 2005 shows a distinct improvement in terms of earnings despite lower net sales. Net sales and sales volume both exceeded the FY 2005 business plan forecasts, while losses were smaller. The first half results show a solid start to achieving the FY 2005 business plan.
The company has, however, decided to leave the forecasts announced on May 23 unchanged because the forecasts contain higher second-half targets premised on substantial increases in sales volume expected from new model introductions. MMC has also factored in deterioration in the U.S. market environment and uncertainties about the impact of soaring oil prices on global economies. The company will instead concentrate all resources on achieving the full-year forecasts published at the beginning of the fiscal year.

In view of the conditions currently at hand, the company has made minor adjustments to full-year sales volume forecasts for certain regions. Specifically, the company has revised volume for Japan upward by 3,000 vehicles to 256,000; has revised volume for North America downward by 15,000 vehicles to 169,000; and has revised volume for Asia and other regions upward by 12,000 vehicles to 691,000. (The full-year global sales volume forecast of 1,370,000 vehicles remains unchanged.)

4. Operational initiatives for FY2005 second half

(1) Japan

- Introduction of new Outlander and i models as well as a number of special editions of existing models.

- Raise customer satisfaction by improving sales and service quality levels.

- Improve the profitability base of the company through consolidation of sales and parts sales companies and by expanding after-sales services revenue.

(2) North America

- Bolster sales on the back of the introduction of new Eclipse and Raider models.

- Normalize sales operations and improve profitability by trimming back fleet sales and reducing inventories.

- Boost sales strength by utilizing the company's new sales-finance system.

(3) Europe

- Boost line-up with the introduction of the new 1-ton pickup truck and Lancer Evolution IX models while expanding sales of existing models.

- Further expand sales in Germany, the U.K. and other major markets as well as in Russia, the Ukraine and other growth markets.

(4) Asia and other regions

- China: Develop dealer network to increase sales of Mitsubishi brand vehicles.

- Thailand: Increase sales through the introduction of the new Triton 1-ton pickup truck; reinforce its position as a core production base.

- Australia: Introduction of the new 380 large sporty sedan.

- Other markets: Further increase sales in Latin America, the Middle East, and Africa.

Note on forward-looking statements
All statements herein, other than historical facts, contain forward-looking statements and are based on our current forecasts, expectations, targets assumptions, plans, and evaluations. Any forecasted value is calculated or obtained based on certain assumptions. Forward-looking statements involve inherent risks and uncertainties. A number of significant factors could therefore cause actual results to differ from those contained in any forward-looking statement.
Significant risk factors include:

- feasibility of each target and initiative as laid out in this presentation;

- fluctuations in interest rates, exchange rates and oil prices;

- changes in laws, regulations and government policies;

- regional and/or global socio-economic changes

Potential risks and uncertainties are not limited to the above and MMC is not under any obligation to update the information in this presentation to reflect any developments or events in the future.

NOTE TO EDITORS: All supporting materials cab be found in the media services section of the Global website www.mitsubishi-motors.com