By Chang-Ran Kim
MAKUHARI, Japan, Oct 29 (Reuters) - Japan's fourth-largest automaker, Mitsubishi Motors Corp , said on Tuesday it expects to triple its operating margin in the truck and bus business from the current 1.4 percent in the next two to three years.
"My personal view is that without an operating margin of four or five percent, the business can't be called viable," Takashi Usami, president of Mitsubishi's Fuso truck unit, told Reuters in an interview on the sidelines of the Tokyo Motor Show.
"We think we can bring it up to that level by 2004 or 2005," added Usami, who is also chief operating officer at Mitsubishi Motors.
While Usami conceded that business has not been easy, with Japanese truck demand having halved from levels six years ago, he said the fall in market volume was also drawing a clearer line between winners and losers, in favour of Mitsubishi Motors.
Analysts say that with truck demand limited to 70,000 units this year compared with about 190,000 during the peak of the bubble economy in the late 1980s, the market is too crowded for four major truckmakers to survive.
Usami said, however, that Mitsubishi's market share, along with that of Hino Motors Ltd , another dominant player, would likely rise with the introduction of tighter regulations on nitrogen oxide emissions.
"For us and for Hino Motors, our major customers are big companies with the wherewithal to switch to the new products," he said.
"The smaller users, frankly, are now wondering whether to make the costly switchover or get out of the transport business altogether," he said. If those users decide to quit, that would deal a blow to the smaller truckmakers, he said.
Mitsubishi's president, Rolf Eckrodt, also present at the interview, said its truck business also had the advantage of a close partnership with the world's biggest truckmaker, DaimlerChrysler AG , which owns 37 percent of Mitsubishi.
Last month, Mitsubishi Motors announced it would spin off its Fuso truck and bus operations, in which the German automaker would take a 43 percent stake.
Eckrodt said that such an alliance with DaimlerChrysler meant Mitsubishi Motors would have access to its partner's technology, suppliers, global sales channels and other infrastructure, giving it an edge over its rivals.
In the business year that ended in March, Mitsubishi steered back to profit for the first time in three years on the back of aggressive cost-cutting. It has projected a record for this year helped by an improvement in sales and further restructuring steps.
Shares of Mitsubishi Motors were trading down 4.05 percent at 237 yen by mid-afternoon, compared with a 0.59 percent fall in the Nikkei average .
The stock has risen about 6.8 percent so far this year.