Mitsubishi Could Hurt Platform Profitability

PARIS – Incremental profitability targets and cost savings for the jointly developed D-segment platform between Chrysler Group and Mitsubishi Motors Corp. could be missed if the Japanese auto maker changes volume projections and usage, a Chrysler executive tells Ward’s.

Eric Ridenour, Chrysler head of product development, tells Ward’s it remains open whether Mitsubishi will use the D-segment platform and fulfill its production volume commitments.

Reports have indicated Mitsubishi is considering plans to scrap the products it planned to base on the D-segment platform.

In an attempt to halt continued speculation of project-ending rifts between DaimlerChrysler AG and Mitsubishi, the two signed an agreement earlier this week renewing their commitment to continuation of current joint-development projects.

Chrysler product development chief Eric Ridenour.

The two have jointly developed small and midsize platforms and are partners in a global engine venture with Hyundai Motor Co. Ltd.

Since DC’s decision to not inject more capital in the flailing Mitsubishi, it has been suggested Mitsubishi would pull out of some ventures already in the works.

DC CEO Juergen Schrempp has signed a contract with Mitsubishi cementing cooperation on current collaborations, while negotiations continue on how much of an equity stake DC will get in the Netherlands Car BV (NedCar) plant that makes the Smart ForFour and Mitsubishi Colt, and which is wholly owned by Mitsubishi.

Meanwhile, Ridenour says if Mitsubishi makes significant changes to its plans for use of the D-segment platform, it could marginally impact profitability for both auto makers.

“There is probably some small impact potentially on some of the volume-bundled parts,” Ridenour says during an interview at the auto show here.

“We don’t know that until we actually go in and (look at specific volume targets). It’s a small effect, but we did expect a few percentage points (of savings) on some of the common parts.”

Ridenour says Chrysler and Mitsubishi are in the process of sourcing parts for the D-segment platform vehicles (replacements for the Dodge Stratus, Chrysler Sebring and Mitsubishi Galant) and will have to nail down volume targets by the end of the year.

“In the next few months we will have most of that done and behind us and we will know what our final place is,” he says.

Ridenour adds if there is an incremental change to volume projections, any loss of savings could still be achieved by boosting volumes of the C-segment vehicles, as they share a significant number of components.

Ridenour, meanwhile, says the C-segment platform vehicles (replacements for the Dodge Neon, Chrysler PT Cruiser and Mitsubishi Lancer) are well under way and no changes have been made to production or volume bundling savings targets for those vehicles.

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