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Mitsubishi Corporation: Restructuring of automotive production and distribution business in Indonesia

Mitsubishi Corporation (“MC”) has reached an agreement with partners Mitsubishi Motors Corporation (“MMC”), Mitsubishi Fuso Truck & Bus Corporation (“MFTBC”), and Indonesia’s PT Krama Yudha (“KY”) regarding the restructuring of their automotive business in Indonesia. MMC and MFTBC products are currently manufactured and distributed in Indonesia by the four partner joint venture Krama Yudha Tiga … Continued

Mitsubishi Corporation (“MC”) has reached an agreement with partners Mitsubishi Motors Corporation (“MMC”), Mitsubishi Fuso Truck & Bus Corporation (“MFTBC”), and Indonesia’s PT Krama Yudha (“KY”) regarding the restructuring of their automotive business in Indonesia.
MMC and MFTBC products are currently manufactured and distributed in Indonesia by the four partner joint venture Krama Yudha Tiga Berlian Motors (KTB). Effective April 2017, however, both brands will be administered separately in order to establish a more efficient structure and expand business in Indonesia, where the automobile market is expected to see continued growth.

KTB was established in 1970 as the core company for automotive production and distribution operations in the Indonesian market. The company has had notable success in developing the Mitsubishi brand image in Indonesia, reaching accumulated sales of some 2.5 million units by the end of 2015.

The Indonesian economy continues to show signs of strong economic growth. This has been accompanied by an expansion in the country’s middle class, with increased purchasing powers as well as rapidly changing consumer needs and orientations. Restructuring the automobile business is an appropriate and timely response to those changes.

KTB will continue in its current form but will exclusively produce and distribute FUSO vehicles. A portion of the shares currently held by MC and MMC will be sold to MFTBC for a new shareholding structure that has MC owning 30%, MFTBC 30%, and KY 40% of KTB. It is expected that the new structure, which will involve stronger management support from MFTBC, coupled with an improved production system and the use of locally sourced parts, will help strengthen competitiveness.

With regard to MMC, a new distribution company will start operating in April 2017 as well. Under its new shareholding structure, MC will hold 40%, MMC 30%, and KY 30% of shares. A newly established factory, PT Mitsubishi Motors Krama Yudha Indonesia (“MMKI”), will also start production in April 2017. The opening of MMKI will facilitate the introduction of new models and the expansion of MMC’s product line up and is expected to lead to increased market share and greater profits for MMC as the company continues to strengthen its sales network.

For MC, the automotive business is among those with the most potential to help boost the company’s growth, while at the same time contributing to the Indonesian economy.

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