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Mitsubishi Motors to close car plant in Nagoya.

TOKYO, Dec. 19 Kyodo

Mitsubishi Motors Corp. plans to close down one of its three main domestic passenger car assembly plants during the business year beginning next April, company sources said Tuesday.

The move comes amid a sharp drop in its vehicle sales following a recent cover-up scandal over vehicle defects.

The company hopes the closure of the Oe plant in Nagoya, which produces mainly recreational vehicles, will enable it to restore sagging earnings, the sources said.

About 2,600 workers at the Oe plant will be relocated to other factories or divisions within the company, or will be asked to apply for an early retirement program.

The Japanese carmaker will discuss the proposed plant closure with DaimlerChrysler AG, which has a 34% stake in Mitsubishi Motors, and announce it formally along with a new mid-term business plan to be compiled by the end of March, they added.

Mitsubishi Motors had planned to use the Oe plant to manufacture a new strategic compact ''Z car,'' developed jointly with DaimlerChrysler, during the business year beginning in April 2002.

But that plan has now been withdrawn, and the new car is likely to be produced at a plant in Okayama Prefecture, the sources said.

Mitsubishi Motors has an annual passenger car production capacity of 1,348,000 units but produced only 908,000 units in the year to March 31 due to slumping sales. The Oe plant alone has an annual production capacity of 228,000 units.

The vacated Oe plant will be sold or used for other purposes, the sources said. The company had already sold about 160,000 square meters, or 40% of the plant's land, by June to Mitsubishi Heavy Industries Ltd. and other concerns.
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Publication:Japan Transportation Scan
Date:Dec 25, 2000
Words:286
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