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DaimlerChrysler AG reportedly has picked Andreas Renschler, president of its Smart GmbH minicar unit, to lead a 500 billion yen ($4.8 billion) reorganization of Mitsubishi Motors Corp.

Renschler, 45, will replace Rolf Eckrodt, 61, as president and CEO of Japan’s only unprofitable automaker at a June shareholders’ meeting. Mitsubishi Motors shares surged 14 percent in Tokyo.

Mitsubishi Motors, which makes the Pajero sport-utility vehicle and Colt compact, will use the funds to develop new models and improve its brand image to compete with larger rivals Toyota Motor Co.p., Nissan Motor Co. and Honda Motor Co. Sales have slumped in the United States and Japan, its two biggest markets. The company also plans to shut down a factory in Australia.

“It’s clearly something they have to do,” based on the investment DaimlerChrysler has in Mitsubishi, said Andrew Palmer, who manages $2 billion including debt in DaimlerChrysler, Ford Motor Co. and General Motors Corp. for Washington-based ASB Capital Management. “It’s just unfortunate they have to spend another couple billion.”

Renschler reportedly estimated the plan’s cost on Friday during a meeting in Tokyo with executives including Ruediger Grube, DaimlerChrysler’s corporate strategy director, and Takashi Nishioka, chairman of Mitsubishi Heavy Industries Ltd., which owns 33.8 percent of Mitsubishi Motors.

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