Annual Report 2010
Year ended March 31, 2010

Driving into the next century
with the world

Mitsubishi Motors Corporate Philosophy“We are committed to providing the utmost driving pleasure and safety for our valued customers
and our community.
On these commitments we will never compromise. This is the Mitsubishi Motors way.”
Customer-centric approach

Going the extra mile

Mitsubishi Motors will give the highest priority to satisfying its customers, and by doing so, become a company that enjoys the trustand confidence of the community at large. To this end, Mitsubishi
Motors will strive its utmost to tackle environmental issues, to raise
the level of passenger and road safety and to address other issuesof concern to car owners and the general public.

Mitsubishi Motors will pay close attention to even the smallest
details in the belief that this approach will lead customers to
discover new value in their cars, giving them a richer and more
rewarding driving experience.

A clear direction for the development andmanufacturing of Mitsubishi Motors vehicles

Importance of continuity
Mitsubishi Motors will continue to manufacture distinctive cars
with the passion and conviction to overcome all challenges.

The cars that Mitsubishi Motors will manufacture will embody
two major concepts: driving pleasure and safety. Mitsubishi
Motors will manufacture cars that deliver superior driving performance and superior levels of safety and durability, and assuch, those who use them will enjoy peace of mind.

Contents
01
02
04
09

16
20
21
22

Consolidated Financial Summary
To Our Shareholders and Stakeholders
Performance Review and Outlook
Special Feature:
Bringing the i-MiEV
to the World
Regional Topics
Japan/North America/Europe/Asia and Other Regions
Quality
Corporate GovernanceInternal Control Systems and Risk Management

Forward-looking Statements

23
25
26
27
28
29
66
68
69

Compliance
The Business Ethics Committee
Management
Responsibility to Society“Mitsubishi Motors Group Environmental Vision 2020”
Financial Section
Consolidated Subsidiaries and Affiliates
Principal Production Facilities
Investor Information

This annual report contains forward-looking statements about Mitsubishi Motors Corporation’s plans, strategies, beliefs and performance. These forward-looking statements are based on
current expectations, estimates, forecasts and projections about the industries in which Mitsubishi Motors Corporation operates, as well as management’s beliefs and assumptions. These
expectations, estimates, forecasts and projections are subject to a number of risks and uncertainties that may cause actual results to differ materially from those projected. Mitsubishi
Motors Corporation, therefore, cautions readers not to place undue reliance on forward-looking statements. Furthermore, Mitsubishi Motors Corporation undertakes no obligation to
update any forward-looking statements as a result of new information, future events or other developments.

Consolidated Financial Summary

In thousands ofIn millions of yen

U.S. dollars

FY2005

FY2006

FY2007

FY2008FY2009FY2009¥2,120,068¥2,202,869¥2,682,103¥1,973,572¥1,445,616$15,537,578

6,783

40,237

108,596

3,926

13,920149,617and minority interests(82,745)

23,104

48,151(53,717)

11,591

124,587

Net income (loss)(92,166)

8,745

34,710(54,883)

4,758

51,139In yenIn U.S. dollars

For the year:
Net sales
Operating income

Per share data:
Net income per share-basic¥(19.75)

¥1.59

¥6.30

¥(9.91)

¥0.86

$0.01

Net income per share-diluted

–

0.96

3.81

–

0.51

0.01

Cash dividends

–

–

–

–

–

–

In thousands ofIn millions of yen

U.S. dollars

At year-end:
Total assets¥1,557,570¥1,778,693¥1,609,408¥1,138,009¥1,258,669$13,528,263

268,678

308,304

328,132

223,024

234,478

2,520,188

Total net assets

Notes: 1. U.S. dollar amounts in the accompanying consolidated financial statements are converted, solely for convenience, at a rate of 93.04 = U.S. $1.00, theexchange rate prevailing on March 31, 2010.
2. The assets and liabilities of truck and bus operations are not reflected in each account because these operations were spun off and subsequently
became an equity method affiliate of Mitsubishi Motors Corporation (MMC) on March 14, 2003. Furthermore, all remaining shares held by MMC had
been transferred to other parties by the end of March 2005.

Net Sales
0500Operating Income
1,000

1,500

09

2,000

2,500

3,000

08

1,973.6

07

05

05

2,120.1(FY)(¥ billion)

2,000(¥ billion)

3.9
108.6

06

2,202.9

150

13.9

07

2,682.1

06

100

50

09

1,445.6

08

40.2
6.8

(FY)

Net Income (Loss)
–150

–100

Total Assets
–50

09

0

50

09
08

–54.9

07

07

34.7

06
05

0

(¥ billion)

4.8

08

(FY)

0

(¥ billion)

06

8.7

05

–92.2
(FY)

500

1,000

1,500

1,258.7
1,138.0
1,609.4
1,778.7
1,557.6

mitsubishi motors corporation Annual Report 2010

Income (loss) before income taxes01

To Our Shareholders and Stakeholders

MiTSUbiShi MoTorS CorporaTioN annual report 2010

In fiscal 2009, the global economy headed toward a gradual
recovery, after putting the worst behind it, but the recovery was
far from strong overall and economic conditions remained harsh.
Amid this business environment, we began mass production andsales of our i-MiEV new-generation electric vehicle, and thei-MiEV received high praise from both customers and the general public. In terms of business performance, we successfully
achieved our initial target, which was a return to profitability on a
net income basis.
In fiscal 2010, we will mark the 40th anniversary of our founding. This will also mark the final year of our mid-term businessplan Step Up 2010. We will accurately respond to global structural changes in automobile demand stemming from the latest
economic crisis, and will take steps to bolster our strengths andsecure steady profits, as well as continue to build the foundations for growth ahead of the next mid-term business plan.
We look forward to your continued support and understanding.
August 2010

Takashi Nishioka
Chairman of the board

osamu Masukopresident

02

Drive@earth means that automobiles connect us to the world. Throughtrust, Mitsubishi vehicles forge a connection to customers, to communities, and ultimately to the natural world around us.
Drive@earth also means a new emphasis on environmental issues. It is
the simple recognition that no enterprise makes sense without thecontext of a healthy planet, and that automakers have a special responsibility in this regard. MMC sets as its ideal the synergy between
dynamic and environmental performance, and will continue to develop
technologies that show as much care for the environment outside as forthe occupants within its vehicles.

mitsubishi motors corporation Annual Report 201003

Takashi Nishioka

Osamu Masuko

Chairman of the Board

PresidentPerformance Review and Outlook

Fiscal 2010 will be a year to finish building the foundations for
growth. Important themes include addressing environmental
issues; developing compact, affordable, and fuel-efficient vehicles;
emerging countries; and business tie-ups.

MiTSUbiShi MoTorS CorporaTioN annual report 201004

President
Osamu Masuko

Step Up 2010 Mid-Term Business Plan Enhanced—After weathering the economic crisis
The Step Up 2010 mid-term business plan positions the three-year period from fiscal year 2008 through fiscal year
2010 as a period to build the foundations for growth, and to this end we have been taking steps to bolster ourstrengths and secure steady profits. The economic crisis which materialized immediately following the launch of the
mid-term business plan left us no choice but to revise our performance targets (see Page 8). However, as we implemented emergency measures, such as cutting costs and carefully scrutinizing investments, we effectively utilized
our finite management resources to begin steadily executing our key strategies, such as enhancing our products
and addressing environmental issues, which comprise the core of the mid-term business plan.
In terms of enhancing our products, we leveraged MMC’s strengths to launch new vehicle models, such as the
Pajero Sport, the i-MiEV, and the RVR (ASX or Outlander Sport in some markets). In terms of environmental technology, we began mass producing electric vehicles, developing a clean diesel engine, and launching new technologies including automated manual transmission and flexible fuel vehicles (FFVs), helping to build the foundations for
growth. Moreover, we enhanced our sales strategy by positioning key emerging countries as important markets,and given the recovery in demand that has materialized since last year we are confident that this strategy will leadto an increase in retail sales volume.
Furthermore, we have already begun to collaborate with PSA Peugeot Citroën on OEM supply of three models,and on local production in Russia. We are actively pushing forward with business collaborations which benefit bothsides as we look to expand business tie-ups.

Fiscal Year
2009

Return to Net Profitability, Target Achieved—Countering the decline in sales and impact of the yen’s appreciation by cutting expenses andreducing costs
In fiscal 2009, the global economy emerged from the depths of the turmoil that had plagued it for more than ayear and headed towards a mild recovery, backed by economic stimulus measures enacted by governments
throughout the world. However, a strong recovery in automobile demand remained far off as the surrounding business climate remained harsh. Amid this environment, we took steps to optimize inventories and accelerate shipments to recovering markets. Despite the decline in net sales, thorough expense reduction efforts helped us toexceed the previous fiscal year in all income levels and to return to profitability on a net income basis, which was
our target for the fiscal year.
Retail sales volume dropped 106,000 units, or 10% year on year, to 960,000 units. Reflecting lower sales
volume and the appreciation of the yen, among other factors, net sales fell ¥528.0 billion, or 27% year on year, to¥1,445.6 billion. Operating income rose ¥10.0 billion year on year, to ¥13.9 billion, due to thorough expensecutting measures first enacted in the latter half of the previous fiscal year as a part of emergency measures in
response to the unprecedented economic crisis and carried through into fiscal 2009. Ordinary income increased¥27.9 billion year on year, to ¥13.0 billion. This was due to the rebound in operating income as well as the ¥17.9
billion upturn in non-operating income such as foreign exchange gains and equity method investment gains. Net
income increased ¥59.7 billion year on year, to ¥4.8 billion, due to the ¥27.9 billion rebound in ordinary income aswell as the significant decline in extraordinary impairment losses.

FY2009 Results Summary (vs. FY2008)(¥ billion, units)
FY2008 Results 1

FY2009 Results 2

Change 2–1

1,973.6

1,445.6-528.0

3.9

13.9

10.0

Ordinary Income (Loss)

-14.9

13.0

27.9

Net Income (Loss)

-54.9

4.8

59.7

Sales Volume (Retail)

106.6

96.0

-10.6

Net Sales
Operating Income

Note: Sales volume figures exclude OEM supplies.

MiTSUbiShi MoTorS CorporaTioN annual report 2010

Fiscal Year2008 Onward

05

Fiscal 2010
MiTSUbiShi MoTorS CorporaTioN annual report 201006

A Year to Finish Building the Foundations for Growth—Key themes include addressing the environment; developing compact, affordable andfuel-efficient vehicles; emerging countries; and business tie-ups
There have been dramatic changes in the demand structure in the automobile market triggered by the onset of theeconomic crisis immediately following the unveiling of our mid-term business plan. Such changes include increased
expectations for eco-friendly technology in conjunction with heightened environmental awareness, most notably inadvanced countries, as well as consumers’ orientation towards fuel-efficient, affordable, and highly economicalcompact cars, especially in emerging countries. Although eco-friendly technologies and cost-cutting technologies
to produce low-priced cars are often contradictory, we recognize that working to overcome both issues is essential
to achieving future growth.
We will proactively take advantage of business tie-ups with other companies on projects in which working
together will provide strong benefits in terms of overcoming these hurdles. Up until this point we have actively
pursued business tie-ups that produce mutual benefit for the companies involved. As a case in point, this past April
we signed an agreement with PSA Peugeot Citroën regarding OEM supply for a new compact SUV.
In these ways, in fiscal 2010 we will work to finish building the foundations for growth, by focusing on addressing environmental issues, developing compact, affordable, and fuel-efficient vehicles, as well as focusing on emerging countries and business tie-ups.

New Organizational Framework
Two Executive Vice Presidents, Established Strategic Operations Office and Cost
Innovation Controlling Office
Amid these dramatic changes in the business environment, beginning with fiscal year 2010 we changed our
executive lineup to include two vice presidents, which we believe will both enhance our management capabilities and allow us to swiftly respond to changes in the business environment. We also created a Strategic Operations Office and Cost Innovation Controlling Office. In a new demand structure, these new entities will enable us
to quickly respond to the increasing need for collaboration aimed at bolstering competitiveness, further enhance
our activities to reduce materials costs, and take steps to reform costs by expanding the scope of these costreducing activities.

R&D Expenditure and Capital Expenditures
Increase Investment in Product Development and Environmental Technology in
Pursuit of GrowthIn fiscal 2009, we thoroughly curbed both R&D expenditure and capital expenditures in response to the dramatic
deterioration of the business environment in the wake of the “Lehman Shock.” However, in fiscal 2010, in pursuit of
future growth we will increase investment in new product development and environmental technology-related
investment, including electric vehicles as well as a compact, affordable, and fuel-efficient global strategic vehicle.
As a result, we expect R&D expenditure to increase by ¥11.6 billion (26%) year on year, to ¥56.0 billion, and capital
expenditures to grow by ¥28.9 billion (61%), to ¥76.0 billion.

During fiscal 2010, we will globally launch the all-new RVR* compact SUV which went on sale in Japan in February
2010. Beginning with a launch in Europe, where the crossover category is experiencing growth, we plan to phase inlaunches in regions such as China, ASEAN nations, Australia and North America. We plan to sell 18,000 units inJapan and 57,000 units overseas, for a combined total of 75,000 units.
* ASX or Outlander Sport in some markets.

EV Business
Bringing the i-MiEV to the WorldIn July 2009, we launched the i-MiEV new-generation electric vehicle in Japan, and it has received high praise fromthe public.
In fiscal 2010, we began selling the i-MiEV to individuals in Japan in April with the lowered manufacturer’s
suggested retail price (MSRP) for the i-MiEV which, combined with the national government’s subsidies, leaves a
cost to the customer of ¥2,840,000.
Overseas, we commenced i-MiEV sales in Hong Kong and Australia, right-hand-drive countries. In October, we
will add a left-hand-drive version and begin shipments to Europe, where environmental awareness is high. We areplanning to sell a total of 9,000 units in fiscal year 2010, including both domestic and overseas sales. In fiscal year
2011, we are planning to roll out the i-MiEV in North America. In fiscal year 2012 we will add i-MiEV variations andplan to sell over 40,000 units.
Currently, MMC has an EV Business Office which reports directly to the president, and is working quickly on avariety of issues, including domestic and overseas marketing strategies as well as business tie-ups. (For details,
please refer to “Special Feature: Bringing the i-MiEV to the World” on Page 9).
While our rollout of electric vehicles is centered on compact models, we will employ a plug-in hybrid system on
an SUV model, one of our strong points.
We have established the Mitsubishi Motors Group Environmental Vision 2020, which clarifies our long-term
environmental goals. It calls for at least 20% of the vehicles we produce in 2020 to be either electric vehicles orplug-in hybrids as part of our commitment to develop the EV business into one of our core businesses.

Initiatives in Key Emerging Countries
Starting Assembly of Outlander at Russian Factory
In Russia, total vehicle demand in fiscal 2009 fell to one-half that of the previous fiscal year, and MMC saw a large
decline in the number of vehicles sold there. Moreover, the recovery in Russia is lagging in comparison to otheremerging countries such as China, Brazil and India. However, Russia remains to be a country with great potential
for growth over the medium and long term. Signs of a recovery have emerged since the beginning of fiscal 2010,
and we expect an increase in sales volume. From September, we will begin assembling the Outlander at a Russian
facility created through a joint venture with PSA Peugeot Citroën.
Our focus in China is three-pronged: bolstering sales of imported built-up vehicles, bolstering sales of vehicles
produced in China, and further expanding the engine production business. In fiscal 2010, total demand in China is
expected to increase 10% compared to the previous fiscal year; so we plan to expand sales of the new Lancer EX,
which we began to produce locally at South East (Fujian) Motor Co., Ltd. (SEM) from last November and to raise
the strength of our brand, while at the same time improve our sales network.
Other key regions include Brazil, which has seen record high sales for three consecutive years; ASEAN nations,which have continued to perform strongly; and Australia, which is likewise performing well. As these markets
recover, we will strive to increase sales, particularly sales of SUVs, one of our strong points.

MiTSUbiShi MoTorS CorporaTioN annual report 2010

New Products
Global Rollout of New Compact SUV

07

MiTSUbiShi MoTorS CorporaTioN annual report 201008

Performance Outlook
Aiming for Increases in Revenue and Profit with Increase in Sales Volume andFurther Cost Reductions—Increase in sales volume will be driven by the new compact SUV

The Step Up 2010 mid-term business plan which we announced in February 2008 included an operating incometarget of ¥90 billion in fiscal 2010, the final year of the plan.
However, the environment surrounding the automobile industry that we envisioned when formulating the plan
has changed significantly, and the bankruptcy of a major U.S. financial institution in September 2008 brought about
three serious problems for the Japanese automobile sector: a drastic decline in retail sales volume, the credit
crunch, and the appreciation of the yen. In conjunction with this dramatic change in the business environment, in
fiscal year 2008 we were unable to avoid a considerable decline in both sales and profits. Still, by taking emergency measures in the face of the economic crisis, such as production cutbacks to reduce excess inventories andimplementing rigorous cost reductions, we were able to secure operating profit.
In fiscal 2009, we took steps to optimize inventories and accelerated shipments to recovering markets, in addition to carrying out thorough cost reduction initiatives. These activities led to a turnaround in the bottom line
despite a decline in sales, and we successfully achieved our initial target of returning to net profitability.
In fiscal 2010, we expect an increase in both sales and profits on the back of higher sales volume and enhanced
cost reductions, and have set an operating income target of ¥45 billion. Our current assumptions are much less
optimistic than at the time of the Step Up 2010 plan, as we are now assuming a roughly 300,000 unit decline insales volume and a ¥15 appreciation against the U.S. dollar. This will certainly result in profits undercutting ourforecasts in our Step Up 2010 mid-term business plan. Nonetheless, we will work to regain our footing throughsuch measures as curbing personnel expenses, reducing advertising expenditure, and further enhancing our cost
reduction programs, and expect operating income to recover to one-half of the ¥90 billion we set as an operating
income target for the last year of Step Up 2010.
We have seen a harsh business environment since the second half of fiscal 2008, but during this time we havetaken steps to enhance our business platform by bolstering our strengths. In fiscal 2010, we will improve profitability by rolling out our new compact SUV around the globe as demand recovers, particularly in emerging countries,
which will lead to growth and a significant leap forward in fiscal 2011 and beyond.

FY2010 Results Forecast Summary (vs. FY2009 Actual)(¥ billion, units)
FY2009 Actual 1

FY2010 Forecast 2

Change 2 – 1

1,445.6

1,900.0+454.4

Operating Income

13.9

45.0

+31.1

Ordinary Income

13.0

30.0

+17.0

Net Sales

Net Income

4.8

15.0

+10.2

Sales Volume (Retail)

96.0

112.1

+16.1

Assumed Forex Rate (Yen)USD 92
EUR 130
AUD 79USD 90
EUR 120
AUD 82

Note: Sales volume figures exclude OEM supplies.

Special Feature

to the World
Mitsubishi Motors is contributing tosociety globally as a pioneer inelectric vehicles
In the midst of rising expectations that electric vehicles
will help make a low-carbon society a reality around theworld in the near future, Mitsubishi Motors launched
the i-MiEV new-generation electric vehicle in Japan in
July 2009 and began offering it overseas in 2010.

MiTSUbiShi MoTorS CorporaTioN annual report 2010

Bringing the09

Bringing the i-MiEV
to the World

i-MiEV delivery ceremony for the Principality of Monaco

Conducting On-Road Tests in Japan and Abroad
mitsubishi motors corporation Annual Report 201010

Mitsubishi Motors launched the i-MiEV new-generation electric vehicle in Japan in July 2009. The launch was theculmination of a 500,000-km proving test program that assessed this car’s basic performance, comfort, and practicality. Customers have lauded the i-MiEV for its acceleration, quietness, and driving feel. The overseas reception ofthis model has been similarly very positive, obtained during 200,000 km of the proving tests in Europe, North
America, and elsewhere internationally.

More than 50 Domestic and Overseas Partnerships
Several factors are essential for the popularization of electric vehicles around the world. They include consumer
education, an improved charging infrastructure, and subsidy schemes and specific legislation for these cars. Partnerships are vital to achieving all of these. Mitsubishi Motors has formed more than 50 domestic and overseas
partnerships with governments, electric power companies and councils, and is moving forward with initiatives topopularize electric vehicles and make a low-carbon society a reality with these partners.

Launching the i-MiEV Abroad and Supplying PSA Peugeot Citroën
MMC is making the i-MiEV available internationally in fiscal 2010. MMC started by offering the right-hand-drive
model in Hong Kong and Australia. In October 2010, MMC will add a left-hand-drive version, shipping it toEurope, where environmental awareness is high. MMC will also supply PSA Peugeot Citroën on an OEM basis fromaround the same time. In addition, the i-MiEV will debut in North America in fiscal 2011.
With full-scale overseas rollout, in addition to sales to individuals in Japan, MMC plans for sales of the i-MiEV
to reach 9,000 units in fiscal 2010, more than five-fold higher than fiscal 2009.

More than 50 Domestic and Overseas Partnerships

8 in North America
United States
Electric power companies (PG&E Corporation,
Southern California Edison, and Portland
General Electric)
Government of Oregon
Government of California
CanadaCity of Vancouver
Government of British Columbia
Hydro Québec (an electric power company)
Transport Canada

6 in Europe
United Kingdom
Participation in Technology Strategy Board program
Republic of Ireland
Government of Ireland
Republic of Iceland
Government of Iceland
Switzerland
Alpiq (an electric power company)
Germany
E-mobility model region project
MonacoPrincipality of Monaco

39 in Japan
Participation in support councils for Ministry of
Economy, Trade and Industry
Participation in councils for EV & pHV Towns
Participation in support councils for electric powercompanies
2 in Asia-PacificHong Kong
Government of the Hong Kong Special Administrative
Region of the People’s Republic of China
New ZealandMeridian Energy Limited (an electric power company)

i-MiEV Rollout Schedule
Fiscal year 2009
July 2009

Fiscal year 2010

Fiscal year 2011

Fleet sales

Japan
Retail sales to individuals

Overseas

Sample shipments ofaround 250 units

Right-hand-drive vehicles (Hong Kong and the U.K. and others)
Europe (including left-hand-drive markets)
For PSA Peugeot Citroën
United States

Reducing Price and Offering the i-MiEV to Individuals in JapanIn April 2010, MMC began offering the i-MiEV to individuals in Japan at a manufacturer’s suggested retailprice of ¥3,980,000, incorporating cost reductions to reduce the price by ¥619,000. Furthermore, utilizing anational government subsidy further reduces the cost to the customer to ¥2,840,000.
MMC has said all along that price reductions are necessary for the popularization of electric vehicles and
MMC would strive to reduce the price of the i-MiEV to an affordable level by reducing costs through economies of scale and other measures.
MMC plans to endeavor to further reduce costs to lower the i-MiEV’s post-subsidy cost to the customer toaround ¥2,000,000 in Japan.
As with fleet customers, MMC is selling the i-MiEV to consumers on a maintenance lease basis. Thisapproach is easier for customers, as Mitsubishi Motors sales outlets provide peace of mind through precise
inspection and maintenance while the leasing company takes care of all government subsidy paperwork.

mitsubishi motors corporation Annual Report 2010

Fall 200911

How Electric Vehicles Could
Transform Social Systems

Electric vehicle parade in a sightseeing area

Climate for Electric Vehicles Set to Change Faster than Anticipatedmitsubishi motors corporation Annual Report 2010

12

Electric vehicles burden the environment less than gasoline vehicles. MMC believes they can also produce additional synergies in combination with social systems, notably for car sharing, tourism, and smart grids.
MMC also believes that electric vehicles could greatly transform the social structure. Electric vehicles could
lead not just to low-carbon road transportation but could also reposition the role of cars among consumers, all thewhile reshaping the energy supply business and the automotive industry. MMC also considers changes to the social
structure of this kind critical to popularizing the use of electric vehicles.
The evolution of electric vehicles is accelerating through constant technological advances. They include better
battery performance and other improvements, which have lowered costs and extended cruising ranges, and contactless charging technology, which has enhanced user convenience.
While MMC does not expect electric vehicles to soon replace all gasoline vehicles, the climate is such that they
have become realistic alternatives far faster than anticipated, and MMC must strive to keep abreast of thisdevelopment.

MiEV House
MMC showcased the MiEV House at the Tokyo Motor Show 2009 to highlight its vision for how electric vehicles
could transform the social structure. SHARP CORPORATION was one of 12 partners that contributed to the exhibit.
Electric vehicles could even be parked inside homes, as they produce no emissions during driving. Putting cars
inside houses would be convenient for elderly drivers and passengers, and make it easier to load and unload baggage. Being able to park indoors also holds potential to make a significant contribution to healthcare for the physically challenged. As electric vehicles can link to power networks, this ability could be expected to produce new
added value.
The i-MiEV battery holds roughly the amount of power a family of four uses in one day. In the future, people
could use electricity from their cars on days when not driving to power home appliances or supply backup electricity during disasters and other emergencies. MMC believes that automakers must start looking to the future tocreate avenues for bringing innovation to electric vehicle-related technologies, and work to redefine the value androles of automobiles. Mitsubishi Motors, as a pioneer and industry leader in new-generation electric vehicles, aims
to help make electric vehicles central to society worldwide.

MiEV HouseEstablishing a New Business
Model—Our Primary Focus Today

Yoshikazu Nakamura

Yoshikazu Nakamura is corporate general manager of the EV Business Office. His
responsibilities include overseeing business strategies and feasibility for MMC’s electricvehicle operations. Mr. Nakamura explains the business model MMC is pursuing and his
current key initiatives.

A New Historical Milestone
Launching the i-MiEV and Establishing the EV Business OfficeAround the year when the i-MiEV was introduced, the focus of social and customer interest began shifting noticeably toward electric vehicles as the ultimate next-­generation cars. The appearance of the i-MiEV triggered tremendous interest in both the electric vehicle business and in the new social systems that such cars could lead to.
These considerations prompted MMC to set up the EV Business Office in August 2009 to specialize in managing the overall profitability of the electric vehicles business, as well as to formulate business strategies and explore
and propose related new operations.
Since then, we have focused on trends in electric vehicles from the diverse perspectives of society and customers,
national governments, the automobile and electric power industries, suppliers, venture businesses, and other stakeholders. We have also tackled issues more swiftly, notably those of domestic and overseas sales strategies and alliances.
Most of the people in the EV Business Office formerly worked in the MiEV Business Management Office, but
we increased staffing, which included taking on employees who had never been involved with electric vehicles. I
think that new ideas from such people is complementing MMC’s more than 40 years of experience in electric vehicle R&D so the company can enter uncharted territory.
I think that automobiles will play diverse roles in society over the next 100 years. MMC recognizes that theelectric vehicle will be a pinnacle technology that will take center stage as the century unfolds. This is why welaunched the i-MiEV. In my estimation, the launch of the i-MiEV in fiscal 2009 constituted a new historical milestone
for MMC in firmly establishing the electric vehicle business.

Target to Raise Production of Electric
Vehicles and Plug-in Hybrids to 20% or More of Total Production
by 2020 Guides Our Internal Operations
Mitsubishi Motors Group Environmental Vision 2020 (see page 28 for details)
MMC announced the Mitsubishi Motors Group Environmental Vision 2020 on June 5, 2009, which was also World
Environment Day, with a stated objective of “Leading the EV Era, Towards a Sustainable Future.” As part of this,
MMC has a target to raise production of electric vehicles and plug-in hybrids to at least 20% of its total production
by 2020. Our electric vehicle business will remain very important over the medium and long terms.
In-house operations are being aligned toward this target. The EV Business Office has simultaneously undertaken
several minor and major projects in new areas over the past year, and we have progressed steadily with collaborationfrom internal divisions. Having the shared target has been a powerful driving force for action inside MMC.

mitsubishi motors corporation Annual Report 2010

Corporate General Manager of the EV Business Office13

Building a Business Model That Generates Stable Profits
Ensuring Stable and Sustainable Earnings

mitsubishi motors corporation Annual Report 201014

In seeking to boost production of electric vehicles and plug-in hybrids to at least 20% of total production by 2020,
we will essentially make the electric vehicle business one of our core operations. Our first move must therefore beto establish a new business model that ensures stable profitability.
To this end, we are employing novel concepts in a wide-ranging review of that business model. Our procurement and production strategies are good examples of this. Electric vehicles incorporate numerous new basic components, notably electric motors, inverters, batteries, and chargers. It is vital strategically to choose whether tomake such key electric vehicle components, including batteries to replace engines of conventional vehicles, inhouse or purchase them externally. With technologies evolving rapidly for all such components, we adopted astrategy of closely collaborating with business partners to procure low-cost parts and thereby maintain ourcompetitiveness.
We believe that we can maintain competitive advantage in electric vehicles by forming strong ties with manufacturers of key components to improve both mass production and technologies and that this will also allow us tocompetitively reduce procurement costs. Instead of engaging in rivalry between automakers, suppliers, electricutilities and other electric vehicle business players for a bigger slice of the earnings pie, we prefer to collaborate tofoster mutual profitability so the electric vehicle business can grow.

Mitsubishi Motors’ Competitive Advantages
I have been told when explaining that we buy the all-important batteries from outside sources that any company
could make an electric vehicle by externally procuring all key components and simply assembling the vehicle. Thatmight be true if it were acceptable to ignore safety or driving feel.
However, electric vehicle development expertise is not earned in a single day. MMC has electric vehicle knowhow accumulated over 40 years. On top of that, to introduce the i-MiEV we conducted extensive road tests aroundthe world and amassed valuable technological data in the process. We drew on that information to complete the
MiEV OS (Operating System), an advanced, integrated vehicle management system that ensures safety and comfort, and conserves energy.
Launching mass-produced electric vehicles ahead of other companies allowed us to exchange information withothers in the market, government bodies, academia, and industry associations, and to leverage actual electricvehicles in business negotiations. I see this as our advantage in swiftly adapting to new business developments.

Becoming Profitable in Fiscal Year 2012
We estimate that the i-MiEV would reach its breakeven point at an annual output of 30,000 units. We plan to sellaround 40,000 of these vehicles, including variations, in fiscal 2012, achieving profitability.

i-MiEV Sales Plan
30,00015,0000

Around12

40,000 units
18,000

11
9,000

10
09
(Fiscal year)

i-MiEV used by the Frankfurt Airport

45,000 (Number of units)

1,600

Our Current Focuses Are to:
1. Encourage People to Ride in Our Electric Vehicles
2. Lower Pricing
3. Expand Our Electric Vehicle Lineup
Our three current priorities are for as many people as possible to try our electric vehicles and learn their advantages, lowering pricing by reducing costs, and expanding our electric vehicle lineup.

Many people who ride in the i-MiEV find to their surprise that, among other things, it accelerates extremely welland is very quiet. First-hand experience is the first step in understanding the benefits that an EV can offer.
For that reason, we are looking closely at taxis. Japanese taxi companies in Niigata, Ehime, Okayama, Tokyo,
and Kyoto have already deployed the i-MiEV in their fleets.
We will work hard to increase the number of i-MiEV taxis to demonstrate to the general public how polishedand attractive the i-MiEV vehicle really is.
Having more i-MiEV taxis in service would also contribute greatly to the environment. Some people switching
to electric vehicles might drive only on weekends. But switching cars that run all day long, such as taxis, to electricvehicles would more swiftly contribute to cutting more carbon dioxide emissions.

Lower Pricing
There is still considerable room for improving the cruising range, charging times, and costs of electric vehicles.
Still, the range is adequate for city driving. While charging takes longer than filling up a gasoline-powered car,people can charge their vehicles at home, so neither of these factors would necessarily inhibit the popularizationof electric vehicles.
Costs are an issue, however, and we will seek to reduce them by increasing the number of units sold and harnessing economies of scale. We believe that electric vehicles cannot become popular without lowering pricing tolevels comparable with those of gasoline-powered cars.
We are striving to reduce costs for the i-MiEV so the end price to the customer is around ¥2,000,000 in Japan.

Expand Our Electric Vehicle Lineup
We are formulating our next mid-term business plan, as part of which we are looking to expand our lineup of electric vehicles. We are not yet able to disclose specifics, but we target fiscal 2012 to make an electric version of our
yet-to-be-released compact, affordable, and fuel-efficient global strategic vehicle, and by fiscal 2013 we plan tolaunch a plug-in hybrid electric vehicle that fully utilizes electric vehicle technology. We are considering many
options for the commercialization of these vehicles.

An i-MiEV taxi in Japanmitsubishi motors corporation Annual Report 2010

Encourage People to Ride in Our Electric Vehicles

15Regional Topics

Targeting Increased Sales Volume in Each Region through Global Rollout of New Compact SUV
In fiscal year 2009, automobile demand, which had declined significantly in the second half of the previous fiscal year, started torecover in many regions. MMC’s automobile retail sales volumes increased as the fiscal year progressed, but full-year sales roseyear on year in only some regions. However, during fiscal year 2009, MMC continued to implement the emergency measures ofrigorous cost reductions initiated in the second half of the previous fiscal year. As a result, the entire MMC Group succeeded inincreasing operating income.
In fiscal year 2010, aggregate demand is expected to decrease due to the reduction or termination of governmental demand
stimulation policies in Japan and Europe. However, the U.S. is showing a mild recovery, and emerging nations are already in aphase of powerful growth. In this market environment, MMC aims to increase both earnings and profit across the whole MMC
Group through increasing sales volume in all regions, including by globally rolling out a new compact SUV.

MiTSUbiShi MoTorS CorporaTioN annual report 2010

16

Japan
We will aim to return to profitability by increasing sales with our new RVR compact
SUV, and the Mitsubishi “Aichaku” Project. We have lowered the price of the i-MiEV
and commenced sales to individuals.
Tetsuro Aikawa
Managing Director, Head Officer of the Headquarters, Domestic Sales Group Headquarters

Fiscal Year 2009 Performance
Retail Sales

Net Sales0

Retail sales in Japan increased 1%, or 3,000 units, year on year to 171,000
units. MMC increased retail sales despite lower year on year sales of minicars
partly due to a delayed recovery of aggregate demand. The increased sales
were driven by registered vehicles including the Colt series and Delica D:5,
which had received the benefits of the reduced taxes on eco-friendly cars,
and the strong launch of the RVR new compact SUV introduced in February.

Net Sales and Operating Income (Loss)[Decreased sales, reduced loss]
Net sales in Japan declined 8%, or ¥29.9 billion, year on year to ¥368.5
billion partly due to a fall in the sales volume of OEM-supply vehicles. Operating loss improved ¥13.9 billion from the previous fiscal year, to an operating loss of ¥1.2 billion. The improvement was due to a rise in profits fromnew vehicles through increased sales of registered vehicles and to cost
reductions, especially in selling expenses and materials costs.

500

600

(¥ billion)

410.0 (Forecast)
368.5

09

398.4

08

488.5

07
(FY)

Operating Income (Loss)
–30

–10

–20

0

10

10

Retail Sales

–1.2
–15.1

08
07

(¥ billion)

6.0 (Forecast)

09

–18.9

(FY)

Retail Sales

Net Sales and Operating Income (Loss)[Increase in sales, return to profitability]0

In fiscal year 2010, MMC is targeting net sales in Japan of ¥410.0 billion, an
increase of ¥41.5 billion, or 11%, year on year. The main factor underlying
this target is higher retail sales. MMC is targeting an operating income of¥6.0 billion, an improvement of ¥7.2 billion year on year from the operating
loss of the previous year. In addition to higher retail sales, the main factors
underlying this target are reductions in material costs and other costs.
* Mitsubishi “Aichaku” Project: A sales promotion campaign conducted together with dealers
nationwide aimed at persuading customers to keep their MMC vehicle for longer. The campaign’s“Aichaku” coupons offer various benefits, of which the main three are: (1) the first Japanesemanufacturer’s special extended guarantee for 10 years/100,000 kilometers to enable customers
to continue driving their newly purchased MMC vehicle with peace of mind for a long time, (2) on
the assumption that customers will use their MMC vehicle for 10 years, an upgrade service toremodel the vehicle interior/exterior, install a moveable front passenger seat, etc. in response tovehicle aging and customer lifestyle changes, and (3) a free replacement service of the battery forthe vehicle’s keyless entry device to encourage MMC users to visit our showrooms.

400

300

10

Outlook for Fiscal Year 2010
In fiscal year 2010, MMC is targeting domestic retail sales of 183,000 units,
an increase of 12,000 units, or 7% year on year. Although reduced demand isanticipated after the expiration of subsidies for environmentally friendly
vehicles, increased sales are projected from the Mitsubishi “Aichaku”
Project*, launched from June, as well as increased retail sales from the RVR
new compact SUV introduced in February. Sales of the i-MiEV to individuals
commenced from April, with the final cost to the customer of ¥2.84 million
after government subsidies and a ¥619,000 reduction in the manufacturer’s
suggested retail price.

200

100

10

(FY)

50

100

150

200

183 (Forecast)

09

171

08

168

07

250

219

(Thousandunits)

Global Rollout of the New Compact SUV
09FY/4Q

10FY/1Q

10FY/2Q

10FY/3Q

10FY/4Q

Japan*
Europe*North Asia (China)
ASEAN
Australia
Middle East and Africa
North America
Central and South America

North America
We plan to increase unit sales as overall demand recovers. In the second halfof the fiscal year we will introduce the new compact SUV.

Fumio Kuwayama
Executive Officer, Head Officer of the Headquarters, Overseas Operations Group Headquarters B

Fiscal Year 2009 Performance
Retail Sales

Net Sales0

Retail sales in the North American market fell 31,000 units, or 26%, year on
year to 88,000 units in fiscal year 2009. Retail sales dropped in the U.S. andMexico, where aggregate demand had fallen from the previous fiscal year,
although retail sales rose year on year in Canada where the Outlander performed well.

10

400

500

(¥ billion)

210.0 (Forecast)

17

175.4

09

232.2

08

Net Sales and Operating Income (Loss)[Decreased sales, reduced loss]
Net sales in North America declined ¥56.8 billion, or 24% year on year to¥175.4 billion, reflecting lower retail sales. Despite the impact of the drop in
retail sales and the yen’s appreciation, operating loss improved by ¥11.4
billion year on year to ¥28.2 billion due to cost reductions, especially selling
expenses and materials costs.

300

200

100

402.7

07
(FY)

Operating Loss

Outlook for Fiscal Year 2010–50

MMC is targeting retail sales of 109,000 units, an increase of 21,000 units, or
24%, year on year. In the U.S., a mild recovery of aggregate demand isanticipated; moreover unit sales are expected to rise year on year with theintroduction of a new compact SUV in the second half of the fiscal year.
Similarly, MMC is targeting sales increases in Canada and Mexico.

10–27.0 (Forecast)

09

–28.2

–20

–30

–40

–10

0

(¥ billion)

200(Thousandunits)

Retail Sales

Net Sales and Operating Income (Loss)[Increase in sales, reduction of loss]
MMC is targeting net sales of ¥210.0 billion, up ¥34.6 billion, or 20%, year
on year, mainly reflecting increased retail sales. MMC is projecting an operating loss of ¥27.0 billion, an improvement of ¥1.2 billion year on year. The
reason for this operating loss improvement is that MMC expects cost reductions, such as materials costs, as well as increased retail sales to more thanoffset the reduced earnings incurred by increased selling expenses anddevelopment expenses.

08

–39.6
–17.8

07
(FY)

Retail Sales
0

50

100

10
09
08
07

MiTSUbiShi MoTorS CorporaTioN annual report 2010

* RVR in Japan, ASX in Europe

150

109 (Forecast)
88
119
172

(FY)
* Puerto Rico’s results have been classified under “Asia and Other Regions” from 2008.

Europe
We aim to increase unit sales amid waning demand in Western Europe by introducing the
new ASX compact crossover. In Russia, where demand is recovering, we will commence
assembly of the Outlander.
Hiroshi Harunari
Managing Director, Head Officer of the Headquarters, Overseas Operations Group Headquarters A,
Corporate General Manager of Overseas Management Office, In Charge of Overseas Operations Group B

Fiscal Year 2009 Performance
Retail Sales
mitsubishi motors corporation Annual Report 201018

Retail sales fell 103,000 units, or 38%, year on year to 169,000 units. Overall,
demand was slow to recover in European countries, and sluggishness wasparticularly marked in Russia and the Ukraine, where MMC’s retail sales
dropped sharply, with Russia down 57,000 units, or 60%, year on year to
39,000 units, and in the Ukraine down 24,000 units, or 72%, year on year to
10,000 units. In Western Europe, although the region felt benefits fromgovernmental demand stimulus measures in Germany and elsewhere, there
was a negative rebound following the expiration of those incentives, thus
retail sales declined year on year. In Central Europe retail sales declined year
on year as demand in general continued to be sluggish even though markets
were strong in Poland and elsewhere.

Net Sales and Operating Income[Decreased sales, reduced income]Net Sales
0

10

1,000

(¥ billion)

631.7
931.6

07
(FY)

Operating Income (Loss)
–20

20

0

10

–8.0 (Forecast)

09

0.8

40

60

80

(¥ billion)

5.3

08

79.7

07
(FY)

Retail Sales
0

50

100

150

200

10

Net Sales and Operating Income (Loss)[Increased in sales, income shift to loss]
MMC is targeting net sales of ¥490.0 billion, a rise of ¥220.8 billion, or 82%,
year on year, due to higher retail sales. Although increased retail sales are afactor in raising operating income, based mainly on projections for the
impact of a strong yen and increased development expenses, MMC expects
operating income to deteriorate ¥8.8 billion from fiscal year 2009 to a loss of¥8.0 billion.

800

269.2

08

Outlook for Fiscal Year 2010
In fiscal year 2010, MMC is targeting retail sales of 196,000 units, up 27,000
units, or 16%, year on year. In some European countries, aggregate demandis expected to decrease due to the reduction or termination of governmental
demand stimulus policies in various European countries. However, retail sales
are projected to increase through the introduction of the ASX in the growing
crossover category. In Russia, where sales are recovering, assembly of the
Outlander at a Russian plant launched as a joint venture with PSA Peugeot
Citroën will commence from September.

600

490.0 (Forecast)09

Net sales in Europe totaled ¥269.2 billion, down ¥362.5 billion, or 57%, year
on year mainly due to lower retail sales and the appreciation of the yen.
Although the drop in retail sales significantly reduced operating income,
MMC worked to mitigate this by reducing costs such as selling expenses andmaterials costs. As a result, operating income in Europe worsened by ¥4.5
billion year on year to ¥0.8 billion.

Retail Sales

400

200

09
08
07
(FY)

250

300

350

(Thousandunits)

196 (Forecast)
169
272
341

Asia and Other Regions
Emerging countries represent a solid earnings platform that promises strong
growth. We plan to greatly increase unit sales in these regions.
Fumio Kuwayama

Hiroshi Harunari

Executive Officer, Head Officer of the­Headquarters, Overseas Operations Group
Headquarters B

Managing Director, Head Officer of the Headquarters,
Overseas Operations Group Headquarters A, Corporate General Manager ofOverseas Management Office, In Charge of Overseas Operations Group B

Retail Sales

Retail sales rose 25,000 units, or 5%, year on year to 532,000 units. MMC
saw significant growth in North Asia, especially in China, where strong sales
were maintained throughout the year, achieving an increase of 68,000 units,
or 57% year on year. In ASEAN, where Thailand and the Philippines performed well, and in Australia and New Zealand, retail sales recovered markedly in the second half of the fiscal year, resulting in retail sales on par withthe previous fiscal year. Sales decreased year on year in Central and SouthAmerica despite signs of recovery in the major market of Brazil. In the Middle
East and Africa, retail sales declined year on year due to the continuing
severe environment of sluggish demand and intensifying competition in the
major markets of the Gulf nations, despite some increased retail sales mainly
due to large-scale business negotiations in the second half of the fiscal year.

Net Sales and Operating Income (Loss)[Decrease in sales, decrease in income]Net Sales0

Retail Sales

MMC is targeting retail sales of 633,000 units, up 101,000 units, or 19%,from fiscal year 2009.
In fiscal year 2010, MMC will successively introduce a new compact SUV
in all regions.
The following describes MMC’s other main sales policies.
In China, MMC expects to see powerful growth in the automobile
market in fiscal year 2010 also. MMC projects increased sales of the new
Lancer EX, which has been locally-produced by South East (Fujian) MotorCo., Ltd. since November 2009. MMC will work to raise the level of the MMC
brand and to expand the number of sales outlets.
In the ASEAN region, the recovery in demand became evident from thesecond half of fiscal year 2009, and MMC’s sales have maintained stronglevels. Regarding the production business in Thailand, the pillar of earnings
in the ASEAN region, both domestic and export shipments should increaseof Pajero Sport, which is achieving favorable sales in various countries. In
Thailand, where there is a growing consumer preference for passenger cars,sales of the new Lancer EX, for which local production commenced last fiscal
year, should increase. In the Philippines, where retail sales grew nearly 40% infiscal year 2009, sales of the new Lancer EX, for which local productioncommenced in September 2009, and sales of the popular Montero Sportshould increase. In Indonesia, MMC aims to increase retail sales by expanding trim levels of the popular Pajero Sport, which was introduced in June
2009, as well as by sales of mainstay commercial-use vehicles. In Malaysia,
MMC will strengthen its sales and after-service systems in addition to
expanding the SUV lineup by introducing the Pajero.
In Australia, MMC aims to increase sales through its popular SUV lineup,
which includes the Challenger, introduced in ­December 2009.
In Brazil, which has achieved record sales for three consecutive years,
MMC will commence local production of the Pajero Sport and strengthen themainstay SUV lineup.

800

10

1,000

(¥ billion)

790.0 (Forecast)
632.5

09

711.3

08

859.3

07
(FY)

Operating Income (Loss)0

Reflecting the impact of a stronger yen and other factors, net sales in Asiaand Other Regions fell ¥78.8 billion, or 11% year on year to ¥632.5 billion.
Operating income declined ¥10.8 billion year on year to ¥42.5 billion mainly
due to decreased wholesale sales accompanying inventory reductions in thefirst half of the fiscal year, despite cost reductions that included decreased
selling expenses and materials costs.

Outlook for Fiscal Year 2010

600

400

200

20

40

60

80

10

(¥ billion)

74.0 (Forecast)
42.5

09

19
53.3

08

65.6

07
(FY)

Retail Sales
0

200

400

600

10
09
08
07

mitsubishi motors corporation Annual Report 2010

Fiscal Year 2009 Performance

800(Thousandunits)

633 (Forecast)
532
507
628

(FY)

In the Middle East, MMC aims to increase retail sales through measures
such as strengthening sales and service systems in Saudi Arabia, where MMC’s
share is comparatively small despite it being the largest market in the region.

Net Sales and Operating Income[Increase in sales, increase in income]
MMC is targeting net sales in Asia and Other Regions of ¥790.0 billion, up¥157.5 billion, or 25%, year on year, mainly based on a projected rise in retailsales. MMC expects operating income to improve ¥31.5 billion year on yearto ¥74.0 billion based mainly on reductions in materials costs and other costs
as well as projected higher retail sales.

Quality“MMC is developing various quality assurance systems to ensure that customers candrive its vehicles with peace of mind.”
Seiichi Ohta
Director, Head Officer of the Headquarters
Quality Affairs Group Headquarters

MiTSUbiShi MoTorS CorporaTioN annual report 201020

Building in Development/Manufacturing Quality

Rapid Feedback of Customer Information• Mitsubishi Motors Development System (MMDS)• New Quality Information Management System (SQM-BC)*2

MMC has introduced the Mitsubishi Motors Development System

MMC introduced the SQM-BC in 2006 to allow MMC to swiftly respond(MMDS), which is centered on the concept of quality gates (QGs) into quality-related information from customers. The SQM-BC manages

every product development process. MMDS is a comprehensive quality

consolidation of multiple after-service related systems. The DES (Datamanagement system that sets and assesses/evaluates the achievement

Entry System), one of the core systems, enables sharing of quality-of specific performance benchmarks for every quality gate at each stage

related information from customers between MMC and distributors toof operations, from vehicle planning to sales and after-sales services.

be received in real time, making possible the further facilitation of the

MMC has adopted a methodology of advancing to the next stage ofanalysis and solution of quality issues and the sharing of information

operations only after confirming the achievement of benchmarks foramong distributors.
The WAS (Warranty Analysis System), another core system, enables

each quality gate using this decision-making system.

the detailed analysis of statistics for complaint data by model, part,production date and other parameters. This information can be effec-

MMDS (Mitsubishi Motors Development System)
Start of development
product
planning

Designconcept

Design approval

Designspecifications

tively utilized by the design, manufacturing, service, and other relatedMarket launchCompletion Mass productionofand quality
development verification

prototype
testing

departments to quickly respond to complaints. WAS entered service atStart of mass
production

plants around the world in 2009.
Furthermore, to secure the human assets necessary for quality assurance in line with increased production outside Japan, MMC is activelyZleveraging its network of experienced and skilled retired employees.

MMC has established a unified global quality assurance framework by• Timely and Transparent Determination Process for Recalls andOther Issues

introducing the Mitsubishi Motors Production Way (MMPW), MMC’s

Since the recall issue of 2004, MMC has taken diligent steps to restore

concept and philosophy of manufacturing, to its plants around theconfidence, including discussions with outside experts. MMC has estab-world. One of the basic concepts is to achieve rigorous quality assur-

lished standardized, strict criteria for determining recalls, and added

ance in each work stage through the incorporation of “stage comple-

members with more of a customer’s perspective to recall judgmenttion” (only allowing non-defective units to pass to the next stage).

meetings including those from the Customer Relations Department and

MMC is passing on this MMPW spirit and knowhow to younger

labor union members. MMC has created a more open system by report-

Gate

F

E

D

C

b

a

• Mitsubishi Motors Production Way (MMPW)

engineers by setting up a specialized training center, known as aing the meetings’ deliberations to top management for final decision.

“Making things Dojo,” at every one of its plants.

The transparency of these proceedings is ensured through monitoringby the CSR Promotion Office.

Basic Concepts of MMPW

Quality Management Structure
MMC acquired ISO 9002 certification at the plant level in 1997, and ISO
9001 certification for the entire company in 2003, covering a range ofCustomer Satisfaction

operations from development to sales and after-sales services. This

Fundamental manufacturing principle:
build quality goods inexpensively and efficientlyStage
completion

Eliminate overburdening,
redundancy andinefficiency

Human Assets*1 Development
Building quality products starts with building quality people.
Based on this approach, MMC provides practical, in-house training
to enhance the quality of human assets through quality engineering,
Failure Mode and Effects Analysis (FMEA) and Fault Tree Analysis (FTA).

includes technical centers located nationwide, from Hokkaido to
Kyushu. These certifications reflect the concerted efforts of MMC staff
to improve quality management based on the philosophy of putting thecustomer first.
Notes:*1 MMC uses the term “human assets” because it sees people as key assets.
*2 SQM-BC: Strategic Quality Management-Backward Chain

Corporate GovernanceCorporate Governance Framework

is appropriately carrying out operations related to vehicle development,

MMC employs the Statutory Auditor System pursuant to the Japanesemanufacturing, and post-market measures based on laws and regula-Companies Act. In addition to mandatory organizations and gover-tions in various countries. The department conducted a total of 90

nance systems, the company is improving its corporate governance byaudits in the fiscal year 2009. The audit results are successively reported

adding an executive officer system and advisory committees.

to top management and to the Business Ethics Committee twice a year.

MMC’s Board of Directors is responsible for making decisions con-The Internal Audit Dept. conducts regular company-wide audits,

cerning important management issues and overseeing execution. In

covering areas including subsidiaries and affiliates in Japan and over-addition, the executive officer system clarifies the roles and responsibili-seas, to verify the appropriateness and effectiveness of internal control

ties of directors and executive officers. Managing directors’ meetingssystems including compliance and risk management. The results arecomposed of directors, executive officers, and statutory auditors makereported to the top management at MMC, its subsidiaries and affiliates.

speedy decisions in bi-weekly meetings.

The Internal Audit Dept. is also actively working to strengthen cor-

Status of Internal Audits and Statutory Audits

both in Japan and overseas. It has established internal auditing divi-

The statutory auditors carry out statutory audits of MMC and its subsid-

sions at all major overseas subsidiaries and has used the regional inte-

iaries by attending important meetings of the company such as Board

gration of consolidated domestic sales companies to establish CSR

of Directors meetings, and receiving reports on the status of businessdivisions at each company.

activities from directors and other corporate officers. Also, key internal
documents and internal audit reports from internal audit divisions,

Guidance From Advisory Committees

subsidiaries and accounting auditors are reviewed.

The Business Ethics Committee is an advisory body to the Board of

In addition to the statutory auditors, MMC has established two

Directors made up of six outside experts. The committee works todepartments within the CSR Promotion Office: the Quality Audit Dept.

spread an awareness of compliance, and it provides MMC directors withand the Internal Audit Dept. Both are independent from operating units

guidance and advice from an objective perspective (more on page 25).

and conduct internal audits from an objective perspective.
The Quality Audit Dept. monitors whether the Quality Affairs Officemitsubishi motors corporation Annual Report 2010

porate governance and internal controls throughout the MMC Group21
Corporate Governance Framework (As of June 30, 2010)
Shareholders’ Meeting

ReportAccounting Auditors

Board of Statutory Auditors
Cooperate (5 members, of whom 3 are outside auditors) Audit
Accounting Audit
and
Audit and Report
ReportBoard of Directors(13 members, of whom
2 are outside directors)

Business Ethics Committee
Report findings andRecommendations

Chairman
Guidance
and Advice

President
Managing Directors’ Meetings
Executive Vice Presidents

Quality Affairs Office

Departments

Quality Audit

Internal Audit

CSR Promotion OfficeInternal
Audit

Subsidiaries and Affiliates

Internal Control Systems and Risk Management“Guided by the ‘Basic Policy on the Establishment of Internal Control Systems,’ we aretaking steps to ensure compliance with laws and regulations and to promote proper,
effective business execution, in line with changes in the business environment worldwide.”
Hiizu Ichikawa
Executive Vice President [Representative Director], Corporate Planning & Financecontinuously conducts educational and training programs. These BCP

Development of Internal Control Systems
Based on the “Basic Policy on the Establishment of Internal Control
Systems” as passed by resolution of the Board of Directors, MMC is
mitsubishi motors corporation Annual Report 201022

continually working to ensure compliance with laws and regulations andto promote proper, effective business execution, in line with changes inthe domestic or overseas environment.
In particular, with regards to ensuring the reliability of financial

initiatives also spread to influential supply chains. MMC, striving toensure its corporate social responsibility, has set as its basic BCP policy
ensuring safety and minimizing damage when a disaster occurs, continuing to supply products and services in line with the company’s
corporate philosophy, and if business activities have been forced tostop temporarily, restarting them quickly.

reporting pursuant to the Financial Instruments and Exchange Act,
MMC is implementing company-wide measures under the leadership ofBusiness Continuity Plan Schematicthe Internal Control Promotion Committee.

Corporate Philosophy
Risk Management Rules

Development of Risk Management Framework
Based on the “Risk Management Rules” formulated in April 2007, MMC

BCP Basic Policies

is establishing infrastructure for company-wide risk management systems centered on the Risk Management Promotion Team. MMC has

Tokai Earthquake
Countermeasures

New Influenza Strain
Countermeasures

Tokyo Earthquake
Countermeasuresappointed a total of 19 risk management officers to each operational
headquarters and offices, and these risk management officers, based on
instructions from the Risk Management Promotion Team, rigorously
strengthen risk countermeasures by conducting repeated cycles of risk
identification, evaluation, devising and implementing countermeasures,and monitoring in each unit. From fiscal year 2008, these officers conduct risk management cycles at each unit every fiscal year, while at thesame time identifying material risks at the company-wide level andreporting them to senior management.
In addition, to prepare for unforeseen contingencies, MMC hasdeveloped emergency contact systems that enable the rapid communication of information to directors and other key personnel, as well as aswift and accurate response.

Data Security Management
MMC recognizes that the protection of data assets (information as wellas information systems, machines, media, and equipment used tohandle that information) is vital to fulfilling its social responsibility andearning the trust of stakeholders.
MMC implements physical, technological, personnel and organizational measures to maintain and improve data security management
based on its information security policy and internal rules that conformto ISO 27001.

Protection of Personal Information
MMC formulated a policy for the protection of personal information in
April 2005, and built a management framework to establish internalInternal Control Promotion Frameworkrules. MMC also appointed a person responsible for personal information management at each department under the direction of the Per-

President

sonal Information Officer. MMC educates staff on the subject throughInternal Control Promotion Committee

Evaluation Teamongoing e-learning seminars and other programs, and makes efforts toCompany Law Subcommittee

Evaluation Department

Evaluation Department

AffiliatedDepartments companies(develop internal

AffiliatedDepartments companies(develop internal

Personnel in charge

Personnel in charge

safeguard personal information in practice.

Security Trade Control
From the viewpoint of maintaining international peace and security,controls)(develop internal
controls)

controls)(develop internal
controls)

Response to the Financial Instruments andExchange Act(Development and evaluation of internal controls
over financial reporting)AffiliatedDepartments companies

AffiliatedDepartments companies

Response to Company Law(Development of systems in line with basic policies)

MMC profoundly believes in the importance of strict trade controls toprevent the proliferation of weapons of mass destruction and the excessive accumulation of conventional weapons.
In order to ensure the appropriate trade control, MMC has established an Internal Security Trade Control Standard as a management
regulation. In accordance with the standard and in order to ensure

Business Continuity Plans

compliance with laws and regulations regarding security trade control

MMC has formulated various business continuity plans (BCPs) based on

the “Supervisory Committee for Security Trade Control” was estab-

anticipated scenarios to respond to earthquakes, epidemics and otherlished under the direction of the president, who acts as Chief Security

natural disasters that have a significant impact on business. MMC has

Trade Control Officer. The legality of export transactions is guaranteedbuilt a system that can respond rapidly to an emergency, andby a management system centered on the committee.

Compliance“To restore society’s trust in the company and be recognized as an enterprise withintegrity, MMC believes it is essential to ensure that all staff members thoroughly
comply with business ethics.”
Shuichi Aoto
Managing Director, Chief Business Ethics Officer, Head Officer of the Headquarters, CSR Corporate Affairs, Controlling & Accounting Group Headquarters

Development of an Organizational Framework for
Promoting Business Ethics

discussed. These meetings provide a good opportunity to enhance

In June 2004, MMC established the CSR Promotion Office to ensure

using actual examples.

thorough compliance and promote a new corporate culture, while

In addition to these types of discussions at each workplace, compli-

restructuring the compliance framework (see chart below). MMC has

ance measures specific to each department were formulated and imple-

strengthened the organization to ensure that awareness of compliancemented under the direction of compliance officers.
In these and other ways, MMC worked to put business ethics into

spreads to each and every employee.
The company appointed 19 compliance officers (as of fiscal year

practice.

2009), under the direction of the Chief Business Ethics Officer (CBEO),
and appointed department managers as code leaders in each depart-

Operating the Help Linement under the compliance officers. MMC receives guidance and

MMC is giving priority to its internal reporting system in order to create

advice from an external perspective from the Business Ethics Commit-a highly transparent workplace environment that is not conducive totee, which acts as an advisory body to the Board of Directors and isscandals and promotes their early detection as well as self-correction.

made up of outside experts.

MMC has already established the Employee Counseling Office andexternal counseling channels through outside attorneys. In April 2006,

Implementation of the Program to Promote Business Ethics

in line with the enforcement of the Whistleblower Protection Act, MMC

In fiscal year 2009, MMC held training sessions on compliance led byestablished operational criteria related to the internal reporting system,

instructors from outside the company as part of a training program foras well as internal regulations, including those prohibiting the disadvan-

directors and corporate auditors, with a total of 25 corporate officers,

tageous treatment of whistleblowers.

comprising full-time directors at the executive officer level or above andstatutory auditors taking part.

Furthermore, to create a framework that facilitates internal reporting,
MMC is endeavoring to disseminate regulatory information within the

Meetings are held three times a year in each workplace at whichfamiliar business ethics problems are examined and solutions arecompany by holding briefings, including information in the company
newsletter, and adopting other measures.

Organizational Framework for Promoting Business Ethics
Offer Opinions and Recommendations

Board of Directors
Chairman

Guidance and Advice

Business Ethics Committee(Made up of external experts)
Chief Business Ethics Officer(CBEO)

President
Direction and Supervision
Department Managers andCorporate General Managers
ReportThorough Compliance with
Business Ethics

Consult
and Report

Thorough Compliance with
Business Ethics

Compliance Officer

Reportand Approval
Direction andGuidance on
Specific
Strategies

Thorough Compliance with
Business Ethics

Employees

Consult on Ethical Issues

Help Line
External Attorneys

Compliance Department

Help Line
Employee Counseling Office

General Manager=Code Leader

Consult on
Ethical Issues

CSR Promotion Office

Various
Consultations

Various Consultations
Employees of Affiliates and Distributors,
Temporary Employees, Former Employees

mitsubishi motors corporation Annual Report 2010

ethical awareness and improve communication through discussion

23

Establishment and Dissemination of Regulations“Safety Pledge Days”

In April 2007, MMC fully revised its “Business Ethics of Mitsubishi

To prevent past errors such as the regrettable recall problems from

Motors Corporation”—MMC’s corporate ethics standards—to turnbeing forgotten over time, January 10 and October 19 have beenthem into more practical guidelines for informing employees’ actions.

designated “Safety Pledge Days,” since two fatal accidents occurred on

All employees and directors have signed an oath of compliance withthose days involving large trucks manufactured by Mitsubishi Fuso, athese standards.

former MMC division. All employees observe a moment of silence on

Furthermore, in January 2008, MMC revised the “Behavioral Standards of Mitsubishi Motors Corporation,” a set of guidelines for behavior
that all employees must keep in mind at all times. MMC distributed therevised booklet to all staff members, and by making use of it on a daily
basis, MMC aims to ensure thorough compliance with business ethics.

mitsubishi motors corporation Annual Report 201024

Activities to Spread Compliance Among MMC Group
Companies
Restoring trust in MMC requires a concerted effort by the entire MMC
Group. To this end, domestic Group companies (including exclusive
dealers) have taken the lead in carrying out initiatives since fiscal year
2005. In fiscal year 2006, almost all companies completed the establishment of systems to ensure compliance with business ethics.
Furthermore, MMC continues to regularly conduct training on
resolving corporate ethics problems, developing precedents andrelated topics. Overseas affiliates are also working to develop compliance promotion frameworks linked with internal controls.

these days, and the previously mentioned meetings to review businessethics problems are held around these times.

The Business Ethics Committee

Review of the Committee’s Activities Since its Establishment

revitalization, indicating that “it is still necessary to stay fully committed

Since the committee convened its first meeting in July 2004 through toto activities to restore trust.”

July 2010, it has held a total of 72 meetings and has considered as

In the report, the committee made 13 policy recommendations.

many as 163 issues in total. During this period, the members of theSince the report was received by MMC, the relevant departments havecommittee have raised frank questions and expressed candid opinions

reported their responses to the policy recommendations to the commit-

regarding each of these issues from the standpoint of external oversighttee on a case-by-case basis, and have received advice from the commit-

and common sense.

tee members. In June 2008, a summary of these reports was presented

The general categories of topics considered by the committee areto the Business Ethics Committee, and was reported later the same

shown below. A variety of issues were considered based on each topic

month to the Board of Directors. In July 2009, a follow-up report of the(the figures in brackets indicate the number or frequency of thesestatus of responses to the earlier recommendations, as well as recog-

issues). Opinions regarding each issues discussed are disclosed to thenized benefits, was made to the Business Ethics Committee. The com-public through press releases for the specific meeting convened.

mittee advised MMC “not to let itself be rushed by outside pressure,”

1. Response to recall problems [23]but rather to “seek improvements in ways that reflect the actual situa-

2. Recall process reform and quality improvement initiatives [21]tion that the company faces.”

3. Initiatives to entrench compliance [50]4. Other initiatives, including corporate culture reforms [63]Overview of Activities in Fiscal Year 2009

5. Fact-finding visits to plants and dealers [6]The committee convened 12 times during fiscal year 2009, and received
briefings on 25 issues, including the business ethics compliance promo-

In October 2006, the Board of Directors of MMC consulted thetion program and the business ethics awareness survey. The commit-

Business Ethics Committee, requesting a summary of MMC’s activities

tee’s views, guidance and advice were sought on these issues. As welltoward restoring trust in the company, as well as an evaluation andas formal committee meetings, committee members attended the

proposals regarding these activities. MMC received a report on the

Compliance Officers’ Meeting as observers, at which they were asked

committee’s findings concerning this issue on May 21, 2007. The reportfor their views and any queries they may have had. Compliance officers

concluded that, with regard to this issue, “the initial stage had been

are responsible for business ethics in each department. In addition, theaccomplished.” At the same time, the report also pointed out issues

committee’s views and guidance are requested on any urgent issues,

and made proposals aimed at providing further support for MMC’s

which are explained to the committee on a case-by-case basis.

Kazuo Mura

Konoe Kawagishi

Committee Chairman
Noboru Matsuda

Nobuyuki Yamamoto

Takahiro Fujimoto

Kazuko Miyamoto

mitsubishi motors corporation Annual Report 2010

The Mitsubishi Motors Business Ethics Committee was established in June 2004 as an advisory body to the Boardof Directors of MMC. At that time, the recall problem had reignited and MMC faced a crisis concerning the company’s survival due to the loss of confidence and trust of society in MMC. The Business Ethics Committee wasestablished as one of the critical steps to restore trust in MMC and ensure its revitalization. The aims of this committee, which is made up solely of external experts, are to conduct monitoring, guidance and consultation from theviewpoint of external oversight and common sense with respect to MMC’s overall activities to restore trust, especially in terms of compliance. The scope of the committee’s activity is not limited to business ethics; but also
includes matters broadly related to quality problems and corporate culture.

25

Management(As of July 1, 2010)

Members of the Board

Takashi Nishioka*

Osamu Masuko*

Makoto Maeda*

Hiizu Ichikawa*

Hiroshi Harunari

Tetsuro Aikawa

Shuichi Aoto

Gayu Uesugi

Seiichi Ohta

Hiroshi Kuroda

Shiro Futaki

Mikio Sasaki

Hidetoshi Yajima

Shuzo Muramoto

Shigemitsu Miki

Yukio Okamoto

Yujiro Kawamoto

Masao Ohmichi

Yoshikazu Nakamura

Shinichi Kurihara

Masahide Konishi

Yoshihiro Kuroi

Yutaka Tabata

Hiroshi Noda

Ryugo Nakao

Takitaro Fukuda

Jo Tsuji

Yasuo Ohyama

Eiji Kato

Hideo Yokoi

Hideo Kimura

Michiro Imai

Fumio Kuwayama

Masahiko Ueki

Akinori Nakanishi

Keizo Fuchita

Tetsuro Miki

Yoichi Yokozawa

Chairman of the Board

MiTSUbiShi MoTorS CorporaTioN annual report 2010

Managing Director
Head Officer of the Headquarters
Domestic Sales Group Headquarters

President

Managing Director
Chief Business Ethics Officer
Head Officer of the Headquarters
CSR, Corporate Affairs, Controlling &Accounting Group Headquarters

Executive Vice President
Technology & Production
In Charge of Russian Project
In Charge of Procurement

Managing Director
Head Officer of the Headquarters
Product Projects & Strategy Group
Headquarters
In Charge of Development

Executive Vice President
Corporate Planning & FinanceDirector
Head Officer of the Headquarters
Quality Affairs Group Headquarters

Managing Director
Head Officer of the Headquarters
Overseas Operations Group Headquarters A
Corporate General Manager of Overseas
Business Management Office
In Charge of Overseas Operations Group
Headquarters B

Director
Head Officer of the Headquarters
Global After Sales Group Headquarters

26

Director
Head Officer of the Headquarters
Production Group Headquarters

Director(Non-Executive Director)

Director(Non-Executive Director)

Statutory Auditors
Norihide Ujita

Statutory Auditor (Full-time)

Statutory Auditor (Full-time)

Statutory Auditor(Outside Statutory Auditor)

Statutory Auditor(Outside Statutory Auditor)

Statutory Auditor(Outside Statutory Auditor)

Executive Officers
Senior Executive Officer
Chief Environmental Strategy Officer
Corporate General Manager of CSR
Promotion Office and Assistant to President

Executive Officer
Corporate General Manager of Corporate
Planning Office

Executive Officer
Head Officer of the Headquarters
Procurement Group Headquarters

Executive Officer
Corporate General Manager of North Asia
OfficeExecutive Officer
Chairman of the Board and CEO, Netherlands
Car B.V.

Senior Executive Officer
Corporate General Manager of EV Business
OfficeExecutive Officer
Corporate General Manager of Finance Officeand General Manager of Financial Planning
Department

Executive Officer
Plant General Manager of Nagoya Plant

Executive Officer
Head Officer of the Headquarters
Overseas Operations Group Headquarters B

Executive Officer
Vice President, Mitsubishi Motors North
America, Inc.

Senior Executive Officer
President and Chief Executive Officer,
Mitsubishi Motors North America, Inc.

Executive Officer
Corporate General Manager ofControlling & Accounting Office

Executive Officer
Plant General Manager of Mizushima Plant

Executive Officer
President, Mitsubishi Motors Philippines
Corporation

Senior Executive Officer
Chairman, Mitsubishi Motor Sales (CHINA)
Co., Ltd.

Executive Officer
Corporate General Manager of ProductStrategy Office

Executive Officer
Plant General Manager of Powertrain Plant

Executive Officer
President, Mitsubishi Motors Europe B.V.

Executive Officer
Head Officer of the Headquarters
Development Group Headquarters

Executive Officer
Corporate General Manager of Domestic
Sales and After-sales Service Office

Executive Officer
Vice President and COO, Manufacturing
Mitsubishi Motors North America, Inc.

*Representative Director

Responsibility to Society“MMC is actively engaged in community-focused activities to build a sustainable
relationship with society as a good corporate citizen.”
Masao Ohmichi
Senior Executive Officer, Chief Environmental Strategy Officer, Corporate General Manager of CSR Promotion Office and Assistant to President

Corporate Citizenship Activity Policy

safety, Environmental preservation, and Participation in local communities. These are being promoted as MMC’s “STEP”
corporate citizenship activities based on our corporate philosophy.
1. Support for the next generation

Supporting the education of the next generation to create a prosperous future.

2. Traffic safety ontributing to traffic safety education and the spread of safe driving to create aCzero-accident society.

3. Environmental preservation

Contributing to preservation of our precious global environment.

4. Participation in local communities

Contributing to the revitalization and development of regional communities.

Main Activities

MMC has been running the Car School program since 1995 as part of

1. Support for the Next Generation• Hands-on Lesson Program

its safe driving educational activities.

The Hands-on Lesson Program began in fiscal year 2005, and is based on
the concept of enabling children to enjoy learning by experiencing the

3. Environmental Preservation• The Pajero Forest“real thing.” MMC employees visit children mainly at elementary schools

MMC has named an approximately three-hectare area of mountainclose to MMC business offices to give hands-on lessons on topics such as

forest in Hayakawa-cho, Yamanashi Prefecture as “Pajero Forest,” andthe environment centered on test rides in the i-MiEV electric vehicle, andhas been working to preserve and cultivate the forest while deepening

car design, with guidance from designers and modelers.

exchanges with local residents through volunteer activities.

• KidZania

A troop of volunteers, including employees and their families, con-

MMC has unveiled an exhibit at KidZania Koshien, which opened

duct a range of activities in the area, including cutting undergrowth,in March 2009, following the success of its exhibit at KidZania Tokyo

installing deer-proof fences, birdhouse construction and nature watching.

since October 2006.

As a means of making effective use of these resources, the volunteers

At the Mitsubishi Motors Pavilion, children can experience thebuild wooden benches and blocks from wood obtained from forest

intrinsic attractiveness and fun of automobiles and the pleasure ofthinning activities, and have also opened a wood block workshop.

driving through activities at a simulated “Driver’s License Testing
Design Studio” (Tokyo only). By encouraging young people to think and4. Participation in Local Communities• Factory Tours

act on their own in the course of these activities, MMC aims to help

The Nagoya Plant, Powertrain Plant (Kyoto Plant, Shiga Plant),

young people obtain the qualities needed for success in the context ofMizushima Plant and Pajero Manufacturing Co., Ltd. have opened up

modern social frameworks and in social life, such as teamwork, a posi-

their production lines and other facilities to local elementary schools

tive attitude, and communication skills.

and residents as a place for social study.

Office,” “Rent-A-Car Center,” “Auto Factory” (Koshien only) and “Car

• Other
2. Traffic Safety• Car School

MMC conducts other kinds of volunteer activities such as regional beautification, lending of MMC facilities, and cooperation in regional events.

The Car School is a driving instruction program in which all participants

MMC collects voluntary donations from employees as part of thethink, learn and enjoy driving together with instructors in the course of“MMC STEP Fund,” and collects donated items as part of its activities

studying driving techniques, automobiles, safety and other topics.

supporting NPOs and other charitable organizations.

mitsubishi motors corporation Annual Report 2010

MMC is tackling four key themes with respect to corporate citizenship activities: Support for the next generation, Traffic27

Mitsubishi Motors Group Environmental Vision 2020—“Leading the EV Era, Towards a Sustainable Future”
Looking ahead to the year 2020, the 50th anniversary of the establishment of the company, MMC has formulated the Mitsubishi Motors Group Environmental Vision 2020.
Under the Mitsubishi Motors Group Environmental Vision 2020, MMC’s environmental activities will be
guided by its environmental policy of “Leading the EV* era, towards a sustainable future.” In this context,
MMC is committed to the development of technology—spearheaded by EV technology—and to reducing theenvironmental impact of its business activities in general. The Mitsubishi Motors Group Environmental Vision2020 will also point the MMC Group toward working with its customers and society at large in creating apleasing and low-carbon society. Additionally, the Environmental Vision 2020 more fully embodies the philosophy of the company’s recently announced “Drive@earth” corporate tagline.
*EV (electric vehicle): electric cars, plug-in hybrids, and other electric-powered vehicles.

MiTSUbiShi MoTorS CorporaTioN annual report 201028

To achieve the Mitsubishi Motors Group Environmental Vision2020 roadmap’s goals and targets, MMC will focus its resources
on a 3-pronged approach based on “products & Technology,”“Corporate activities” and “Cooperation with Society.”<Mitsubishi Motors Group Environmental Vision 2020
product & technology targets for the year 2020>• Raise the total production ratio of EVs to at least 20%• Cut global lineup CO2 emissions by a weighted average of
50% from the 2005 level.

1. Products & Technology:
as well as pushing ahead with the development of EV technologies and products, MMC will seek to reduce environmental loads
throughout the entire lifecycle of its products, mainly by improving the fuel economy of internal combustion engine-powered
vehicles, and enhancing vehicle recyclability.

CO2 Emissions Reduction Targets for the Year 2020
Vehicle-produced Co2

improve the fuel economy of gasoline
and diesel vehicles
Total production ratio of EVs

50% Reduction

20%

Factory-produced Co2

raise the efficiency of all plants andfacilities worldwide and introduce
renewable energy, etc.

20% Reduction

Corporate Image

Covering all fields of corporate activities from product planning
through development, production, sales and after-sales services,
MMC will step up its efforts to promote more widespread use ofEVs. in addition, MMC will raise the level of its environmental protection activities throughout the Mitsubishi Motors Group by setting
its own environmental standards for each field of corporate activity.
<Mitsubishi Motors Group Environmental Vision 2020
corporate activity targets for the year 2020>• Reduce per-vehicle CO2 emissions during production by
20% from the 2005 level

3. Cooperation with Society:
MMC will collaborate with governments, various industries andother partners to help develop charging infrastructure and new
traffic systems using EVs.
While continuing to promote environmental conservation
activities implemented with local communities, the company will
also work to enhance activities such as the global expansion of
corporate citizenship activities, including tree planting programs,and “eco-driving” support measures.
Near-future Goal

auto industry

Government

MMC GroupMedia

2. Corporate Activities:

Products &Technology

Customers

Operations
othersectors

Trading
partners

Cooperation withsociety

Towards asustainable future

Financial Section

Contents
Financial Results and Discussion
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors

mitsubishi motors corporation annual report 2010

30
34
36
37
38
39
65

29

Financial Results and Discussion

Operational Review

income statement earnings items, including operating

In fiscal year 2009 ended March 31, 2010, the global econ-

income, ordinary income and net income, and achieved its

omy saw the sharp downturn triggered by the financial crisis

goal of net profitability.

subside, and headed toward a gradual recovery after putting
the worst behind it. This recovery was supported by eco-

Results of Operations

nomic stimulus measures implemented by various countries.

Retail Sales Volume

Despite these positive developments, a strong overall eco-

MMC’s global retail sales in fiscal year 2009 came to 960,000

nomic recovery remains a distant prospect. In particular, withunits, down 106,000 units, or 10% year on year.

Japan’s economic recovery being very dependent on extermitsubishi motors corporation Annual Report 201030

Regional sales in Japan came to 171,000 units, up 3,000

nal demand, the foreign exchange market trended towards

units, or 1% year on year, reflecting a boost in overall

an appreciation of the yen. In addition, with wage anddemand throughout the year from the government’s eco-car

employment conditions slow to recover amid a deflationary

tax reductions and incentives and the February 2010 launch

environment, domestic demand was unable to drive eco-of the new RVR compact crossover.

nomic growth, and business conditions remained harsh.
In this business environment, in the second year of its
Step Up 2010 mid-term business plan, MMC worked to bol-

North American sales came to 88,000 units, down 31,000
units, or 26% year on year due to declines in the UnitedStates and Mexico, which offset gains in Canada.

ster its strengths and secure steady profits by making earnest

In Europe, demand was slow to recover on the whole. In

efforts to return domestic operations to profitability, stabiliz-

particular, there was a sharp downturn in market conditions in

ing North American businesses, building a more market-

Russia and the Ukraine, resulting in regional sales of 169,000

responsive production structure, and enhancing

units, a drop of 103,000 units, or 38% year on year.

environmental technologies. Another priority was to continue

In Asia and Other Regions, regional sales came to

implementing thorough cost reductions amid a continued

532,000 units, up 25,000 units, or 5% year on year. This wassevere business environment.

despite decreases in Central and South America and in the

As a result, in terms of consolidated business perfor-

Middle East and reflected a more than 60% improvement inmance in fiscal year 2009, despite a drop in net sales MMC

China and major rises in such markets as Taiwan, Thailand,achieved a stronger year-on-year performance in all major

and the Philippines.

Retail Sales
0

09
08
07
06
05
(FY)

Net Sales/Operating Margin
500

1,000

1,500

(Thousandunits)

1,000

0

09

960

08

1,066
1,360
1,230
1,344

2,000

3,000

(¥ billion)

1.0
1,445.6
0.2

1,973.6
4.0

07
06

1.8

2,202.9

0.3

05
(FY)
0
n Net Sales

2,682.1

2,120.1
2
Operating Margin (%)

4

6

(%)

Net Sales and Income

2. Financial Services

Net sales decreased ¥528.0 billion, or 27% year on year, toNet sales in the financial services sector came to ¥10.9 billion,¥1,445.6 billion, due largely to a steep drop in vehicle sales

down ¥1.0 billion, or 9% year on year. Operating income rosein the first half of the year and the impact of the appreciation¥2.0 billion year on year to ¥2.4 billion.

of the yen.

Geographical Segment Information• Japanemergency cost-cutting measures that MMC undertook in

In Japan, net sales came to ¥1,243.9 billion, down ¥356.3

the second half of fiscal year 2008 in response to an unprec-

billion, or 22.3% year on year, largely because of a drop in

edented economic crisis.

vehicle sales and the yen’s appreciation. MMC recorded an

Ordinary income came to ¥13.0 billion, an improvement

operating loss of ¥9.8 billion, worsening ¥12.4 billion fromof ¥27.9 billion from an ordinary loss a year earlier. This

operating income in the previous year, mainly due to lower

mainly reflected improved operating income, as well as an

net sales (Lower net sales; shift to a loss).

improvement of ¥17.9 billion in net non-operating income(expenses), which includes foreign exchange gains (losses)• North America

and equity in earnings (losses) of affiliates.

In North America, net sales came to ¥166.0 billion, down

An improvement of ¥27.9 billion in ordinary income and a¥66.1 billion, or 28.5% year on year, owing to a substantial

large decrease in extraordinary impairment loss led to a net

decline in vehicle sales. The operating loss came to ¥4.4

income of ¥4.8 billion, improving ¥59.7 billion from a net loss

billion, a ¥19.2 billion improvement from the previous year,

in the previous year.

reflecting lower advertising and other costs (Lower net sales;
smaller operating loss).

Segment Analysis

31

Business Segment Information• Europe

1. Automobiles

In Europe, net sales came to ¥191.0 billion, down ¥165.1

Net sales in the automotive business sector came to ¥1,434.7

billion, or 46.4% year on year as a result of a large drop inbillion (a decrease of ¥526.8 billion, or 27%, year on year).

vehicle sales. MMC recorded operating income of ¥5.1 ­billion,

Operating income came to ¥11.5 billion, up ¥8.1 billion year

an improvement of ¥9.6 billion year on year. This was due toon year.

reduced selling and labor costs, mainly as a result of the

Total Assets
0

09
08
07
06
05
(FY)

Interest-bearing Debt
500

1,000

1,500

2,000

(¥ billion)

009

1,258.7
1,138.0
1,609.4
1,778.7
1,557.6

100

200

300

400

500

353.4

07

353.9

06
05

600

392.7

08

(FY)

mitsubishi motors corporation Annual Report 2010

Operating income was up ¥10.0 billion year on year to¥13.9 billion, stemming from the continuation of thorough

503.8
447.8

(¥ billion)restructuring of the European subsidiary (Lower net sales;of ¥22.3 billion, compared with a net outflow of ¥94.8 billion

restored profitability).

in the previous year, due mainly to capital expenditures.

• Asia and Other Regions

inflow of ¥30.9 billion, compared with a net outflow of ¥5.0

In Asia and Other Regions, net sales came to ¥456.5 billion,

billion in the previous year.

Finally, cash flow from financing activities totaled a net

down ¥21.9 billion, or 4.6% year on year, reflecting

The year-end balance of cash and cash equivalents camedecreased vehicle sales. Operating income came to ¥22.2

to ¥263.5 billion, compared with ¥154.7 billion at the previ-

billion, up ¥0.5 billion year on year, on the strength of anous fiscal year-end.

upturn in exchange rates and reductions in selling costs
Cash Flow Indicators(Lower net sales; higher earnings).
mitsubishi motors corporation Annual Report 2010

32

Analysis of Financial Position
Analysis of Assets, Liabilities, Net Assets, and Cash FlowsAt the end of the term, total assets came to ¥1,258.7 billion,up ¥120.7 billion from the end of the previous fiscal year.
Total liabilities came to ¥1,024.2 billion, a ¥109.2 billion
increase from the end of the previous fiscal year. Net assets
came to ¥234.5 billion, an increase of ¥11.5 billion from theend of the previous fiscal year.
Cash flow from operating activities came to a net inflow of¥100.7 billion, compared with a net outflow of ¥93.3 billion in
the previous year, due mainly to an increase in working capital.
Cash flow from investing activities came to a net outflow

Cash Flows from Operating Activities
–150

–100

–50

0

50

100

09
08

200

(¥ billion)

2006

2007

2008

2009

2010

20.4

17.2

16.6

19.7

18.8

17.8

Shareholders’ equity ratio(fair value basis)

37.7

87.8

56.8

56.4

60.8

55.9

Cash flows/
Interest-bearing debt ratio

34.9

8.2

3.1

1.9

—

3.9

Interest coverage ratio

0.5

2.9

7.8

8.6

—

7.4

*	The shareholders’ equity ratio is shareholders’ equity divided by total assets(Minority interests excluded from shareholders’ equity from the year ended March
31, 2007).
	The shareholders’ equity ratio (fair value basis) is market capitalization divided bytotal assets.
	The Cash flows/Interest-bearing debt ratio is interest-bearing debt divided bycash flow.
The interest coverage ratio is cash flow divided by interest paid.
Notes:
1. Each indicator is calculated from consolidated financial figures.
2. Market capitalization is calculated based on the number of issued shares excluding treasury stock.
3. Cash flow refers to operating cash flow.
4. Interest-bearing debt includes all liabilities recorded on the balance sheet for
which interest is paid.

–120

08
188.3
162.3
54.4

–90

–60

–30

09

–93.3

06
05

2005

Cash Flows from Investing Activities
150

100.7

07

(FY)

Years ended March 31,

Shareholders’ equity ratio (%)

–22.3
–94.8

07

–48.9

06

–46.0

05
(FY)

–84.8

0

(¥ billion)

Business-related Risks

Effect of socioeconomic situations

Risks that may affect the business results, financial position

The breakdown of the above ratio for overseas sales is 12.1%

and other aspects of the MMC Group are outlined as follows:

for North America, 18.6% for Europe, and 43.8% for Asia andother regions. There is a possibility that changes in the socio-

Leasing, financial services and sales incentives

economic situation in Japan or any of these regions will

Overcapacity in the auto industry, and fierce competition,

impact MMC results.

has led to the necessity of sales incentives in sales promotion

Effect of interest rate fluctuations

efforts. The sales incentives MMC uses in promotions reduce

The balance of MMC’s consolidated interest-bearing debt

the selling price of new vehicles. It is possible that the use ofstood at ¥392.7 billion at the end of March 2010. There is a

incentives will lower resale values in the used car market andpossibility that fluctuations in interest rates on borrowings

residual values evaluated for vehicles returned at the end of

resulting from a change in financial market conditions in theleases. If vehicle residual values decrease, there could be a

future will impact MMC results.

negative impact on future business performance. The decline
in residual values could also put downward pressure on car

Effect of fluctuations in materials prices

and lease assets held as collateral in the sales finance unit.

The MMC Group purchases materials and finished parts andcomponents from many partners. Increased demand andIssuance of common and preferred shares and effect onother changes in market conditions may cause materials andshare pricecomponents prices to increase, thus raising MMC’s manufac-

In June and July 2004, March 2005, and January 2006 MMC

turing costs and resulting in an impact on MMC results.

issued several classes of convertible preferred shares. The
conversion of all Class B shares, series 1 – 3 (issued July 2004),

Natural and other disasters

has already been completed, but the possible conversion of

The MMC Group maintains production and other facilities in

the remaining Class A & G shares to common shares in the

many parts of the world. The occurrence of a major natural or

future will dilute the value of existing common shares, andother disaster, such as an earthquake or typhoon, may result

thus possibly influence the market price of common shares.

in lengthy halts in operations, etc. and thus have an impact
on MMC results.

Effect of foreign exchange rate fluctuations
Overseas sales accounted for 74.5% of the consolidated

Changes in laws and regulations

sales of MMC for the period. MMC endeavors to minimize

MMC abides by laws and regulations regarding the environ-the risk involved in foreign currency receivables and payables

ment, product safety, etc. in its various markets of operation.

through foreign currency derivative contracts. However, fluc-

If any laws and regulations were to be changed, or new rules

tuations in the foreign exchange markets still may have anissued, costs associated with implementing these changes

impact on MMC results.

would have an impact on MMC results.

mitsubishi motors corporation Annual Report 2010

especially price competition in the North American market,

33

Consolidated Balance Sheets

Mitsubishi Motors Corporation and Consolidated Subsidiaries
As of March 31, 2010 and 2009

In millions of yen

In thousands of
U.S. dollars(Note 3)

2010

2009

2010

¥ 263,453
121,385
22,139183,869
251
2,007
90,418(10,448)
673,077¥ 154,666
89,60730,596
189,120608
1,398
82,474(7,528)
540,943$ 2,831,613
1,304,661
237,960
1,976,236
2,701
21,573
971,827(112,299)
7,234,275

Property, plant and equipment, net (Notes 5, 8 and 14)

408,234

439,936

4,387,732

Intangible assets

12,435

16,436

133,652

78,65945,196
6,746
6,060
40,395(12,136)
164,922¥1,258,669

68,44324,0019,146
8,206
43,218(12,322)
140,693¥1,138,009

845,438
485,771
72,516
65,139434,177(130,440)
1,772,602$13,528,263

Assetsmitsubishi motors corporation Annual Report 2010

Current assets: Cash and cash equivalents (Notes 13 and 15) Notes and accounts receivable—trade (Notes 4, 8 and 15)
Finance receivables (Notes 4, 8 and 15) Inventories (Note 8) Short-term loans receivable
Deferred tax assets (Note 18) Other (Note 8) Allowance for doubtful accounts (Note 15)
Total current assets

34

Investments and other assets: Investments (Notes 6, 8 and 15)
Long-term finance receivables (Notes 4, 8 and 15)
Long-term loans receivable (Note 15)
Deferred tax assets (Note 18) Other (Note 8) Allowance for doubtful accounts (Note 15)
Total investments and other assets, net
Total assets

Current liabilities: Notes and accounts payable—trade (Note 15) Short-term loans payable (Notes 8 and 15) Current portion of long-term debt (Notes 8 and 15)
Lease obligations (Note 8) Accounts payable—other and accrued expenses (Notes 7 and 15) Income taxes payable (Note 18) OtherTotal current liabilities
Long-term debt (Notes 8 and 15)
Lease obligations (Note 8)
Deferred tax liabilities (Note 18)
Provision for retirement benefits (Note 17)
Other
Total liabilities
Net assets: Shareholders’ equity (Notes 9 and 22):  Preferred stock:   Authorized:
3,312,000 shares   Issued or converted:		437,593 shares in 2009		437,593 shares in 2010  Common stock:   Authorized:9,958,285,000 shares   Issued or converted:
5,537,898,840 shares in 2009
5,537,956,840 shares in 2010  Capital surplus  Accumulated deficit  Treasury stock—83,358 shares at March 31, 2009  Treasury stock—87,254 shares at March 31, 2010
 Total shareholders’ equity
Valuation and translation adjustments:   Valuation difference on available-for-sale securities   Deferred gains or losses on hedges   Foreign currency translation adjustment Total valuation and translation adjustments Minority interests
Total net assets
Contingent liabilities (Note 10)
Total liabilities and net assets
See accompanying notes to consolidated financial statements.

In millions of yen
2010

2009

2010

¥ 265,028
125,851
193,723
7,405
127,522
3,062
50,684
773,278
73,174
10,93920,750106,354
39,694
1,024,191¥ 155,600
179,635
68,991
7,425
150,139
4,994
53,306620,093
104,779
13,197
18,549106,31152,053914,985$ 2,848,543
1,352,659
2,082,149
79,593
1,370,616
32,915544,764
8,311,242
786,485
117,574
223,029
1,143,104
426,638
11,008,075

218,796

218,796

2,351,639

438,558
432,666(765,988)

438,553432,661(770,750)

4,713,656
4,650,327(8,232,895)(15)
324,017(14)
319,246(163)
3,482,563

5,494
(90)
(105,236)(99,832)
10,293
234,4781,183
789(107,769)(105,795)
9,573
223,024

59,056(973)(1,131,093)(1,073,010)
110,635
2,520,188¥1,258,669¥1,138,009$13,528,263

mitsubishi motors corporation Annual Report 2010

Liabilities and net assets

In thousands of
U.S. dollars(Note 3)35

Consolidated Statements of Operations
Mitsubishi Motors Corporation and Consolidated Subsidiaries
For the years ended March 31, 2010 and 2009

In millions of yen

In thousands of
U.S. dollars(Note 3)

2010

2009

2010

¥1,445,616
1,211,635
233,980¥1,973,572
1,663,121
310,451$15,537,578
13,022,739
2,514,838

Selling, general and administrative expenses (Note 11)  Operating income

220,060
13,920306,524
3,926

2,365,221
149,617

Interest and dividends income
Interest expenses
Impairment loss (Note 5)
Other gain (loss), net (Notes 6 and 12)  Income (loss) before income taxes and minority interests

2,111
13,403
214
9,177
11,591

6,485
14,54627,494(22,088)(53,717)

22,698144,066
2,303
98,642
124,587

3,140
1,150
4,290
2,542
4,758

4,899
(3,788)1,111
55¥ (54,883)

33,755
12,362
46,117
27,33051,139Net sales
Cost of sales   Gross profit

mitsubishi motors corporation Annual Report 201036

Income taxes (Note 18):
 Current
Deferred
Minority interests in income  Net income (loss) (Note 22)
See accompanying notes to consolidated financial statements.

¥$Consolidated Statements of Changes in Net Assets

In millions of yen

In thousands of
U.S. dollars(Note 3)

2010

2009

2010

Shareholders’ equity
Preferred stock: Balance at beginning of year
 Preferred stock issued or converted Balance at end of year

¥ 218,796–
218,796¥ 218,796–
218,796$ 2,351,639–
2,351,639

Common stock: Balance at beginning of year
 Common stock issued or converted Balance at end of year

438,5535
438,558

438,5530438,553

4,713,601
54
4,713,656

Capital surplus: Balance at beginning of year
 Issuance or conversion of common and preferred stock Balance at end of year

432,6614
432,666

432,661
0432,661

4,650,273
53
4,650,327

Accumulated deficit: Balance at beginning of year
Effect of changes in accounting policies applied to foreign subsidiaries Net income (loss) Change of scope of consolidation Change of scope of equity method Increase by merger Balance at end of year

(770,750)
–
4,758
(3)
(153)
160
(765,988)(702,432)(13,455)(54,883)21––(770,750)(8,284,075)–
51,139(33)(1,647)
1,721(8,232,895)

Treasury stock: Balance at beginning of year
 Net change Balance at end of year
Total shareholders’ equity

(14)
(0)
(15)
324,017

(14)
(0)
(14)
319,246

(157)
(5)
(163)
3,482,563

Valuation and translation adjustments
Valuation difference on available-for-sale securities: Balance at beginning of year
 Net change Balance at end of year

1,183
4,310
5,494

10,676(9,492)
1,183

12,724
46,33159,056

Deferred gains or losses on hedges: Balance at beginning of year
 Net change Balance at end of year

789
(880)
(90)

3,157
(2,367)789

8,490(9,464)(973)

Foreign currency translation adjustment: Balance at beginning of year
 Net change Balance at end of year
Total valuation and translation adjustments(107,769)
2,532(105,236)(99,832)(84,584)(23,185)(107,769)(105,795)(1,158,313)
27,219(1,131,093)(1,073,010)

Minority interests: Balance at beginning of year
 Net change Balance at end of year
Total net assets

9,573
719
10,293¥ 234,478

11,318(1,744)9,573¥ 223,024

102,898
7,736
110,635$ 2,520,188

See accompanying notes to consolidated financial statements.

mitsubishi motors corporation Annual Report 2010

Mitsubishi Motors Corporation and Consolidated Subsidiaries
For the years ended March 31, 2010 and 200937

Consolidated Statements of Cash Flows
Mitsubishi Motors Corporation and Consolidated Subsidiaries
For the years ended March 31, 2009 and 2008

mitsubishi motors corporation Annual Report 201038

In millions of yen

In thousands of
U.S. dollars(Note 3)

2010

2009

2010

¥ 4,758¥ (54,883)$

71,869(551)(52)(4,544)
1,150
2,542
(736)
214
1,168
(27,975)
12,113(15,597)
107,557(51,199)
100,716

84,585(3,194)
2,445(367)(3,788)55
2,968
27,494
8,832
63,14457,073(16,368)(229,035)(32,296)(93,335)

772,462(5,931)(568)(48,840)
12,362
27,330(7,912)
2,303
12,557(300,682)
130,197(167,641)
1,156,031(550,299)
1,082,509

Investing activities:
Decrease (increase) in time deposits
Purchase of property, plant and equipment (Note 13)
Proceeds from sales of property, plant and equipment (Note 13)
Net decrease (increase) in investments in securities
Decrease (increase) in short-term loans receivable
Payments of long-term loans receivableCollection of long-term loans receivable
Other, net
Net cash provided by (used in) investing activities

12,267(44,279)
13,941
260
349
(13)
413
(5,263)(22,325)(13,720)(91,224)
16,686(114)(1,027)(811)
714(5,291)(94,789)

131,854(475,924)
149,840
2,795
3,753
(145)
4,440
(56,568)(239,953)

Financing activities:
Increase (decrease) in short-term loans payable
Proceeds from issuance of long-term debt
Repayment or redemption of long-term debt
Cash dividends paid to minority shareholders
Other, net
Net cash provided by (used in) financing activities(52,161)
171,800(79,843)(1,671)(7,242)30,881(28,135)
114,435(82,755)(585)(7,941)(4,983)(560,639)
1,846,523(858,166)(17,960)(77,840)
331,917(584)
108,688
154,666(13,793)(206,902)
360,902(6,284)
1,168,188
1,662,364

25

666

273

73
¥263,453–¥ 154,666

787$2,831,613

Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by(used in) operating activities:
Depreciation and amortization Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for retirement benefits
Equity in (earnings) losses of affiliates Income taxes—deferred Minority interests in income
Loss (gain) on sales and retirement of property, plant and equipment, net Impairment loss
Early retirement expense
Decrease (increase) in notes and accounts receivable—trade
Decrease (increase) in inventories Change in finance receivables (Note 13) Increase (decrease) in notes and accounts payable—trade Other, net (Note 13)
Net cash provided by (used in) operating activities

Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase (decrease) in cash and cash equivalents resulting from change ofscope of consolidation
Increase in cash and cash equivalents resulting from merger withunconsolidated subsidiaries
Cash and cash equivalents at end of year (Note 13)
See accompanying notes to consolidated financial statements.

51,139

Notes to Consolidated Financial Statements
Mitsubishi Motors Corporation and Consolidated Subsidiaries

MMC and its domestic consolidated subsidiaries maintain their books of account in conformity with the financial accounting standardsof Japan. The financial statements of foreign subsidiaries are prepared for consolidation purposes in conformity with generally
accepted accounting principles in the United States or International Financial Reporting Standards, subject to the adjustments requiredby generally accepted accounting principles in Japan.
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Japan which are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards. These financial statements have been compiled from the consolidated financial statements filed with the Financial Services Agency as required by the Financial Instruments & Exchange Act of Japan.
In addition, the notes to the consolidated financial statements include information which is not required under generally accepted
accounting principles in Japan but is presented herein as additional information.
Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.
As permitted, amounts of less than ¥1 million have been omitted. Consequently, the totals shown in the accompanying financial
statements (both in Yen and U.S. dollars) do not necessarily agree with the sum of the individual amounts.

(b) Principles of consolidation
All significant companies over which MMC has effective control are consolidated. Significant companies over which MMC has theability to exercise significant influence have been accounted for by the equity method.
All significant inter-company transactions have been eliminated in consolidation.
Any differences at the date of acquisition between acquisition cost and the fair value of the net assets acquired are expensed whenincurred or are amortized over periods between 3 to 7 years depending on the period over which it is estimated to be beneficial foreach investment.

(c) Cash and cash equivalents

mitsubishi motors corporation Annual Report 2010

1. Significant Accounting Policies(a) Basis of preparation

All highly liquid and low risk investments with maturities of three months or less when purchased are considered to be cash equivalents.
39(d) Inventories
Inventories of MMC and its domestic consolidated subsidiaries are principally stated at cost determined by the first in first out methodor specific identification method (under either method, the balance sheet carrying value is reduced to recognize any deterioration ofrecoverability). Inventories of the overseas consolidated subsidiaries are principally stated at the lower of cost or market value. Cost isdetermined by the specific identification method.

(e) Investments
Investments in securities are classified either as held-to-maturity, investments in unconsolidated subsidiaries and affiliates, or othersecurities. Held-to-maturity securities are stated at their amortized cost. No investments classified as held-to-maturity were held during
the years ended March 31, 2010 and 2009. Other securities with a readily determinable market value are stated at fair value and thecost of such securities sold is computed based on the moving average method. The difference between the acquisition cost and thecarrying value of other securities, including unrealized gains and losses, is recognized in “Valuation difference on available-for-salesecurities” in the accompanying consolidated balance sheets. Other securities without a readily determinable market value are statedat cost determined by the moving average method.

(f) Depreciation and amortization
Property, plant and equipment (excluding leased assets):
Depreciation of property, plant and equipment (excluding leased assets) is principally calculated using the declining balance methodor the straight line method over the estimated useful life of the respective assets for MMC and domestic consolidated subsidiaries.
Depreciation is principally calculated using the straight line method for the overseas consolidated subsidiaries.
The useful lives of the assets are based on the estimated lives of assets for MMC and are determined in accordance with the Corporation Tax Act for its domestic consolidated subsidiaries. The useful lives of the assets are determined based on the expected useful
lives for the overseas consolidated subsidiaries.
Intangible fixed assets (excluding leased assets):
Intangible fixed assets (excluding leased assets) are amortized using the straight line method for MMC and its domestic consolidated
subsidiaries and using the straight line method primarily over the period for which each asset is available for use for its overseas subsidiaries. Software intended for use by MMC and its domestic consolidated subsidiaries is amortized using the straight line method
over a period of 5 years.

Leased assets:
Assets recognized under finance leases that do not involve transfer of ownership to the lessee are depreciated using the straight line
method based on the contract term of the lease agreement. If a guaranteed residual value is determined in the lease agreement, thesaid guaranteed residual value is deemed as the residual value of such leased assets. If the residual value is not determined, it isdeemed to be zero.

(g) Allowance for doubtful accounts
The allowance for doubtful accounts has been provided based on MMC and its consolidated subsidiaries’ historical experience withrespect to write-offs and an estimate of the amount of specific uncollectible accounts.

(h) Allowance for product warranties
mitsubishi motors corporation Annual Report 201040

The allowance for product warranty claims has been calculated based on MMC and its consolidated subsidiaries’ historical experienceand estimations with respect to future costs relating to claims.

(i) Retirement benefits
Accrued retirement benefits for employees at March 31, 2010 and 2009 are calculated based on the retirement benefits obligation andthe fair value of the pension plan assets estimated at year end.
Prior service cost is being amortized using the straight line method over periods of 1 to 17 years. These periods are within theestimated average remaining service years of the employees.
Actuarial gains and losses are being amortized using the straight line method over the periods of 5 to 15 years. These periods arewithin the estimated average remaining service years of the employees.

(j) Accrual for retirement benefits for directors and corporate auditors
Before the termination of the retirement benefits plan for directors and corporate auditors in the fiscal year ended March 2007, certain
directors and corporate auditors of MMC and its domestic consolidated subsidiaries had been customarily entitled to lump-sum payments under their respective unfunded severance benefit plans, subject to the shareholders’ approval. Due to the termination of theplan and partial deduction of the provision, further provision is no longer needed and the outstanding balance of the provision atMarch 31, 2010 and 2009 represents benefits reserved before the plan’s termination.

(k) Translation of foreign currency accounts
Receivables and payables denominated in foreign currencies are translated into Yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the statements of operations.
The accounts of the consolidated foreign subsidiaries are translated into Yen as follows:a. Asset and liability items are translated at the rate of exchange in effect on March 31;
b. Components of shareholders’ equity are translated at their historical rates at acquisition or upon occurrence; andc. Revenues, expenses and cash flow items are translated at the average rate for the financial period. Translation adjustments areincluded in “Net assets.”(l) Amounts per share of common stock
The computation of basic net income per share of common stock is based on the weighted average number of shares of common
stock outstanding during each year. Diluted net income per share of common stock is computed based on the weighted average
number of shares of common stock outstanding each year after giving effect to the dilutive potential of common stock to be issued
upon the conversion of preferred stock and stock options.

(m) Derivative financial instruments
MMC and its consolidated subsidiaries are exposed to risks arising from fluctuations in foreign currency exchange rates and interest
rates. In order to manage those risks, MMC and its consolidated subsidiaries enter into various derivative agreements including forward foreign exchange contracts and interest rate swaps.
Forward foreign exchange contracts are utilized to manage risks arising from forecast exports of finished goods and related foreign
currency receivables. Interest rate swaps are utilized to manage interest rate risk for loans and bonds. MMC and its consolidated subsidiaries do not utilize derivatives for speculation or trading purposes.
Derivative financial instruments are recorded at fair value, excluding certain instruments described below which are recorded inaccordance with the special hedge provisions of the accounting standard.

Forward foreign exchange contracts related to forecast exports of finished goods are accounted for using deferral hedge accounting. Deferral hedge accounting requires unrealized gains or losses to be deferred as liabilities or assets.
MMC and its consolidated subsidiaries have also developed a hedging policy to control various aspects of the derivative transactions including authorization levels and transaction volumes. Based on this policy, within certain limits, MMC and its consolidated subsidiaries hedge the risks arising from the changes in foreign currency exchange rates and interest rates. Forward foreign exchange
contracts are designated to hedge the exposure to variability in expected future cash flows.
For interest rate swaps accounted for as special hedges, instead of measuring hedge effectiveness, confirmation of the conditions
for special hedge accounting is carried out.

(Accounting standard for measurement of inventories）“Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, issued on July 5, 2006) has been applied from theprevious fiscal year. Accordingly, operating income decreased by ¥245 million and loss before income taxes and minority interests
increased by the same amount. The impact on segment information has been described in the relevant section.
(Accounting standard for lease transactions)
In prior years, MMC and its domestic consolidated subsidiaries accounted for finance lease transactions, which do not involve thetransfer of ownership, using the method of accounting for operating leases. However, following the application of the ”AccountingStandard for Lease Transactions” (ASBJ Statement No. 13, issued on June 17, 1993 and revised on March 30, 2007 by the BusinessAccounting Deliberation Council), and “Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, issued on
January 18, 1994 and revised on March 30, 2007 by JIPCA) in the previous fiscal year, the method of accounting for finance leases is
now applied to such finance lease transactions.
If the commencement of the finance lease contract, which does not involve transfer of ownership, is earlier than the beginning of
the first year of adoption of the above accounting standard, the balance of future minimum lease payments (after deduction of theinterest element) as of the end of the fiscal year prior to adoption is deemed as the acquisition cost of the asset, and such leased
assets are recognized as if they had been acquired at the beginning of the year of adoption of the standard.
As a result of this change, property, plant and equipment increased by ¥24,172 million. However, the impact of this change on
operating income and loss before income taxes and minority interests was immaterial.
Along with the application of the Accounting Standard for Lease Transactions, the balance of the purchased molds not yet depreciated that was formerly included in “Inventories” in accordance with the accounting treatment for finance lease is now included in“Property, plant and equipment, net”. As a result of this change, inventories decreased by ¥35,102 million, and property, plant andequipment increased by the same amount.
(Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements)
From the beginning of the previous fiscal year, the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF Practical Solution No. 18) has been adopted. Accordingly, the opening balance ofretained earnings decreased by ¥13,455 million. Operating income increased by ¥1,943 million and loss before income taxes andminority interests also decreased by the same amount respectively as compared to the amount that would have been recorded under
the previous method.
The impact on segment information has been described in the relevant section.

3. U.S. Dollar Amounts
The U.S. dollar amounts in the accompanying consolidated financial statements are included, solely for convenience, at ¥93.04 = U.S.
$1.00, the exchange rate prevailing on March 31, 2010. This translation should not be construed as a representation that the Yenamounts represent or have been, or could be, converted into U.S. dollars at that or any other rate.

4. Notes and Accounts Receivable-trade, and Finance Receivables
The outstanding balances of trade notes and accounts receivable sold to others which have been deducted from the respective
accounts amounted to ¥18,000 million ($193,465 thousand) and ¥7,600 million as of March 31, 2010 and 2009, respectively.

mitsubishi motors corporation Annual Report 2010

2. Changes in Accounting Policies

41

5. Property, Plant and Equipment
Accumulated depreciation of property, plant and equipment at March 31, 2010 and 2009 was ¥1,099,678 million ($11,819,416 thousand)and ¥1,100,730 million, respectively.
Impairment losses were recognized in the following asset groups for the years ended March 31, 2010 and March 31, 2009:

In millions of yen
2010
Location

mitsubishi motors corporation Annual Report 2010

42

Application

AssetsMatsuyama, Ehime and Kawagoe, Assets used in Saitama and others (16 sites)
sales operations

Land, buildings and others

Nayoro, Hokkaido and others(2 sites)

Land

Idle assets

In thousands of
U.S. dollars
2010
Impairment loss amount¥208$2,238

6

65

¥214

$2,303In millions of yen
2009
Impairment loss
amountLocation

Application

AssetsTsukuba, Ibaraki and Nerima, Tokyo and others (37 sites)

Assets used in sales
operations

Land, buildings and others¥ 706

Ohta, Tokyo and Soka, Saitama
and others (14 sites)

Idle assets

Land, buildings and others

871

Illinois, U.S.A. (6 sites)

Production facilities

Machinery and equipment,
furniture and fixtures and others

25,916¥27,494

The groupings of assets are determined as follows:
Assets used in production are grouped either by manufacturing plants or operational sites. Assets used in sales operations are
generally grouped by operational sites. Assets leased to others and idle assets have their own asset groups.
As a result of the worsening market environment and other factors, the book value of some of the assets has been adjusted downwardly to recoverable value.
The recoverable values of assets have been obtained through comparing and then taking the higher of: value in use, which isdetermined by estimating future cash flow with a 5% discount rate; and net realizable value, which is based on an appraisal value
obtained from a professional real estate appraiser or calculated on a reasonable basis by using the estate tax valuations through landassessments and similar methods.
Loss on impairment of fixed assets amounted to ¥214 million ($2,303 thousand) and ¥27,494 million for the years ended March 31,
2010 and 2009, respectively. Losses on land at March 31, 2010 and 2009 amounted to ¥85 million ($914 thousand) and ¥458 million,
respectively. Losses on buildings at March 31, 2010 and 2009 amounted to ¥125 million ($1,350 thousand) and ¥650 million, respectively.
Losses on other assets at March 31, 2010 and 2009 amounted to ¥3 million ($38 thousand) and ¥26,384 million, respectively.

6. Investments
Other securities at March 31, 2010 and 2009 were as follows:
In millions of yen

In thousands of U.S. dollars

Other securities: Securities with market value
Total

2010

Carrying
amountAcquisition
cost

Unrealized
gains

Unrealized(losses)

Carrying
amountAcquisition
cost

Unrealized
gains

Unrealized(losses)¥20,296¥20,296¥10,170¥10,170¥10,138¥10,138

¥(12)
¥(12)

$218,143$218,143$109,317$109,317$108,965$108,965$(139)$(139)

Significant declines in the value of securities with market value are recognized as impairment losses if the decline is not considered
to be recoverable. After the write-down of the impaired amount, a new book value is recognized. Losses recognized on the impairmentof other securities with market value totaled ¥20 million ($220 thousand) for the year ended March 31, 2010.
In millions of yen
2009

Other securities: Securities with market value Securities without market value
Total other securities

Carrying
amountAcquisition
cost

Unrealized
gains

Unrealized(losses)¥13,312
7,916¥21,228¥10,424
7,916¥18,340¥5,795–¥5,795¥(2,907)–¥(2,907)

Significant declines in the value of securities with market value are recognized as impairment losses if the decline is not considered
to be recoverable. After the write-down of the impaired amount, a new book value is recognized. Losses recognized on the impairment
of securities with market value totaled ¥0 million for the year ended March 31, 2009. Similarly, significant declines in the value of securities without market value are recognized as impairment losses. Losses recognized on the impairment of securities without market value
totaled ¥43 million for the year ended March 31, 2009.
Proceeds from sales of other securities and the corresponding gross gains and losses that are included in other gain (loss), net in
the accompanying consolidated statements of operations for the years ended March 31, 2010 and 2009 were as follows:

In millions of yen

Proceeds
Gross gains
Gross losses

In thousands of
U.S. dollars

2010

2009

2010

¥260
136
–

¥446
77
(16)

$2,795
1,468–

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥101,190
26,331¥127,522¥114,578
35,561¥150,139$1,087,607
283,009$1,370,616

In millions of yen

In thousands of
U.S. dollars

7. Accounts Payable—other and Accrued Expenses
Accounts payable—other and accrued expenses at March 31, 2010 and 2009 were as follows:

Accrued expenses and accounts payable
Allowance for product warranties

8. Short-term Loans Payable, Long-term Debt and Lease Obligations
Short-term loans payable at March 31, 2010 and 2009 consisted of the following:

Loans, principally from banks

2010

2009

2010

¥125,851¥179,635$1,352,659

mitsubishi motors corporation Annual Report 2010

2010

43

The weighted average interest rate on short-term loans payable at March 31, 2010 and 2009 were 3.1% and 3.9%, respectively.
Long-term debt at March 31, 2010 and 2009 consisted of the following:

Loans, principally from banks and insurance companies, due through 2023
at interest rates averaging 3.5% in 2010 and 4.0% in 2009: Secured Unsecured
3.3% bonds due May 28, 2009 (issued May 28, 1997)
1.1% bonds due September 24, 2010 (issued September 26, 2005)
mitsubishi motors corporation Annual Report 2010

44

Less current portion

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 87,419
179,278–200
266,897(193,723)¥ 73,174¥ 43,283
104,687
25,600200
173,770(68,991)¥104,779$ 939,588
1,926,897–
2,149
2,868,635(2,082,149)$ 786,485

In millions of yen

In thousands of
U.S. dollars¥193,723
52,984
10,540
5,223
3,411
1,013
¥266,897$2,082,149
569,486
113,291
56,14736,662
10,897$2,868,635

In millions of yen

In thousands of
U.S. dollars

3.3% bonds due May 28, 2009 were issued by MMC.
1.1% bonds due September 24, 2010 were issued by a domestic subsidiary, Suiryo Plastics Co., Ltd.
The maturities of long-term debt are as follows:

Years ending March 31,

2011
2012
2013
2014
2015
Thereafter
Total

Lease obligations at March 31, 2010 and 2009 consisted of the following:

Current
Non-current

2010

2009

2010

¥ 7,405
10,939¥ 7,425
13,197$ 79,593
117,574

The weighted average interest rates on lease obligations due through 2021 at March 31, 2010 and 2009 were 4.4% and 4.2 %,respectively.
The maturities of lease obligations are as follows:

Years ending March 31,

2011
2012
2013
2014
2015
Thereafter
Total

In millions of yen

In thousands of
U.S. dollars¥ 7,405
3,989
3,025
2,324
843
756
¥18,344$ 79,593
42,87532,51824,9859,065
8,129$197,168

Finance receivables and Long-term finance receivables
Inventories
Property, plant and equipment, net
Other (see (i) below)

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 56,224
5,463
69,004
10,094¥140,787¥ 51,172
30,769102,62953,519¥238,091$ 604,309
58,716
741,667
108,496$1,513,189(i) ¥1,025 million ($11,025 thousand) and ¥949 million of other current assets were pledged based on a liability in a term lease contract relating to a building with Murata
Medical Services, Ltd. at March 31, 2010 and 2009, respectively. ¥46 million ($494 thousand) and ¥46 million of investments were pledged as collateral for debt of­Mizushima Eco-Works Co., Ltd. at 2010 and 2009, respectively.

The following groups of assets of MMC, the Okazaki factory, were pledged as collateral at March 31, 2010 and 2009, respectively.

In millions of yen

Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Land

In thousands of
U.S. dollars

2010

2009

2010

¥11,448
11,301
675
985¥24,411¥12,047
9,949
867
985
¥23,850$123,050
121,466
7,262
10,595$262,374

The following groups of assets of MMC, the Mizushima factory, were pledged as collateral at March 31, 2010 and 2009, respectively.
The amounts guaranteed for the loan from The Japan Bank for International Cooperation to a consolidated subsidiary EQUUS
Leasing B.V. were ¥7,778 million ($83,603 thousand) and ¥8,869 million at March 31, 2010 and 2009, respectively.

In millions of yen

Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Land

In thousands of
U.S. dollars

2010

2009

2010

¥ 7,61127,760890
2,008¥38,271¥ 8,201
33,0971,011
2,008¥44,319$ 81,809
298,372
9,570
21,591$411,343

The following groups of assets of MMC, the Kyoto factory, were pledged as collateral at March 31, 2010 and 2009, respectively.

In millions of yen

Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Land

In thousands of
U.S. dollars

2010

2009

2010

¥ 5,731
18,430812
2,235¥27,210¥ 6,388
15,500609
2,235¥24,734$ 61,606
198,089
8,736
24,023$292,456

mitsubishi motors corporation Annual Report 2010

Assets pledged as collateral for short-term borrowings, long-term debt and guarantees (excluding factory related groups of assets)
at March 31, 2010 and 2009 consisted of the following:

45

The following groups of assets of MMC, the Shiga factory, were pledged as collateral at March 31, 2010 and 2009, respectively.

Buildings and structures
Machinery and equipment
Land

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 2,682
11,797
3,859¥18,339¥ 2,848
14,401
3,859¥21,109$ 28,834
126,80241,482$197,118

The following groups of assets of a consolidated subsidiary, Pajero Manufacturing Corporation, were pledged as collateral at March
31, 2010 and 2009, respectively.
mitsubishi motors corporation Annual Report 2010

In millions of yen

Buildings and structures
Machinery and equipment
Land

In thousands of
U.S. dollars

2010

2009

2010

¥2,5372,972
1,540¥7,049¥2,6793,472
1,540¥7,691$27,269
31,946
16,552$75,768

The following groups of assets of a consolidated subsidiary, Suiryo Plastics Co., Ltd., were pledged as collateral at March 31, 2010
and 2009, respectively.

46

Buildings and structures
Machinery and equipment
Land

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 9181,264
194¥2,377¥ 984
1,463
194¥2,642$ 9,869
13,593
2,090$25,553

In millions of yen

In thousands of
U.S. dollars

The obligations secured by such collateral at March 31, 2010 and 2009 consisted of the following:

Short-term loans payable
Current portion of long-term debt
Long-term debt

2010

2009

2010

¥ 45,159
62,31825,100¥132,578¥ 73,135
26,612
16,670¥116,419$ 485,373
669,804
269,783$1,424,962

9. Net Assets
The Companies Act provides that an amount equal to 10% of the amount to be disbursed as a distribution of earnings should beappropriated to the legal reserve until the sum of the legal reserve and capital surplus equals at least 25% of common stock. MMC and
its domestic subsidiaries have provided these amounts in accordance with the Companies Act.
MMC is authorized to issue 3,312,000 shares of convertible preferred stock that are classified as Series A, B and G (3 to 4 times ineach series), and has 437,593 shares outstanding at March 31, 2010.
The holders of each series of convertible preferred stock do not have voting rights, but the holders of Series A and G (except for
Series B) are entitled to preferred stock dividends of ¥50,000 per share each year after April 2009.
MMC also would be required to distribute residual claims to the holders of each series of convertible preferred stock by a single
payment of one million yen per share of preferred stock in order of payment.

10. Contingent Liabilities
Loan guarantees given in the ordinary course of business amounted to ¥3,235 million ($34,772 thousand) and ¥4,007 million at March
31, 2010 and 2009, respectively. Agreements similar to guarantees given in the ordinary course of business amounted to ¥1,525 million($16,400 thousand) and ¥1,424 million at March 31, 2010 and 2009, respectively.

11. Selling, General and Administrative Expenses

Advertising and promotion expenses
Freightage expense
Provision for allowance for doubtful accounts
Directors’ compensations, salaries and allowances
Pension expenses
Depreciation
Research and development expenses
Other
Total

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 52,211
24,509647
56,761
4,645
11,86922,47946,937¥220,060¥ 78,783
44,530–66,9795,144
13,79135,80861,485¥306,524$  561,172
263,426
6,955
610,071
49,928
127,572
241,609504,484$2,365,221

In millions of yen

In thousands of
U.S. dollars

12. Other Gain (Loss), Net
Other gain (loss), net for the years ended March 31, 2010 and 2009 consisted of the following:

2010

Gain on sales of investments in securities
Gain (loss) on sales and retirement of property, plant and equipment, net
Reversal of allowance for doubtful accounts
Equity in earnings of affiliates
Early retirement expense
Litigation expenses
Foreign exchange gains (losses)
Reversal of loss on liquidation of subsidiaries and affiliates
Reversal of cost related to the closure of the production facility of Australian subsidiary
Environmental expenses
Gain on transfer from business divestitures
Other
Total

¥ 138736–
4,544(1,168)(1,752)
9,130
1,167
–
(1,949)–(1,669)¥ 9,177

2009

2010

91
(2,968)460
367(8,832)(3,517)(5,105)
–
1,896
–
561
(5,042)¥(22,088)$ 1,487
7,912–
48,840(12,557)(18,835)
98,13912,548–(20,949)–(17,943)$ 98,642

In millions of yen

In thousands of
U.S. dollars¥

13. Cash Flow Information
Cash and cash equivalents at March 31, 2010 and 2009 consisted of the following:

Cash and bank deposits
Time deposits with maturities of more than three months
Cash and cash equivalents

2010

2009

2010

¥264,323(869)¥263,453¥167,841(13,175)¥154,666$2,840,964(9,350)$2,831,613

Interest paid less interest received and dividends received within operating activities in the consolidated statements of cash flows
for the years ended March 31, 2010 and 2009 amounted to a net expense of ¥10,814 million ($116,235 thousand) and ¥5,917 million,
respectively. Income taxes paid for the years ended March 31, 2010 and 2009 amounted to ¥5,006 million ($53,807 thousand) and¥6,727 million, respectively.

mitsubishi motors corporation Annual Report 2010

Selling, general and administrative expenses for the years ended March 31, 2010 and 2009 consisted of the following:47

Purchases of property, plant and equipment within investing activities in the consolidated statements of cash flows for the years
ended March 31, 2010 and 2009 include payments for the acquisition of lease vehicles of ¥5,098 million ($54,796 thousand) and ¥13,006
million, respectively.
Proceeds from sales of property, plant and equipment within investing activities in the consolidated statements of cash flows forthe years ended March 31, 2010 and 2009 include proceeds from the sale of lease vehicles of ¥5,416 million ($58,213 thousand) and¥8,587 million, respectively.
Changes in finance receivables within operating activities in the consolidated statements of cash flows for the years ended March
31, 2010 and 2009 are primarily the net of payments amounting to ¥98,447 million ($1,058,116 thousand) and ¥68,616 million, respectively, and proceeds from collections amounting to ¥82,849 million ($890,475 thousand) and ¥52,247 million, respectively.

mitsubishi motors corporation Annual Report 201048

14. Leases
As lessee(1) Finance lease transactions that do not involve transfer of ownership to the lessee(a) Description of the leased assets:
Property, plant and equipment
Leased assets principally include, but are not limited to, production facilities for the automobile business (“Machinery and equipment(net)” and “Tool, furniture and fixtures (net)”).
(b) Depreciation method of leased assets:
Leased assets under finance leases that do not involve transfer of ownership to the lessee, are depreciated using the straight line
method based on the contract term of the lease agreement. If the guaranteed residual value is determined in the lease agreement, thesaid guaranteed residual value is deemed as the residual value of such leased assets. If the residual value is not determined, it isdeemed to be zero.

(2) Operating lease transactions
Future minimum lease payments required under non-cancellable operating lease transactions entered into by MMC and its consolidated subsidiaries at March 31, 2010 and 2009 were as follows:

Due within 1 year
Due after 1 year
Total

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥1,6807,081¥8,761¥ 4,189
12,628¥16,818$18,057
76,108$94,166

As lessor
Future minimum lease revenues from non-cancellable operating lease transactions entered into by MMC and its consolidated subsidiaries as lessor at March 31, 2010 and 2009 were as follows:

In millions of yen

Due within 1 year
Due after 1 year
Total

In thousands of
U.S. dollars

2010

2009

2010

¥ 8,502
3,909¥12,412¥ 6,559
10,977¥17,537$ 91,390
42,016$133,407

15. Financial Instruments
For the year ended March 31, 2010
Overview of financial instruments(b) Nature and risks of financial instruments and our risk management structure
Trade receivables, which include notes receivable and accounts receivable, are exposed to the credit risk of our customers. To manage
this risk, in accordance with the Group’s credit control rules, each group company monitors the financial condition of its major customers, as well as managing the maturity profiles and outstanding balances of the receivables on a customer by customer basis.
Trade receivables denominated in foreign currency are exposed to foreign currency risk. In principle, forward foreign exchange
contracts are used to hedge the net position after offsetting foreign currency denominated payables.
Investment securities are exposed to the risk of market price fluctuation. However such securities are composed of mainly thestocks of companies with which the Group has business relationships.
Trade payables, which include notes payable and accounts payable, are mostly expected to be settled within one year. While trade
payables include certain payables denominated in foreign currencies, in principle these are managed by netting against foreign currency denominated receivables.
Floating rate bank borrowings are exposed to interest rate risk. For some of our long-term bank borrowings, derivative transactions(interest rate swaps) are used as hedging instruments on an individual loan contract basis to hedge the interest payable fluctuation risk.
Such transactions meet the criteria of special accounting provisions for interest rate swaps, and therefore hedge effectiveness assessment is not required.
Certain intercompany loans are exposed to foreign currency risk, however derivative transactions are used as hedging instruments
for some of these loans.
In order to mitigate counterparty risks, the Group enters into derivative transactions only with highly rated financial institutions.
Trade payables and bank borrowings are exposed to liquidity risk. Each Group company manages these risks, by preparing cash
flow projections and other similar tools.
(c) Supplementary information about the fair value of financial instruments
The notional amount with respect to the derivative transactions presented in “Fair value of financial instruments” does not represent
the amount of market risk associated with the relevant derivative transactions.

mitsubishi motors corporation Annual Report 2010(a) Our policy to manage financial instruments
The Group’s capital management policy is to limit its investments to low-risk financial products and to obtain its required funds mainly
through bank borrowings. We use derivative instruments to hedge interest rate, foreign currency and similar risks, and we do not enter
into any speculative transactions.

49

Fair value of financial instruments
The carrying amount, fair value, and the difference between the carrying amount and the fair value of the financial instruments at March
31, 2010 were as follows. These financial instruments do not include any financial instrument for which it is extremely difficult to reasonably measure its fair value. (Refer to Note 15. 2)
In millions of yen
March 31, 2010

Cash and bank deposits
Notes and accounts receivable—trade
Finance receivables
Allowance for doubtful accounts (*1)
mitsubishi motors corporation Annual Report 201050

Investment securities (*2)
Total assets
Notes and accounts payable—trade
Short-term loans payable
Long-term loans payable (*3)
Accrued expenses and accounts payable (*4)
Total liabilities
Derivative transactions (*5)

Carrying
amount¥264,323
121,385
67,336(5,550)61,785
20,296¥467,790
265,028
125,851
266,697
101,190¥758,768
8,956

Fair value

Difference¥264,323
121,385¥

––61,07920,296¥467,084
265,028
125,851
267,638
101,190¥759,709
8,956

(705)
–
¥(705)
–
–
940
–
¥ 940
–

In thousands of U.S. dollars
Carrying
amount$2,840,964
1,304,661
723,731(59,653)664,077
218,143$5,027,846
2,848,543
1,352,659
2,866,485
1,087,607$8,155,295
96,261

Fair value

Difference$2,840,964
1,304,661$––656,490
218,143$5,020,259
2,848,543
1,352,659
2,876,594
1,087,607$8,165,404
96,261(7,587)–$(7,587)––
10,108–$10,108–(*1) The allowance for doubtful accounts recognized for the individual financial receivable is deducted from the carrying amount.
(*2) Investments presented on the balance sheets consist of Investment securities of ¥64,820 million ($696,693 thousand), which include Securities with market value of¥20,296 million ($218,143) and Non-listed stocks and stocks of unconsolidated subsidiaries and affiliates of ¥44,524 million ($478,549) (refer to Note 15.2), and Other
investments in unconsolidated subsidiaries and affiliates of ¥13,839 million ($148,745 thousand) at March 31, 2010.
(*3) Long-term debts presented on the balance sheets consist of Long-term loans payable of ¥266,697 million ($2,866,485 thousand) and bonds of ¥200 million ($2,149
thousand) at March 31, 2010.
(*4) Accounts payable—other and accrued expenses presented on the balance sheets consist of Accrued expenses and accounts payable of ¥101,190 million ($1,087,607
thousand) and Allowance for product warranties of ¥26,331 million ($283,009 thousand) at March 31, 2010.
(*5) The amount of the receivable/payable derived from derivative transactions is presented on a net basis.
Note: 1.	Method to measure the fair value of the financial instruments, and other securities and derivative transactions.
		Assets
		Cash and bank deposits
			The carrying amounts are used as fair values of these items as these items are settled within a short period of time and the fair values are nearly equal to suchcarrying amounts
		Notes and accounts receivable—trade			The carrying amounts are used as fair values of these items as these items are generated in the normal course of business operations and principally settled
within a short period of time and the fair values are nearly equal to such carrying amounts.
		 Finance receivables
			The finance receivables are classified by certain terms to maturity, and the fair values of these items are determined based on the present values of the future
cash flows that are discounted at the appropriate indicative rates such as rates of government bonds adding the credit risk premiums based on the credit risk
classes respectively.
		Investment securities
			The fair values of investment securities are based on the market value. Refer to Note 6, “Investments,” regarding the details of the securities classified by the
purpose of holding.
		 Liabilities
		Notes and accounts payable—trade, Short-term loans payable and Accrued expenses and accounts payable			The carrying amounts are used as fair values of these items as these items are settled within a short period of time and the fair values are nearly equal to suchcarrying amounts.
		 Long-term loans payable			The long-term loans payable are classified by certain terms to maturity, and the fair values of these items are determined based on the present values of the total
amount of principal and interest that are discounted by using the prevailing interest rates that would be presumably applied if similar loans were newly made.
		 Derivative transactions
			Refer to Note 16, “Derivative Financial Instruments.”
2. Financial instruments for which it is extremely difficult to reasonably measure the fair value
Carrying amountMarch 31, 2010

In millionsof yenIn thousands of
U.S. dollars

Non-listed stocks and stocks of unconsolidated subsidiaries and affiliates¥44,524$478,549

	These financial instruments do not have any quoted market price, and the future cash flow can not be estimated and it would be recognized as extremely difficult toreasonably measure the fair value. Accordingly these are not included in Investment securities.

3.	Maturity profile of the monetary receivables subsequent to March 31, 2010

March 31, 2010

2011
2012
2013
2014
2015
Thereafter
Total

Bank
deposits

Financereceivables¥263,918–––––¥263,918¥116,524
1,011
993
988
378
1,490
¥121,385¥22,139
294
2,826
10,50318,017
13,553¥67,336

In thousands of U.S. dollars

deposits

Notes andaccounts
receivable—trade

Financereceivables$2,836,615
–
–
–
–
–
$2,836,615$1,252,413
10,867
10,674
10,621
4,067
16,017$1,304,661$237,961
3,163
30,380112,891
193,658
145,677$723,731

Bank

4.	Maturity profile of the long-term loans payable subsequent to March 31, 2010		Refer to Note 8 “Short-term Loans payable, Long-term Debt and Lease Obligations.”(Additional information)
Effective from the year ended March 31, 2010, MMC has adopted the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, issued on March 10, 2008) and the “Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ GuidanceNo. 19, issued on March 10, 2008).

16. Derivative Financial Instruments
For the year ended March 31, 2009(a) Nature of and policy for derivative transactions
MMC and its consolidated subsidiaries utilize derivative financial instruments, including forward foreign exchange contracts, crosscurrency swaps and interest rate swaps to manage their exposure to fluctuations in foreign currencies and interest rates. MMC and its
consolidated subsidiaries do not utilize derivatives for speculation or trading purposes.

mitsubishi motors corporation Annual Report 2010

In millions of yen
Notes andaccounts
receivable—trade

51(b) Risk
MMC and its consolidated subsidiaries are exposed to the risk of credit loss in the event of nonperformance by the counterparties tothe derivatives, but any such loss would not be expected to be material because MMC and its consolidated subsidiaries enter into
derivative transactions only with financial institutions with high credit ratings. The notional amounts of the derivative financial instruments do not necessarily represent the amounts exchanged by the parties and, therefore, are not a direct measure of MMC’s risk exposure in connection with derivatives.
All the transactions related to derivative financial instruments are for the purpose of hedging. MMC and its consolidated subsidiaries do not enter into derivative contracts for which significant volatility would have any significant influence on its operations.
(c) Control
MMC does not enter into derivative contracts for trading purposes or on the anticipation of gains from short-term market movements.
Derivative transactions are appropriately pre-approved by managing directors in charge of finance group headquarters. MMC
approves derivative transactions of consolidated subsidiaries as appropriate, and in accordance with policies established for eachsubsidiary, which require the appropriate approval of managing directors in charge of finance group headquarters.

Summarized below are the notional amounts and the estimated fair values (based on the prices provided by counterparty financial
institutions) of the derivative positions at March 31, 2010 and 2009:(a) Derivative transactions that are not subject to hedge accounting
Forward foreign exchange contracts and cross currency swaps
In millions of yen
March 31, 2010

Notional
amountmitsubishi motors corporation Annual Report 2010

Forward foreign exchange contracts: Sell:¥932  US $   £ stg
1,864  Canada $1,903  Australian $830   Japanese ¥103,977 Buy:
1,197  Thai B|   Japanese ¥244
Cross currency swaps: Sell:
28,482   Japanese ¥Total–

Due morethan 1 year

Fair value

Unrealized
gain (loss)

¥

¥

¥

–
–
–
–
–

0
(1)
(82)
(39)
6,904

0
(1)
(82)
(39)
6,904

In thousands of U.S. dollars
Notional
amount$

10,02720,04020,458
8,922
1,117,553

Due morethan 1 year

$

–
–
–
–
–

Fair value

Unrealized
gain (loss)

$

$

10
(20)
(890)
(424)
74,214

10
(20)
(890)
(424)
74,214

–
–

94
(1)

94
(1)

12,875
2,628

–
–

1,010
(20)

1,010
(20)

18,626–

2,059¥8,933

2,059¥8,933306,132–

200,196–

22,139$96,020

22,139$96,020

Notional
amountDue morethan 1 year

Fair value

Unrealized
gain (loss)$142,798–$142,798
–

$238
$238

$238
$238

Interest rate options

52

In millions of yen
March 31, 2010

Interest rate options:
 Buy:
Total

Notional
amountDue morethan 1 year

Fair value

Unrealized
gain (loss)¥13,285–¥13,285
–

¥22
¥22

¥22
¥22

In thousands of U.S. dollars

The method to determine fair values is based on quotations obtained from financial institutions.

(b) Derivative transactions that are subject to hedge accounting
Forward foreign exchange contracts
In millions of yen
March 31, 2010

Forward foreign exchange contracts: Sell:   Japanese ¥Total

Hedged item

Interest Income

Notional
amountDue morethan 1 year

¥4
–

–
–

In thousands of U.S. dollars

Fair value

Notional
amountDue more than
1 yearFair value

¥0
¥0

$ 45
–

–
–

$3
$3

The method to determine fair values is based on quotations obtained from financial institutions.

Interest rate swaps
In millions of yen
March 31, 2010

Pay—fixed, receive—floating:Japanese ¥Hedged item

Long-termloans payable

Total

Notional
amountDue morethan 1 year

¥7,637–¥3,000–In thousands of U.S. dollars

Fair value

Notional
amountDue more than
1 yearFair value––$82,082–$32,244–––

Forward foreign exchange contracts and cross currency swaps
In millions of yen
March 31, 2009

Forward foreign exchange contracts: Sell:  US $   Euro   Japanese ¥ Buy:  Thai B   Japanese ¥Cross currency swaps: Sell:   £ stg   Japanese ¥  Others
Total

Notional
amountDue morethan 1 year

¥ 4,841
9,449
55,658

¥

1,158
844

Fair value

Unrealized
gain (loss)–––¥ 4,933
8,725
59,025¥ (92)723(3,367)

–
–

1,224
847

66
2

53

391
17,912462––¥17,912
–
–

0
821
(0)
–

0
821
(0)
¥(1,846)

Notional
amountDue morethan 1 year

Fair value¥31,187¥31,187¥(571)

Within 1
year

From 1year to 3

Over 3
years

¥–
–
–

¥9,8237.5
5.8¥ 21,364
6.5
4.8Interest rate swaps
In millions of yen
March 31, 2009

Interest rate swaps: Pay—fixed, receive—floating
Total

Unrealized
gain (loss)¥(571)¥(571)In millions of yen
March 31, 2009

Pay—fixed, receive—floating Notional amount Average pay—fixed rate (%) Average receive—floating rate (%)

mitsubishi motors corporation Annual Report 2010

As interest rate swaps under the special hedge provisions are accounted together with hedged item (long-term loans payable),their fair values are reflected in the fair value of long-term loans payable.

The method to determine fair values is based on quotations obtained from financial institutions.
Derivative financial instruments, principally forward exchange contracts and interest swaps, which qualify as hedges and are accounted
for using the deferred hedge accounting method, are excluded from the above table according to the disclosure requirements.

17. Retirement Benefits
MMC and its consolidated subsidiaries have defined benefit pension plans for their employees. The plans include contributory plans inaccordance with the Welfare Pension Institute Law of Japan, tax-qualified plans, and non-contributory severance plans. Additional
retirement benefits are paid in certain cases upon an employee’s retirement. Certain foreign consolidated subsidiaries have defined
contribution pension plans. At March 31, 2010, MMC and its consolidated subsidiaries have 1 fund for contributory plans in accordancewith the Welfare Pension Insurance Law, and 13 funds for tax-qualified plans. MMC and its consolidated subsidiaries have 16 noncontributory severance plans.
The funded status of multi-employer pension plans included in the above plans which are accounted for as defined contribution
schemes as of March 31, 2009 was as follows:
In millions of yen

mitsubishi motors corporation Annual Report 2010

54

Pension Plan assets
Benefit obligations under pension plan rules
Difference¥21,251
26,275(5,024)

The ratio of MMC and its consolidated subsidiaries’ payments to total contributions of the multi-employer plans as of March 31,
2009 was 59.3%. This ratio is not equal to the ratio of the amount actually contributed by the MMC group.
Defined Benefit Plans
The discount rates used to determine the retirement benefit obligation were 1.5% – 2.0% for MMC and its domestic consolidated
subsidiaries, 4.7% – 10.5% for its foreign consolidated subsidiaries, and 1.5% – 2.5% for MMC and its domestic consolidated subsidiaries, 3.7% – 11.7% for its foreign consolidated subsidiaries at March 31, 2010 and 2009, respectively. The rates of return on plan assets
assumed were 0.7% – 4.0% for MMC and its domestic consolidated subsidiaries, 5.0% – 8.0% for its foreign consolidated subsidiaries,
and 0.8% – 4.0% for MMC and its domestic consolidated subsidiaries, 4.9% – 8.0% for its foreign consolidated subsidiaries, at March
31, 2010 and 2009, respectively.
Prior service cost is amortized using the straight line method over periods of 1 to 17 years and 1 to 21 years for the years ended
March 31, 2010 and 2009. These periods are within the estimated average remaining service years of the employees.
The amortization period for actuarial gains and losses starts from the subsequent fiscal year and actuarial gains and losses areamortized by the straight line method over the periods of 5 to 15 years and 5 to 21 years for the years ended March 31, 2010 and 2009.
These periods are within the estimated average remaining service years of the employees.
Unrecognized net obligations and assets at the date of initial application are amortized within one year.
The retirement benefit obligation for MMC and its consolidated subsidiaries’ employees’ defined benefit plans at March 31, 2010
and 2009 are summarized as follows:

In millions of yen

Retirement benefits obligation
Pension plan assets at fair value
Unfunded status
Unrecognized actuarial losses
Unrecognized prior service costs
Net recognized retirement benefits obligation
Prepaid pension premiums
Provision for retirement benefits

In thousands of
U.S. dollars

2010

2009

2010

¥(171,671)
57,626(114,044)
20,337(5,651)(99,358)
6,995¥(106,354)¥(178,133)
47,566(130,566)
27,057
3,190(100,318)
5,993¥(106,311)$(1,845,133)
619,377(1,225,755)
218,586(60,747)(1,067,916)
75,188$(1,143,104)

Some of the consolidated subsidiaries adopt the simplified method for the calculation of retirement benefits obligation.

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses
Amortization of prior service costs
OthersPension expenses

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 7,804
4,372(2,841)
4,840
(595)
–
¥13,580¥ 8,668
4,793(3,637)
3,103
260
101
¥13,290$ 83,886
46,991(30,536)
52,025(6,401)–$145,965

In addition to the pension expenses above, additional retirement benefits of ¥1,168 million ($12,557 thousand) and ¥8,832 million
were paid and recorded as other gain (loss), net for the years ended March 31, 2010 and 2009, respectively.
Pension expenses of consolidated subsidiaries, which adopt the simplified method, are included in the service costs.

18. Income Taxes
MMC and its domestic consolidated subsidiaries are subject to corporate, resident and enterprise taxes based on their taxable income.
Income taxes of the foreign consolidated subsidiaries are generally calculated based on the tax rates applicable in their countries ofincorporation. The consolidated tax payment system is applied at March 31, 2010 and 2009.
The effective tax rates reflected in the accompanying consolidated statements of operations for the year ended March 31, 2010
differ from the statutory tax rate for the following reasons:mitsubishi motors corporation Annual Report 2010

Pension expenses for MMC and its consolidated subsidiaries’ employees’ retirement defined benefit plans for the years ended
March 31, 2010 and 2009 consisted of the following:(%)

Statutory income tax rate for MMC
Equity in earnings of affiliates
Dividends received deduction
Difference in tax rate of overseas subsidiaries and others
Income taxes as a percentage of income before income taxes and minority interests

55

2010

2009

40.2
(15.8)
(3.2)
15.8
37.0

Due to loss before income
taxes and minority interests, the information isomitted from the notes.

The significant components of deferred tax assets and liabilities as of March 31, 2010 and 2009 consisted of the following:

Deferred tax assets: Net operating loss carry forward Accrued retirement benefits Allowance for doubtful accounts Allowance for product warranties Accounts payable—warranties
Fixed assets (incl. impairment losses) Others
Less valuation allowance
Total deferred tax assets
Deferred tax liabilities: Reserves under the Special Taxation Measures Law Unrealized holding gain on securities
Fair value adjustments relating to land
 Accelerated depreciation in overseas consolidated subsidiaries Others
Total deferred tax liabilities
Net deferred tax liabilities

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 253,602
45,641
6,044
11,352
4,724
33,00759,230(388,634)
24,968¥ 212,748
46,5595,916
14,525
7,812
38,152
61,766(349,819)
37,661$2,725,731
490,556
64,971122,015
50,773354,767
636,618(4,177,066)
268,366(323)(3,663)(4,511)(13,084)(16,069)(37,651)¥ (12,682)

(380)
(803)
(4,557)(23,678)(17,185)(46,605)¥ (8,944)(3,473)(39,370)(48,492)(140,631)(172,714)(404,683)$ (136,317)

Deferred tax assets and liabilities at March 31, 2010 and 2009 are included in the accompanying consolidated balance sheets as follows:

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net deferred tax liabilities

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 2,007
6,060–(20,750)¥(12,682)¥ 1,398
8,206–(18,549)¥ (8,944)$ 21,573
65,139–(223,029)$(136,317)

19. Investment and Rental Property
mitsubishi motors corporation Annual Report 201056

For the fiscal year ended March 31, 2010, no note is provided as the amount of the investment and rental property is considered immaterial.
(Additional information)
Effective for the year ended March 31, 2010, the “Accounting Standard for Disclosures about Fair Value of Investment and Rental­Property” (ASBJ Statement No. 20, issued on November 28, 2008) and the “Guidance on Accounting Standard for Disclosures about
Fair Value of Investment and Rental Property” (ASBJ Guidance No. 23, issued on November 28, 2008) have been adopted.

20. Segment Information(a) Business segments
The business segment information for MMC and its consolidated subsidiaries for the years ended March 31, 2010 and 2009 is summarized
as follows:

Net sales: Automobiles
Financial services  Total Corporate and eliminations  Consolidated
Operating income (loss): Automobiles
Financial services  Total Corporate and eliminations  Consolidated
Total assets: Automobiles
Financial services  Total Corporate and eliminations  Consolidated
Depreciation: Automobiles
Financial services  Consolidated
Impairment loss: Automobiles
Financial services  Consolidated
Capital expenditures: Automobiles
Financial services  Consolidated

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥1,434,736
10,8781,445,614
1¥1,445,616¥1,961,563
11,891
1,973,454
117¥1,973,572$15,420,640
116,923
15,537,564
13$15,537,578

¥

¥

$

¥

11,493
2,425
13,9191
13,920

¥

3,388
419
3,808
117
3,926

$

123,535
26,067
149,603
13
149,617¥1,184,603
90,385
1,274,988(16,319)¥1,258,669¥1,042,197
82,977
1,125,174
12,834¥1,138,009$12,732,195
971,467
13,703,662(175,399)$13,528,263¥69,393
2,457
71,850¥ 79,972
4,436¥ 84,408

$

214
–
214

¥ 22,121
5,372¥ 27,494$

49,378
5,577
54,955¥ 76,310
13,364¥ 89,675

$

¥
¥
¥
¥
¥

$

$

$

745,843
26,410772,253
2,303
–
2,303
530,718
59,942590,660

(b) Geographical segments
The geographical segment information for MMC and its consolidated subsidiaries for the years ended March 31, 2010 and 2009 issummarized as follows:

Net sales:Japan North America
Europe Asia Other areas  Total Corporate and eliminations  Consolidated
Operating income (loss):Japan North America
Europe Asia Other areas  Total Corporate and eliminations  Consolidated
Total assets:
Japan North America
Europe Asia Other areas  Total Corporate and eliminations  Consolidated

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥1,243,926
165,984
190,968
274,500
181,954
2,057,333(611,717)¥1,445,616¥1,600,176
232,063356,143305,006
173,395
2,666,785(693,212)¥1,973,572$13,369,801
1,784,007
2,052,542
2,950,348
1,955,659
22,112,359(6,574,781)$15,537,578

mitsubishi motors corporation Annual Report 2010

Note 1.	Segments are divided by sector and by market.
2.	Major products by business segment
		Automobiles . . . . . . . . . . . Passenger cars
		 Financial services . . . . . . . Sales-finance products
3.	Changes in accounting treatment
		 (1)	Accounting standard for measurement of inventories
			As described in Note 2 “Changes in Accounting Policies,” from the beginning of previous fiscal year, the “Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9, issued on July 5, 2006) has been adopted. Accordingly, the operating income for “Automobiles” decreased by ¥245 million for the fiscal
year ended March 31, 2009 as compared to the amount that would have been recorded under the previous method.
		 (2) 	Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements
			As described in Note 2 “Changes in Accounting Policies,” from the beginning of previous fiscal year, the “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF Practical Solution No. 18, issued on May 17, 2006) has been adopted. Accordingly,
the operating income for “Automobiles” increased by ¥1,943 million for the fiscal year ended March 31, 2009 as compared to the amount that would have beenrecorded under the previous method.

57

¥

¥

(9,846)(4,379)5,061
13,616
8,570
13,021898
13,920¥1,091,321
159,081
119,258
234,235
64,485
1,668,382(409,712)¥1,258,669

2,561(23,605)(4,461)
20,618
1,055(3,831)
7,757¥ 3,926$(105,826)(47,074)
54,400146,347
92,111
139,957
9,659$149,617¥932,233
166,008
120,420
201,727
53,0081,473,399(335,389)¥1,138,009$11,729,591
1,709,816
1,281,797
2,517,580
693,098
17,931,884(4,403,620)$13,528,263¥Note: 1.	National and regional groupings are classified by geographical proximity and mutual relevance of business activities.
2.	Main countries and regions outside Japan are grouped as follows:		 (1)	North America . . . . . . The United States
		 (2) Europe . . . . . . . . . . . . . The Netherlands		 (3)	Asia . . . . . . . . . . . . . . . Thailand, Philippines		 (4)	Other areas . . . . . . . . . Australia, New Zealand, UAE, Puerto Rico
3.	Changes in accounting treatment
		 (1)	Accounting Standard for Measurement of Inventories
			As described in Note 2 “Changes in Accounting Policies,” from the beginning of previous fiscal year, the “Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9, issued on July 5, 2006) has been adopted. Accordingly, the operating income for “Japan” decreased by ¥245 million for the fiscal year
ended March 31, 2009 as compared to the amount that would have been recorded under the previous method.
		 (2)	Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements
			As described in Note 2 “Changes in Accounting Policies,” from the beginning of previous fiscal year, the “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF Practical Solution No. 18, issued on May 17, 2006) has been adopted. Accordingly,
the operating income for “Asia” increased by ¥1,943 million for the fiscal year ended March 31, 2009 as compared to the amount that would have been recorded
under the previous method.

(c) Overseas sales
Overseas sales, which include export sales of MMC and its domestic consolidated subsidiaries and sales (other than exports to Japan)of the foreign consolidated subsidiaries for the years ended March 31, 2010 and 2009 are summarized as follows:

mitsubishi motors corporation Annual Report 2010

58

Overseas sales: North America
Europe Asia Oceania Other areas  TotalConsolidated sales

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥ 175,391
269,221262,507
152,798
217,216¥1,077,136¥1,445,616¥ 232,202
631,658
216,561–494,769¥1,575,192¥1,973,572$ 1,885,118
2,893,612
2,821,449
1,642,289
2,334,660$11,577,129$15,537,578(%)

Overseas sales as a percentage of consolidated sales: North America
Europe Asia Oceania Other areas  Total

12.1
18.6
18.2
10.6
15.0
74.5

11.8
32.0
11.0
–
25.0
79.8

Note: 1.	National and regional groupings are by geographical proximity and mutual relevance of business activities.
2.	Main countries and regions outside Japan are grouped as follows:		 (1)	North America . . . . . . The United States
		 (2) Europe . . . . . . . . . . . . . The Netherlands, Italy, Germany, Russia, Ukraine		 (3)	Asia. . . . . . . . . . . . . . . . Thailand, Malaysia, Taiwan
		 (4)	Oceania . . . . . . . . . . . . Australia, New Zealand		 (5)	Other areas . . . . . . . . . UAE, Puerto Rico
3.	Overseas sales are classified by the region of the wholesaler or end users. The figures consist of sales outside of Japan of MMC and its consolidated subsidiaries.
4.	Change in the geographic segments
		The overseas sales for “Oceania,” which had been included in “Other areas” in the previous fiscal year, have exceeded 10% of total consolidated sales. Accordingly, they are presented separately from this fiscal year.
		The overseas sales for “Oceania” for the previous fiscal year were ¥137,607 million, and the percentage of total consolidated sales was 7.0%. The overseas sales
for “Other areas,” excluding those for “Oceania,” were ¥357,162 million ($3,838,807 thousand), and the percentage of total consolidated sales was 18.0% for thesame period.

21. Related Party Transactions
MMC entered into the following transactions with related parties during the years ended March 31, 2010 and 2009:(Additional Information)
Effective for the year ended March 31, 2009, “Accounting Standard for Related Party Disclosure” (ASBJ Statement No. 11, issued on
October 17, 2006) and the “Guidance on Accounting Standard for Related Party Disclosure” (ASBJ Guidance No. 13, issued on­October 17, 2006) have been adopted.
Notwithstanding, there is no change in the scope of disclosure compared to the previous fiscal years.

Related Party Transactions
Transactions between MMC and the Related Parties(a) Transaction with the parent or major shareholder (major corporate shareholder) of the reporting company (MMC)

Party type:
Party name:
Address:
Capital:Business:% of voting stock held:
Relationship with the Related Party:
Detail of transaction:
Transaction amount:
Account title:
Balance at year end:

Major shareholder
Mitsubishi Corporation
Chiyoda-Ku, Tokyo, Japan¥203,228 million
Wholesale trading
Direct 13.99 Indirect 0.00
Sales of products; import of materials for
production; mutual directorships
Sales¥233,848 million($2,513,420 thousand)Accounts receivable¥15,910 million($171,007 thousand)(b) Transaction with the unconsolidated subsidiaries and affiliates of the reporting company (MMC)
March 31, 2010

Party type:
Party name:
Address:
Capital:Business:% of voting stock held:
Relationship with the Related Party:
Detail of transaction:
Transaction amount:
Account title:
Balance at year end:

Affiliate
JATCO Ltd.
Fuji, Shizuoka, Japan¥29,935 million
Development, manufacture and sale oftransmissions and automobile components
Direct 15.04
Purchase of automobile components;
mutual directorships
Purchases¥63,908 million($686,893 thousand)Accounts payable¥15,002 million($161,249 thousand)Note 1.	Consumption tax is excluded from transaction amount and included in the balance at year end.
2.	Contract terms and the policy to determine the contract terms:
		Sales price of products is determined based on market price and overall cost.
3.	Purchase price of automobile components is determined based on estimated cost, current component price, and market prices of each component.

mitsubishi motors corporation Annual Report 2010

March 31, 201059

Significant affiliates
Summary of financial information of the significant affiliates
JATCO Ltd. is considered as the significant affiliate for the year ended March 31, 2010, and a summary of its financial information forthe same fiscal year is shown as below:
Total current assets
Total non-current assets¥133,950 million ($1,439,707 thousand)¥232,645 million ($2,500,491 thousand)Total current liabilities¥173,943 million ($1,869,551 thousand)Total non-current liabilities ¥70,708 million ($759,974 thousand)mitsubishi motors corporation Annual Report 201060

Total net assets¥121,944 million ($1,310,671 thousand)

Sales
Income before taxes
Net income¥432,596 million ($4,649,576 thousand)¥19,313 million ($207,583 thousand)¥12,840 million ($138,014 thousand)Related Party Transactions
Transactions between MMC and the Related Parties(a) Transaction with the parent or major shareholder (major corporate shareholder) of the reporting company (MMC)
March 31, 2009

Party type:
Party name:
Address:
Capital:Business:% of voting stock held:
Relationship with the Related Party:
Detail of transaction:
Transaction amount:
Account title:
Balance at year end:

Major shareholder
Mitsubishi Corporation
Chiyoda-Ku, Tokyo, Japan¥202,816 million
Wholesale trading
Direct 14.0 Indirect 0.0
Sales of products; import of materials for
production; mutual directorships
Sales¥251,381 million
Accounts receivable¥7,476 million(b) Transaction with the company who has the same parent as the reporting company (MMC) and/or the subsidiary of other affiliate of the reporting company
March 31, 2009

Party type:
Party name:
Address:
Capital:Business:% of voting stock held:
Relationship with the Related Party:
Detail of transaction:
Transaction amount:
Account title:
Balance at year end:

Majority-owned company by a major
shareholder of MMC
MC Automobile (Europe) N.V.
Amsterdam, The NetherlandsC= 107,572 thousand
Controlling company of automobile
business operations in Europe
N/A
Consignment sales of products
Sales¥230,327 million
Accounts receivable¥880 million

Note: 1.	Consumption tax is excluded from transaction amount and included in the balance at year end.
2.	Contract terms and the policy to determine the contract terms:
	Sales price of products is determined based on market price and overall cost.

22. Income and Equity per Share

Net income (loss) per share of common stock
Basic
DilutedStockholders’ equity per share of common stock

In yenIn U.S. dollars

2010

2009

2010

¥ 0.860.51(38.54)¥(9.91)–(40.47)$ 0.010.01(0.41)

Diluted amounts per share of common stock are not included for the year ended March 31, 2009 due to the net loss recorded.
The computations of net income per share of common stock for the year ended March 31, 2010 and 2009 are as follows:

Numerator for basic net income (loss) per share of common stock: Net income (loss) Income not available to common stockholders Income available to common stockholders
Denominator for net income (loss) per share of common stock:
Weighted average number of shares (in thousands) Number of dilutive potential common shares (in thousands)(Preferred stock)(Number of stock options exercised)

In millions of yen

In thousands of
U.S. dollars

2010

2009

2010

¥4,758–¥4,758¥(54,883)–¥(54,883)$51,139–$51,139

5,537,858
3,880,647(3,880,647)–

5,537,816–––

mitsubishi motors corporation Annual Report 2010

Net income and equity per share of common stock for the years ended March 31, 2010 and 2009 are summarized as follows:61

In numbers of stock, 966 thousand shares relating to stock options were outstanding at March 31, 2009.

23. Stock Option Plans
Information regarding subscription, size and fluctuation of stock options as of March 31, 2010 and 2009 are as follows:(a) Subscription of stock options
March 31, 2010

Date of approval byshareholders’ meeting:Grantees:

mitsubishi motors corporation Annual Report 201062

Date of granted:
Class and number of shares granted:
Condition of settlement of rights:

Required service period:
Exercise period:

June 25, 2002
5 directors, 25 executive officers and
80 employees
June 2, 2003
Common stock 1,994,000
Limited to directors, executive officers,
employees of the company or its
subsidiaries at exercise date (except for
those who no longer hold the above
positions due to termination of terms,
retirement, or other valid reasons)
No provisions
From July 1, 2004 to June 30, 2009(b) Size and fluctuation of stock options
Outstanding stock options during the year ended March 31, 2010 converted to numbers of shares are as follows:
March 31, 2010

Non-vested (number of shares): Outstanding at the beginning of the year:
Granted during the year:
Forfeited during the year:
Vested during the year: Outstanding at the end of the year:
Vested (number of shares): Outstanding at the beginning of the year:
Vested during the year:
Exercised during the year:
Forfeited during the year: Outstanding at the end of the year:
Exercise price:
Weighted average market price at exercise date:
Fair evaluation price on grant date:

–
–
–
–
–
966,000–
58,000908,000
–
¥173
¥178
–

(a) Subscription of stock options

Date of approval byshareholders’ meeting:Grantees:
Date of granted:
Class and number of shares granted:
Condition of settlement of rights:

Required service period:
Exercise period:

June 25, 2002
5 directors, 25 executive officers and
80 employees
June 2, 2003
Common stock 1,994,000
Limited to directors, executive officers,
employees of the company or its
subsidiaries at exercise date (except for
those who no longer hold the above
positions due to termination of terms,
retirement, or other valid reasons)
No provisions
From July 1, 2004 to June 30, 2009(b) Size and fluctuation of stock options
Outstanding stock options during the year ended March 31, 2009 converted to numbers of shares are as follows:
March 31, 2009Non-vested (number of shares): Outstanding at the beginning of the year:
Granted during the year:
Forfeited during the year:
Vested during the year: Outstanding at the end of the year:
Vested (number of shares): Outstanding at the beginning of the year:
Vested during the year:
Exercised during the year:
Forfeited during the year: Outstanding at the end of the year:
Exercise price:
Weighted average market price at exercise date:
Fair evaluation price on grant date:

–
–
–
–
–
975,000
–
1,000
8,000
966,000
¥173
¥183
–

mitsubishi motors corporation Annual Report 2010

March 31, 200963

24. Business Combinations
N/A

25. Subsequent Event
N/Amitsubishi motors corporation Annual Report 2010

64

65

mitsubishi motors corporation Annual Report 2010

Consolidated Subsidiaries and Affiliates
As of March 31, 2010

Company

Incorporated in

Consolidated subsidiaries

mitsubishi motors corporation Annual Report 201066

Hokkaido Mitsubishi Motors Sales Co., Ltd.

Japan

Higashi Nihon Mitsubishi Motors Sales Co., Ltd.

Japan

Kanto Mitsubishi Motors Sales Co., Ltd.

Japan

Niigata Mitsubishi Motors Sales Co., Ltd.

Japan

Chubu Mitsubishi Motors Sales Co., Ltd.

Japan

Nishi Nihon Mitsubishi Motors Sales Co., Ltd.

Japan

Mitsubishi Motors Parts Sales Co., Ltd.

Japan

Higashi Kanto MMC Parts Sales Co., Ltd.

Japan

Shikoku MMC Parts Sales Co., Ltd.*2

Japan

Pajero Manufacturing Co., Ltd.

Japan

Mitsubishi Automotive Accessories & Products Co., Ltd.

Japan

Mitsubishi Automotive Logistics Technology Co., Ltd.

Japan

Mitsubishi Automotive Engineering Co., Ltd.

Japan

Suiryo Plastics Co., Ltd.

Japan

Mitsubishi Motors North America, Inc. (MMNA)

U.S.A.

Mitsubishi Motors R&D of America, Inc. (MRDA)

U.S.A.

Mitsubishi Motor Sales of Canada, Inc. (MMSCAN)

CanadaMitsubishi Motors Credit of America, Inc. (MMCA)

U.S.A.

Mitsubishi Motor Sales of Caribbean, Inc. (MMSC)

Puerto Rico

Mitsubishi Motors Europe B.V. (MME)

Netherlands

Mitsubishi Motor R&D Europe GmbH (MRDE)

Germany

Mitsubishi Motor Sales Netherlands B.V.

Netherlands

Mitsubishi Motors Deutschland GmbHGermany

Mitsubishi Motors France S.A.S

FranceMitsubishi Motors Belgium NV

Belgium

MMC International Finance (Netherlands) B.V.

Netherlands

Netherlands Car B.V. (NedCar)

Netherlands

Mitsubishi Motors Australia, Ltd. (MMAL)

Australia

Mitsubishi Motors New Zealand Ltd. (MMNZ)New Zealand

Mitsubishi Motors (Thailand) Co., Ltd. (MMTH)

Thailand

MMTh Engine Co., Ltd.

ThailandMitsubishi Motors Philippines Corp. (MMPC)

Philippines

Asian Transmission Corp. (ATC)Philippines

Mitsubishi Motors Middle East and Africa FZE

U.A.E.

Note: MMC has 23 other subsidiaries outside Japan in addition to the above.

Equity method affiliates
Muroran Mitsubishi Motors Sales Co., Ltd.

Japan

Tokachi Mitsubishi Motors Sales Co., Ltd.

Japan

Ibaraki Mitsubishi Motors Sales Co., Ltd.

Japan

Meihoku Mitsubishi Motors Sales Co., Ltd.

Japan

Mie Mitsubishi Motors Sales Co., Ltd.

Japan

Kagawa Mitsubishi Motors Sales Co., Ltd.

Japan

Miyazaki Mitsubishi Motors Sales Co., Ltd.

Japan

MMC Diamond Finance Corp.

Japan

Mitsubishi Motors do Portugal S.A.

Portugal

Vina Star Motors Corporation

Vietnam

Note: MMC has 12 other affiliates outside Japan in addition to the above.

Other Associated Companies
Company

Incorporated in

Mitsubishi Heavy Industries, Ltd.

Japan

*1 Figures in parentheses represent indirect shares.			
*2 Although MMC's equity holding is less than 50%, this affiliate is listed as a subsidiary because MMC exercises effective control over the company.

Business Lines

MMC Share of Voting Rights (%)*1

JPY 100

Automobile sales

100.0

JPY 100

Automobile sales

100.0

JPY 100

Automobile sales

100.0

JPY 100

Automobile sales

100.0

JPY 100

Automobile sales

100.0

JPY 100

Automobile sales

100.0

JPY 100

Automobile parts sales

100.0 (31.5)

JPY 100

Automobile parts sales

56.0 (10.0)

JPY 100

Automobile parts sales

50.0 (8.0)

JPY 610

Automobile and parts manufacture, sales

100.0

JPY 300

Sales of automobile accessories, air conditioners

100.0

JPY 436

Automobile inspection, maintenance, transport, storage and packaging

82.8

JPY 350

Design and testing of automobiles and parts

100.0

JPY 100

Manufacture, sales of automobile parts

100.0

USD 398.8

Automobile importing, manufacturing, sales

100.0

USD 2.0

Product development, design, testing, certification

100.0 (100.0)

USD 1.3

Automobile importing, sales

100.0 (100.0)

USD 260.0

Automobile financing, leasing

100.0 (100.0)

USD 47.5

Automobile importing, sales

100.0

EUR 1282.9

Importing, sales of automobiles and parts

100.0

EUR 0.8

Product development, design, testing, certification

100.0 (100.0)

EUR 6.8

Automobile importing, sales

100.0 (100.0)

EUR 30.0

Automobile importing, sales

100.0 (100.0)

EUR 10.0

Automobile importing, sales

100.0 (100.0)

EUR 3.0

Automobile importing, sales

100.0 (100.0)

EUR 0.1

Procurement of funds, group company financing

100.0

EUR 250.0

Manufacturing, sales of automobiles and parts

100.0 (15.0)

AUD 1,789.9

Automobile importing, sales

100.0

NZD 48.0

Automobile importing, sales

100.0

THB 7,000.0

Automobile importing, assembly, sales

100.0

THB 20.0

Manufacturing of automobile engines

100.0 (100.0)

PHP 1,640.0

Automobile importing, assembly, sales

51.0

PHP 420.0

Manufacturing of automobile transmissions

94.7 (89.4)

UAD 10.0

Importing, sales of automobile parts

100.0

JPY 100

Automobile sales

29.0 (29.0)

JPY 60Automobile sales

35.0

JPY 30Automobile sales

40.0

JPY 70Automobile sales

28.6

JPY 58Automobile sales

24.8

JPY 50Automobile sales

23.0

JPY 60Automobile sales

38.8

JPY 3,000

Auto sales financing, leasing, rentals

47.0

EUR 16.5

Automobile importing, sales

50.0 (50.0)

USD 16.0

Manufacture and marketing of automobiles and parts

25.0

Capitalization (In millions of yen)

Business Lines

Share of Voting Rights in MMC (%)

265,608

Shipbuilding & ocean systems development, power systems, machinery & steel structures,aerospace, mass and medium-lot manufactured machinery and others

15.7 (0.5)

mitsubishi motors corporation Annual Report 2010

Capitalization (In millions)67Principal Production Facilities

8

r
e
123
456

7

q
wt
mitsubishi motors corporation Annual Report 2010

90 y

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Country/Region

Name

Major Products

Japan

1	Nagoya Plant–Okazaki

Outlander, Colt, Colt Plus, Grandis, ASX (RVR)

2	Mizushima Plant

Lancer (Galant Fortis), i, eK Wagon, Minicab

3	Pajero Manufacturing Co., Ltd.

Pajero (Montero), Delica D:5

4	Powertrain Plant–Kyoto

Engines5	Powertrain Plant–Shiga

Engines

6	Powertrain Plant–Mizushima

Engines, transmissions

7	Mitsubishi Motors North America, Inc. (MMNA)

Eclipse, Galant, Endeavor, Eclipse Spyder

Netherlands

8	Netherlands Car B.V. (NedCar)

Colt (European model), Outlander

Thailand9	Mitsubishi Motors (Thailand) Co., Ltd. (MMTh)

Triton, Pajero Sport, Lancer, Spacewagon (Grandis)

0	MMTH Engine Co., Ltd. (MEC)

Engines-	Mitsubishi Motors Philippines Corporation (MMPC)

Adventure, L300 (Delica), Lancer

U.S.A.

Philippines

China=	Asian Transmission Corporation (ATC)Transmissions

q GAC Changfeng Motor Co., Ltd. (CFA)

Pajerow	South East (Fujian) Motor Co., Ltd. (SEM)

Galant, Lancer, Zinger, L300 (Delica)e Shenyang Aerospace Mitsubishi Motors Engine Manufacturing, Co., Ltd. (SAME)

Enginesr	Harbin Dongan Automotive Engine Manufacturing, Co., Ltd. (DAE)Engines, transmissions

Taiwant	China Motor Corporation (CMC)

Colt Plus, Lancer Fortis, Outlander, Zinger

Vietnamy Vina Star Motors Corporation (VSM)

Zinger, Grandis-=

Investor Information
As of March 31, 2010

Company NameMITSUBISHI MOTORS CORPORATIONHead Office

5-33-8, Shiba, Minato-ku, Tokyo 108-8410, Japan

Established

April 22, 1970

Capital¥657,355,059,926

Number of Employees

Consolidated: 31,003 Non-consolidated: 12,831

Stock Listings

Tokyo Stock Exchange and Osaka Securities Exchange

Securities Code7211

Share Trading Unit

1,000 common shares; 1 preferred share

Number of Shares Outstanding

5,538,336,433

Number of Shareholders

Type

Number of issued shares

Number of shareholders

5,537,956,840

413,917First Series Class A

73,000

4

Second Series Class A

25,0007

Third Series Class A

1,000

1

First Series Class G

130,000

2

Second Series Class G

168,393

3

Third Series Class G

10,2001

Fourth Series Class G

30,000

1

COMMON SHARES

mitsubishi motors corporation Annual Report 2010

Telephone: +81-3-3456-1111

PREFERRED SHARES

Major Shareholders(Common Shares)

Name

Number of shares
held (thousands)% of total

Mitsubishi Heavy Industries, Ltd.

839,966

15.16

Mitsubishi Corporation

774,835

13.99

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

269,024

4.85

Japan Trustee Services Bank, Ltd. (Trust account)

77,072

1.39

The Master Trust Bank of Japan, Ltd. (Trust account)

69,364

1.25

MLPFS Custody(Standing proxy: Merrill Lynch Japan Securities Co., Ltd.)48,9870.88

Mitsubishi UFJ Trust and Banking Corporation(Standing proxy: The Master Trust Bank of Japan, Ltd.)32,166

0.58

Japan Trustee Services Bank, Ltd. (Trust account 1)

31,972

0.57

Japan Trustee Services Bank, Ltd. (Trust account 6)

29,6400.53

Japan Trustee Services Bank, Ltd. (Trust account 3)

29,5600.53

2,202,587

39.76

Total

Transfer Agent and Register

Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku, Tokyo, Japan(Contact)
Mitsubishi UFJ Trust and Banking Corporation Transfer Agent
7-10-11, Higashisuna, Koto-ku, Tokyo, Japan
Toll-free telephone 0120-232-711

69

Annual Report 20105-33-8, Shiba, Minato-ku, Tokyo 108-8410, Japan
Public Relations Department
Tel : +81-3-6852-4206 (IR)+81-3-6852-4274 (Corporate PR)
Fax : +81-3-6852-5405
http://www.mitsubishi-motors.com
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