Mitsubishi Electric to Boost Automotive Electronics Production in Southeast Asia

Tokyo, September 8, 1997 -- Mitsubishi Electric Corporation has announced plans to expand its production capacity for automotive electronics in Southeast Asia, where the automobile industry is enjoying rapid expansion. At the same time, the company will increase its local content ratio to protect itself better against foreign exchange rate fluctuations.

The rapid development of the automobile industry in Southeast Asia suggests long-term sustained market growth into the future. Accordingly, the Association of Southeast Asian Nations (ASEAN) launched its ASEAN AICO in October 1996 in an attempt to promote industrial cooperation among its member nations as well as to reduce import/export tariffs to 5% or less for trade within the ASEAN region.

In the meantime, some countries are implementing their own industrial policies, and Indonesia will be imposing a more rigid local procurement requirement for foreign-based manufacturers operating in Indonesia beginning in1998. There is also a fear that protectionists could gain power in Southeast Asia, as many nations are suffering from economic crises and some recently carried out currency devaluation. Considering this background, Mitsubishi Electric has decided to strengthen its production system in order to utilize AICO effectively and increase its ability to respond flexibly to unpredictable economic and regulatory conditions in the region.

*1 AICO: ASEAN Industrial Cooperation Scheme

Mitsubishi Electric has been producing automotive electronics in the Southeast Asian countries of Thailand, Indonesia, the Philippines, and Malaysia since 1984. With the aim of creating a regional complementary production structure, Mitsubishi Electric will move to establish the most efficient division of production among its facilities in the region. Initial efforts will concentrate on the key product areas of alternators and starter motors and will involve increases in both production capacity and local content percentages. A total investment of about \3 billion is planned for the region over a three-year period.

1. Indonesia

Having produced automotive electronics in Indonesia since 1987, Mitsubishi Electric has transferred production for this segment of its business to Lippo Melco Auto-parts (LMA), a new company established in January 1997. Plans call for a doubling of the current production of alternators and starter motors to 200,000 units/year each by the end of 1997. Local content percentages will also be increased in compliance with the country's local content regulation to be enacted in 1998.

2. Thailand

Mitsubishi Electric Thai Auto-parts, Co., Ltd.(META), which was established in February 1997, is currently constructing a new manufacturing plant in the preferential tariff zone of the Layong Province. All production equipment will be transferred from the present location to the new plant by the end of 1997. Full production is scheduled to begin at the new plant in 1998, and plans call for a doubling of the current production of alternators and starter motors to 200,000 units/year each.

*2 Preferential Tariff Zone: Also known as a "Third Zone, " the term refers to specially designated areas where lower tariffs are to be applied to imported parts and components.

3. Malaysia

Mitsubishi Electric will increase the local content ratio for alternators and starter motors manufactured by APM Auto Electrics. Sdn. Bhd. (APM-AE Kuala Lumpur), Mitsubishi Electric's technical licensee in Malaysia.

4. The Philippines

The production of alternators and starter motors has already begun at Laguna Auto-parts Manufacturing Corporation (LAMCOR), Mitsubishi Electric's Philippine production site. Production capacity expansion efforts at Laguna have been completed, and LAMCOR will be exporting some of its alternator and starter motor components to Mitsubishi Electric factories in Japan for assembly. As exports from LAMCOR increase, Philippine auto-makers with Foreign Exchange Earning obligations will also benefit from LAMCOR's increased export activity as LAMCOR will be able to offer them the right to import knock down parts equal to the value of LAMCOR's increased exports.

A total of 800,000 units each of alternators and starter motors will be produced in Mitsubishi Electric-affiliated manufacturing plants in the four Southeast Asian countries. Efforts will be made to cut down on manufacturing costs with the four countries sharing production of parts and components.

Taking advantage of AICO, additional tariff relief will be sought through complementary production and supply systems arranged among these four production sites.

1. Manufacturing Plants in Japan

Plant	Location	Main Products
Himeji Plant	Himeji, Hyogo Prefecture	Alternators, Starter motors, fuel injection systems, sensors, ECUs (ABS automatic transmission control, etc.), power steering system
Sanda Plant	Sanda, Hyogo Prefecture	Car audio equipment, navigation systems, airbag ECUs, HIDECU valves
Fukuyama Plant	Fukuyama, Hiroshima Prefecture	Fuel pumps

2. Domestic market shares of main products

Domestic market share Alternators/Starter motors 30% each

Fuel injection systems 20%

3. Overseas manufacturing sites (other than those mentioned above)

Country	Company's name	Main Products
U. S. A.	Mitsubishi Electric Automotive America Inc.>	Alternators, starter motors, fuel injection ECUs, car audio equipment
Korea	KEFICO Corporation	Fuel injection systems
Taiwan	Shihlin Electric & Engineering Corporation	Alternators, starter motors, ignition circuit parts

Media inquiries to:

Toru Ushioda

Public Relations Dept.

Mitsubishi Electric Corporation

2-2-3, Marunouchi

Chiyoda-ku, Tokyo 100

JAPAN

Tel: 81-3-3218-2333

Fax: 81-3-3218-2431