Mitsubishi Motors to sell factory that makes the Pajero for JPY 4 billion

Two years ago, Mitsubishi confirmed that they're shutting down the factory that makes the long-lived Pajero SUV. Called the Pajero Manufacturing Co. Ltd., the factory first opened in 1943 and was initially called “Toyo Koki”. It used to manufacture aircraft parts during World War II before shifting to making vehicles.

Now onto 2022, and the fate of Pajero Manufacturing Co. Ltd. has been sealed. According to a report by Nikkei Asia, Mitsubishi Motors agreed to sell the now-defunct Pajero factory to Daio Paper for about JPY 4 billion (around PHP 1.758 billion). The deal, which is expected to be announced this week, will see the transfer of both the land and facilities to Japan's leading maker of tissue and toilet paper.

The selling of the factory is part of Mitsubishi's restructuring as it plans to make more electrified and electric vehicles (EVs). Currently, the automaker is investing JPY 8 billion to update its Mizushima plant in Okayama Prefecture where they plan to make electric mini-cars with Alliance partner Nissan starting in May.

Mitsubishi Pajero factory to become a toilet paper plant image

The automaker is also busy reworking its domestic operations. In July 2020, a medium-term plan targetted a 20% reduction in fixed costs from fiscal 2019 levels through unloading the factory and reducing office staff. As a result, about 650 workers in Japan accepted early retirement offers last year.

Once the Pajero factory is sold to Daio Paper, this will provide the necessary funds for Mitsubishi's restructuring. But what about the workers affected by the factory closure? Of the roughly 1,000 employees that worked at the plant, around 30% will be reassigned within Mitsubishi Motors. Another 30% have taken jobs with other businesses in the area. The remaining 250 have accepted early retirement offers, while the last few plan to look for work at the Daio factory once it opens.

During its peak, the Pajero factory turned out 170,000 vehicles a year. But over the years, it has seen a huge decline in production. As the Pajero fell out of favor amongst buyers, the facility was only able to produce 63,000 vehicles during the fiscal year 2019. The factory also faced a 30% rise in fixed costs between the fiscal years of 2015 and 2019. This came after form Alliance Chairman Carlos Ghosn put up an aggressive expansion strategy, putting more pressure on the factory's bottom line. Things went from bad to worse when the pandemic first hit in 2020 which likely expedited the Pajero factory's demise.

Mitsubishi Pajero factory to become a toilet paper plant image

Daio Paper plans to use the Pajero factory to make sanitary paper products which include tissues and toilet paper. The plant serves as a key location as it's near Daio's paper mill which the company expanded in 2021.

With Pajero Manufacturing Co. Ltd. set to be consigned to the history books, we cannot help but feel sentimental about the passing of both the SUV and its factory. We're hoping that Mitsubishi brings back the Pajero name for a possible EV or electrified SUV in the near future.

On the lighter side of things, it's quite ironic that the factory that used to make the Pajero (which is actually the Spanish slang for "choking the chicken") will soon be making toilet paper.