Outlander drove 55% jump in Mitsubishi sales in China in latest fiscal year.
Outlander drove 55% jump in Mitsubishi sales in China in latest fiscal year.

Alliance Partners Assist in Mitsubishi’s Recovery

Osamu Masuko, the automaker’s 69-year-old CEO, says he has no illusions about the challenges facing the automaker but believes a foundation has been laid for long-term sustainable growth.

TOKYO – Mitsubishi is like a cat with nine lives. It keeps coming back.

Osamu Masuko (photo below), the automaker’s 69-year-old CEO, gave it several of those lives through his managerial prowess. Now he is working to see it through another critical moment.

Two years ago in April, just as Mitsubishi was preparing to announce record earnings for fiscal 2015, Masuko was blindsided by a mileage-cheating scandal involving the automaker’s minicars in Japan, sending its share price plummeting overnight and threatening to undo more than a decade of restructuring.

Nissan, Mitsubishi’s partner in the 0.66L minicars, extended its Japanese affiliate both a financial lifeline and an executive team to help rebuild its engineering operation.

Now Mitsubishi, a full-fledged member of the Renault-Nissan Alliance, is two-thirds of the way back to peak profitability, with earnings rebounding to ¥98.2 billion ($891 million) in the fiscal year ending March 31.

In a recent interview with WardsAuto, Masuko says he has no illusions about the challenges facing the automaker but believes a foundation has been laid for long-term sustainable growth.

Mitsubishi’s fiscal 2019 earnings target is ¥150 billion ($1.36 billion), which would be the automaker’s largest profit since it was created out of Mitsubishi Heavy Industries’ automotive division nearly half a century ago. Profit margin is expected to return to 6% peak levels.

“Right now, concentration and focus are very important for us in terms of both technology and marketing,” Masuko says. “We simply can’t do everything. We’re not big enough.”

The automaker plans to invest 5.1% of sales in R&D this year, 50% more than in the years preceding the mileage-cheating disclosures.

How Mitsubishi intends to piggyback on Nissan’s and Renault’s electric-vehicle technology in terms of platforms, models and markets is still being worked out. But the alliance has chosen Mitsubishi’s plug-in hybrid technology for future C- and D-segment vehicles. The automaker also will focus on all-wheel drive.

As for markets, “It is China and Southeast Asia,” says Masuko, who acknowledges Mitsubishi’s presence in Japan and the U.S. still is small. “But we are going to try to grow our presence.”

The automaker’s focus on the Asia region is partly a consequence of management’s decision to shutter unprofitable plants in Adelaide, Australia; and Normal, IL; and sell its stake in Netherlands Car B.V.

The other part: to take advantage of Mitsubishi’s good name and “three diamonds” trademark in Southeast Asia.

Apart from traditional ties to the region, dating back to 1966 when the automaker began assembling knock-down trucks in Thailand, Masuko sees the market as having enormous growth potential. Vehicle ownership is low, the middle class is growing and, particularly in the case of Indonesia, the population is huge.

Indonesia ranks as the world’s fourth-most-populous country, trailing China, India and the U.S.

Reflecting these trends, Mitsubishi posted record sales in the region of 275,000 units in the most recent fiscal year on the strength of double-digit growth in Indonesia, Thailand and the Philippines. Sales in Indonesia, where the automaker launched the Xpander passenger van at a new $600 million (¥65 billion) plant east of Jakarta, grew 60% to 104,000 units.

The region accounted for 20% of global sales, which rebounded to 1.1 million, but more importantly nearly 50% of profits.

In China, the automaker’s business grew 55% to 157,000 units mostly on sales of the Outlander CUV, which is produced by GAC Mitsubishi Motors. The automaker projects further 25% growth this year and a doubling of sales in the next several years.

In March, it launched the Eupheme plug-in hybrid, a derivative of the Outlander PHEV, and later this year will introduce the Eclipse Cross.

Analysts speculate Mitsubishi eventually will build a Nissan version of its Pajero Sport SUV in Indonesia or perhaps even a Nissan version of the Xpander.

“The alliance provides opportunities,” Masuko says. “But in the end, it is management who is responsible for implementing the plan.”

 

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish