Mitsubishi Reveals Its Next Steps
March 12, 2008

By Peter Nunn

Analyst and observers in Tokyo continue to pick over Mitsubishi Motors’ recently announced midterm business plan, labeled "Step Up 2010."

Anyone expecting a radical, cut-to-the-chase Carlos Ghosn–style makeover to rev up Japan’s weakest automaker, however, was in for a surprise.

Mitsubishi’s new three-year plan, running through to March 2011, turns out to be a pretty cautious deal and has already drawn flak in some quarters in Tokyo for not going far enough, especially on the financial side.

Mitsubishi President Osamu Makuko told the press the company is targeting a 12.5 percent rise in operating profits, up to some $870 million, over the $775 million expected this year, coupled with a 6 percent hike in global sales, up to 1.42 million vehicles.

Net profits, however, are set to soar from this year’s forecast $194 million up to $485 million if all goes to plan over the next three years.

What upset some of Japan’s media, though, especially the influential Nikkei, was Mitsubishi made no mention of when it would restart paying dividends. (Mitsubishi hasn’t paid dividends for 10 straight years now).

The Nikkei also voiced disappointment over Mitsubishi’s weak growth forecast and limited cash flow, meaning the company won’t have enough money to invest.

Others disagree and believe Mitsubishi might be right to play it safe, given the current volatile economic times and surging yen, plus the fact that, according to an insider, the flow of new models over the next three years is set to slow to a trickle.

After the massive financial meltdown of 2004-06, Mitsubishi is now back in the black but still feeling its way. The company surely deserves a lot of credit for developing a whole new range of stylish, good-to-drive new-era models, capped by the Lancer, Evo, Outlander and tiny i minicar, despite facing the very real possibility of bankruptcy while these cars were being developed.    

On the new-product front, here’s what Mitsubishi has announced:
• Mitsubishi will expand the number of midsize (Outlander/Lancer-base) models. One of these is expected to be a new medium-size premium sedan — a spin-off from the Tokyo show Concept-ZT, designed to fit between Galant and Lancer. Mitsubishi is also planning a build a global sports coupe out of its Detroit show Concept-RA. The Lancer-based Prototype-S hatchback shown at Geneva will also go live this fall and is set to ship to North America.
• Two new SUVs, a small, "lower impact" model, and a bigger SUV based on its Thai-made Triton pickup, will come out later this year and debut at the Moscow show. The latter is set for Asian, Oceanic, Russian and Middle East markets. 
• Mitsubishi’s range of domestic 660cc minicars will be adapted and sold globally.
• Mitsubishi’s electric-powered i-MiEV minicar will also go out to world markets.
• Mitsubishi is stepping up its 660cc minicar OEM collaboration with Nissan in Japan from two to three models, and collaborating over light commercial vehicles in exchange.
• Mitsubishi will begin exporting U.S.–made Eclipse sports coupes to China later this year.

Despite all this, Mitsubishi is predicting sales in "mature" markets such as North America and Japan will remain sluggish. As a counter, Mitsu is actively expanding its presence into the big emerging markets of Russia, Ukraine, China, Middle East, Brazil and India. 

Yes, Mitsubishi is looking at setting up a new production plant in Russia to build Outlander SUVs but no final decision on that has gone through, said a spokesman.

If Mitsubishi does decide to go into Russia with a partner, then France’s PSA group, which now sells its own Outlander-based SUVs in Europe, is the only name in the frame right now.

In the short term, at least, Mitsubishi’s balance sheet still looks fragile. Like all Japanese automakers, Mitsubishi closes its books on the latest business year at the end of this month. The company is now forecasting global sales of 1.337 million units, down 25,000 units from predictions in October, due to "the current sales environment" and shutdown of its Australian manufacturing plant.

Full-year net revenues are set to drop to $25.8 billion, down $290 million from October’s forecast. But operating income is expected to go up to $775 million, an increase of some $97 million, and Mitsu’s full-year net income is still targeted at the $194 million mark.

Photos:

1—Concept-RA
2—Concept-ZT
3—Prototype-S
4—i-MiEV minicar

Posted by Michelle Krebs at 4:23 AM under Business , Companies | Comments (0) | digg this | Seed Newsvine