AutoBeta(AutoBeta.net)06/22 Report--

With the decline in global auto market sales and the impact of the new crown virus, major multinational auto companies have made new plans for future development to improve their performance through lower cost reduction. According to a number of media reports, Mitsubishi Motors has launched a new plan that will gradually reduce its current investment in major markets in Europe and China and focus on Southeast Asia. In response to media reports of withdrawal from China, Mitsubishi officials issued a statement today denying it.

At the shareholders 'meeting, Mitsubishi Motors CEO Takao Kato said Mitsubishi would gradually scale back its business in markets including Europe and China. Although Kato did not explicitly mention the North American market at the meeting, it was later confirmed by the company that the United States is one of Mitsubishi's largest markets, along with Europe and China. Under the old plan, the company focused on North America and China as its main markets, but under the new plan, Mitsubishi will shift its focus to more profitable markets.

'Although sales are growing in many regions of the world, for Mitsubishi, its profits cannot reach the expected level, so we plan to provide core products only in regions where growth has been achieved, and market expansion has been achieved, while some regions with lower sales will only gradually reduce product plans,' Mr. Kato said.

Obviously, North America and China, as the largest markets, have failed to bring satisfactory results to Mitsubishi, and this statement will obviously impact these markets again. At the same conference, Kato Takato announced that Mitsubishi senior management collective salary cut 45%, fixed salary cut 20- 30%, he explained that at present affected by the epidemic situation of its factories forced to stop production, front-line workers wages have dropped 10%, senior management should share the operating pressure at this time, jointly reduce wages to overcome difficulties, so that Mitsubishi can overcome this difficulty.

Therefore, Mitsubishi Motors will make new development for the brand, focusing on the more dominant Southeast Asian market, originally hoped to expand in Europe and China market, because sales performance is less than expected, resulting in the main model blocked and the brand lost a lot of capital.

In response, at the previous shareholders 'meeting of the Reynolds-Nissan-Mitsubishi Alliance, the Alliance also made new plans for their respective brands in the future market. It is understood that in order to avoid regional overlap, the three brands of the alliance will redivide the market, among which Nissan brand will dominate the US and China markets as well as the Japanese domestic market, Renault will take Europe, Russia, South America and South Africa as the dominant position; South Asia market will have Renault and Nissan coexist; Mitsubishi can only dominate Southeast Asia and Oceania and a small area of the Middle East, Central Africa.

According to the new plan of Reynolds-Nissan-Mitsubishi alliance, it means that Mitsubishi brand will become the next brand to launch in China market after gradually reducing the Chinese market, and China, as the world's largest automobile market, may only leave Nissan brand. After all, in April this year, Renault brand has also announced that it will withdraw fuel models from the Chinese market.

In response to the report, Mitsubishi Motors officially issued a statement to the media: Mitsubishi Motors will effectively use limited resources, while reducing fixed costs through structural changes as the top priority to improve profitability in various countries. The specific implementation strategy is still under review, but regarding China, we will continue to develop future business with existing partners.

According to Mitsubishi Motors 'fiscal year 2019, Mitsubishi's net loss has reached 25.78 billion yen. As a result, Mitsubishi had to cancel its annual dividend and decided to cut fixed costs by 20% and more over the next two years. Mitsubishi Motors warned in April that it expected to lose money for the full year, cut executive pay by nearly half and eliminate performance bonuses this year.

According to Mitsubishi Motors 'sales in fiscal year 2019, Mitsubishi Motors sold 160,000 vehicles in the U.S. market last year, down 8% year-on-year; sales in Europe were 215,000 vehicles, down 9% year-on-year; sales in Southeast Asia fell 9% year-on-year, but it is still the world's largest market, with annual sales reaching 290,000 vehicles. According to the financial report data, the company's sales revenue in fiscal year 2019 was 2270.3 billion yen, down 10% year-on-year; operating profit was 12.8 billion yen, down 89% year-on-year, operating profit margin was only 0.6%; net profit attributable to shareholders of parent company was-25.8 billion yen, far lower than 132.9 billion yen in fiscal year 2018.

In the Chinese market, GAC Mitsubishi is also struggling, sales continue to decline, brands continue to be marginalized. Although its brand sales increased by 3.5% to 136,000 vehicles in 2019, it has been far behind Toyota, Honda, Nissan and other first-line Japanese peers. Its joint venture company GAC Mitsubishi in China has accumulated sales of only 10,000 vehicles in the first three months of this year, down 66.67% year-on-year, becoming the brand with the most serious decline in joint venture brands under GAC Group. Therefore, whether Mitsubishi brand will follow the footsteps of Renault and Suzuki brands has also become a concern of everyone.

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