The Big Shrink: Mitsubishi Thinks Small After Profit Plunge

Steph Willems
by Steph Willems
the big shrink mitsubishi thinks small after profit plunge

Mitsubishi Motors’ membership in the great Renault-Nissan alliance won’t protect it from economic realities arising from the coronavirus pandemic. On Tuesday, the automaker announced an 89-percent drop in operating profit for the year ended March, with black ink totaling just $119 million.

Rocked by the virus that’s thrown every automaker’s balance sheet into disarray, Mitsubishi scrapped its planned dividend and held back from issuing a projection for the current year. It’s also thinking small. The virus has changed the global landscape, and Mitsubishi says it will have to change to meet the challenge.

After reporting the company’s poorest results in three years, CEO Takao Kato addressed journalists by teleconference.

“Before the virus we had been mulling which underperforming regions and vehicle segments to cut our exposure to,” he said, as reported by Reuters. “In the wake of the virus, we need to pick up the pace of making these changes. To stay competitive in a post-coronavirus market, we need to immediately shrink our area of focus to regions and segments in which we excel.”

Mitsubishi was already struggling in Asia, China especially. The arrival of the cost-incurring, market-sinking coronavirus occurred at a bad time.

In response to the new reality, Mitsubishi says it will chop its fixed costs by 20 percent or more in the next two years while attempting to bolster its standing in Southeast Asia, from which it draws one-quarter of its sales. Its alliance duties remain, however. The group is expected to announce a going-forward plan in late May, providing details on which members will do what, and where.

What Mitsubishi’s plan means for North America remains to be seen. The automaker said it will offer more details on its near-term strategy at the end of the first fiscal quarter.

[Image: Mitsubishi Motors]

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  • Eggsalad Eggsalad on May 19, 2020

    I dunno, but about 70% of the Mitsubishis I've seen around Vegas wear rental-car bar codes. Car rental companies aren't buying, and that does not bode well.

  • Jeff S Jeff S on May 19, 2020

    Not a long shot if it were made in Mexico and it could share a platform with one of Nissan's crossovers and parts with Nissan and Mitsubishi. Lower labor costs, shared platforms, limited exterior and interior color choice, and limited options all to make it more efficient to assemble and to maximize use of just in time parts delivery. No need to be concerned about a chicken tax if the truck is made in North America. It would be easy to re badge a Frontier but the the drive train changes in the 2020 Frontier would take away the cost advantages and the appeal for a product that is different. The 2020 Frontiers have lost their price advantage and the 2021s will definitely be more expensive. Having a compact pickup priced as the lowest priced pickup would definitely expand Mitsubishi's presence. The Mirage has definitely helped Mitsubishi to grow their market share.

    • Hondaaustin Hondaaustin on May 19, 2020

      Yes. I think the Mitsu truck could be a rebadged 2019 Frontier... it's long paid off and still isn't too bad... put a handsome new grill around the diamonds and people will buy it.

  • Denis Jeep have other cars?!?
  • Darren Mertz In 2000, after reading the glowing reviews from c/d in 1998, I decided that was the car for me (yep, it took me 2 years to make up my mind). I found a 1999 with 24k on the clock at a local Volvo dealership. I think the salesman was more impressed with it than I was. It was everything I had hoped for. Comfortable, stylish, roomy, refined, efficient, flexible, ... I can't think of more superlatives right now but there are likely more. I had that car until just last year at this time. A red light runner t-boned me and my partner who was in the passenger seat. The cops estimate the other driver hit us at about 50 mph - on a city street. My partner wasn't visibly injured (when the seat air bag went off it shoved him out of the way of the intruding car) but his hip was rather tweaked. My car, though, was gone. I cried like a baby when they towed it away. I ruminated for months trying to decide how to replace it. Luckily, we had my 1998 SAAB 9000 as a spare car to use. I decided early on that there would be no new car considered. I loathe touch screens. I'm also not a fan of climate control. Months went by. I decided to keep looking for another B5 Passat. As the author wrote, the B5.5 just looked 'over done'. October this past year I found my Cinderella slipper - an early 2001. Same silver color. Same black leather interior. Same 1.8T engine. Same 5 speed manual transmission. I was happier than a pig in sh!t. But a little sad also. I had replaced my baby. But life goes on. I drive it every day to work which takes me over some rather twisty freeway ramps. I love the light snarel as I charge up some steep hills on my way home. So, I'm a dyed-in-the-wool Passat guy.
  • Paul Mezhir As awful as the styling was on these cars, they were beautifully assembled and extremely well finished for the day. The doors closed solidly, the ride was extremely quiet and the absence of squeaks and rattles was commendable. As for styling? Everything's beautiful in it's own way.....except for the VI's proportions were just odd: the passenger compartment and wheelbase seemed to be way too short, especially compared to the VI sedan. Even the short-lived Town Coupe had much better proportions. None of the fox-body Lincolns could compare to the beautiful proportions of the Mark was the epitome of long, low, sleek and elegant. The proportions were just about perfect from every angle.
  • ToolGuy Silhouetting yourself on a ridge like that is an excellent way to get yourself shot ( Skylining)."Don't you know there's a special military operation on?"
  • ToolGuy When Farley says “like the Millennium Falcon” he means "fully updatable" and "constantly improving" -- it's right there in the Car and Driver article (and makes perfect sense).