The Big Shrink: Mitsubishi Thinks Small After Profit Plunge

Steph Willems
by Steph Willems

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]

Steph Willems
Steph Willems

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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.

  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
  • Dave Holzman A design award for the Prius?!!! Yes, the Prius is a great looking car, but the visibility is terrible from what I've read, notably Consumer Reports. Bad visibility is a dangerous, and very annoying design flaw.
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