Mitsubishi Motors banks on emerging markets
TOKYO (Reuters) - Struggling Japanese automaker Mitsubishi Motors Corp (7211.T) said on Friday it would focus on promising new car markets as it seeks growth with the aim of more than doubling net profit in three years.
Mitsubishi Motors, the maker of Lancer sedans, said it would target net profit of 50 billion yen ($480 million) in the year to March 2011, up from the 20 billion yen it has forecast for this year.
"We need to pick our battles in order to achieve sustainable growth," President Osamu Masuko told a news conference.
Since 2004, Mitsubishi Motors has relied heavily on other core Mitsubishi group firms such as Mitsubishi UFJ Financial Group Inc (8306.T), Mitsubishi Corp (8058.T) and Mitsubishi Heavy Industries Ltd (7011.T) for funding to rebuild itself after incurring big losses in North America and dissolving a shareholding tie with the former DaimlerChrysler, once its top shareholder. It has not paid a dividend in about a decade.
While the company is back in the black, Mitsubishi Motors lacks the brand power and momentum that many of its domestic rivals have in North America, Japan and China, and the automaker is counting on Russia, the Middle East and other newly motorizing markets to survive.
In a recognition of its shortcomings and limited resources, the automaker identified specific regions where it would concentrate on growing aggressively, and outlined a product strategy that it said would fit more effectively in each region.
In Russia and Ukraine, where Mitsubishi Motors has cultivated a strong brand image, it will expand its sales network and focus on sport utility vehicles, while beefing up partnerships with local distributors.
It said it expected sales in Russia, where it is considering a local assembly plant, to jump by two-thirds to 169,000 vehicles in three years.
Mitsubishi Motors said it would set up a company to manage sales, marketing and services in the Middle East and would seek more sales in fast-growing economies Brazil, China and India.
The Middle East, Latin America and Africa combined are expected to account for more than a fifth of its global sales by 2010/11, with a 25 percent rise to 313,000 vehicles.
Meanwhile, in the mature markets of Japan and North America, the maker of the Outlander SUV said it would focus on profitability rather than selling more cars, predicting a fall in its sales in both regions by the end of the midterm plan.
Mitsubishi Motors said it would aim to shore up its Chinese operations. It is in talks with partner Hunan Changfeng Motors Co (600991.SS) to form a 50-50 local venture but warned of an 18 percent fall in sales over the next three years due to a dearth of new models.
Mitsubishi Motors expects to post an operating profit of 90 billion yen in 2010/11, up 13 percent from an estimated 80 billion yen for 2007/08. It expects global sales to grow 6.4 percent to 1.422 million vehicles during the period.
The automaker did not disclose how many new vehicle models it would launch, but said it would focus on small cars in the more energy- and environment-conscious developed markets of Japan and Europe, including a global launch of electric vehicles.
Over the past few months, Mitsubishi Motors has closed a loss-making Australian factory and announced an expansion of a manufacturing deal with Nissan Motor Co (7201.T), as part of efforts to restore its health.
