Retooled Lineup Key to Mitsubishi Business Plan

TOKYO – Mitsubishi President Osamu Masuko believes the automaker’s latest midterm business plan, scheduled to take effect April 1, marks a coming of age for the company in its quest to achieve sustainably profitable operations.

Masuko, who took over as president shortly before DaimlerChrysler withdrew its equity stake in spring 2005, revealed the plan in November.

Mitsubishi announced in February that Masuko, 66, would be promoted to CEO and board chairman in June. His successor as president, Tetsuro Aikawa, will serve concurrently as chief operating officer and be responsible for implementing the business plan.

Named New Stage 2016, the plan lays out aggressive earnings, sales and production goals for fiscal 2016. Targets include record earnings of ¥135 billion ($1.3 billion) on sales of ¥2.6 trillion ($25.4 billion), both up more than 40% from fiscal 2012 levels, and output of more than 1.4 million units.

More than 60% of Mitsubishi vehicles will be built outside Japan, double levels of three years ago.

Profit margins, though still below Japanese market leaders Toyota and Honda, are projected to reach a solid 5%.

“Moving forward, our growth engines will be emerging markets and environmental technologies,” Masuko tells WardsAuto. “We’ve planted many seeds and expect to bear fruit in the coming three years.”

Among those “seeds” are a new model lineup built around SUVs and plug-in hybrids.

In total, the automaker plans to launch seven new models by March 2017. These include a remodeled Triton pickup and four next-generation SUVs, the Pajero Sport, Pajero, RVR and Delica D:5. Also coming are a pair of PHEVs, one compact and one large.

The plug-ins likely will be based on two Tokyo auto show concepts, the GC-PHEV and XR-PHEV.

Concurrently, Mitsubishi will further streamline its platform and model lineups in an effort to get more bang for its buck...or the yen...or the baht, since Thailand is the automaker’s second-largest production center behind Japan.

Management plans to reduce platform numbers from nine to seven. In April 2011, when the automaker launched its Jump 2013 business plan (predecessor to New Stage 16), it had 12 platforms on which it built 23 models. Over the next three years it plans to reduce models to 13.

EV Battery Prices to Fall

Meanwhile, Masuko maintains Mitsubishi will achieve its electric-vehicle/plug-in hybrid sales target of 20% in fiscal 2020 despite a recent sharp downturn in i-MiEV sales. Through September, i-MiEV sales were off 90% from fiscal-2011 levels.

To critics who argue lithium battery costs will not come down sufficiently to make EVs viable, Masuko notes that when the automaker launched the i-MiEV electric car in June 2009 the battery alone cost more than ¥2 million ($20,000).

Since then, prices have fallen by two-thirds, he says, adding: “And we’re going to see further reductions in the future. The age of EVs and plug-in hybrids will surely come.”

Mitsubishi’s business plan also involves expanding Mitsubishi’s Southeast Asian production base, currently centered in Thailand, to Malaysia and the Philippines.

In Malaysia, the automaker began assembling ASX CUVs in January. Management confirms plans to expand capacity in the Philippines but has not yet committed to a production site.

Mitsubishi currently builds L300, Adventure and Lancer EX models at a small assembly plant in the suburbs of Manila. News reports indicate the automaker will add 100,000 units of capacity by 2015, although the number seems inflated given the size of the Philippine market.

In total, the company plans to invest an average ¥100 billion ($1 billion) annually in facilities over the next three years including, in addition to overseas operations, upgrades of its Mizushima and Okazaki plants in Japan.

Asia is where the automaker is projecting greatest sales growth: 120,000 units in Southeast Asia and 90,000 in China to 390,000 and 200,000, respectively, by fiscal 2016.

Looking to the future, Masuko says Mitsubishi will continue its policy not to enter into capital alliances with domestic or foreign automakers. But business alliances like the ones it has with Nissan and PSA Peugeot Citroen will be pursued.

Mitsubishi currently builds 0.7L minicars with Nissan at its Mizushima plant. Nissan supplies Delica, Delica D:3, Dignity, Proudia and Lancer Cargo models to Mitsubishi in Japan while Mitsubishi provides Nissan with Navara pickups in Thailand.

Suzuki since 2011 has supplied rebadged Solios sold as the Delica D:2 by Mitsubishi.

In Russia, Mitsubishi is partnering with PSA to produce Outlander and Pajero Sport SUVs while exporting rebadged i-MiEVs to Peugeot and Citroen for sale in Europe.

Mitsubishi also is cleaning up its balance sheet. In December 2012, management sold the money-losing NedCar operation in Born, the Netherlands. Now off the books are an estimated ¥10 billion to ¥15 billion ($10 million to $15 million) in yearly losses.

The automaker is attempting to buy back ¥240 billion ($2.4 billion) in preferred stocks from major shareholders Mitsubishi UFJ Financial Group, Mitsubishi Heavy Industries and Mitsubishi Corp. The current capital arrangement dates back to 2005, when DaimlerChrysler withdrew financial support from the Japanese auto maker.