TOKYO -- Mitsubishi Motors Corp. CEO Rolf Eckrodt said Wednesday that he was confident about turning around the company's rickety domestic fortunes, forecasting a 13 percent jump in sales this year despite stagnant car demand in Japan.
Mitsubishi's passenger car sales plunged 12 percent in the business year that ended on March 31 due to a dearth of new models as the automaker concentrated on restructuring itself after a crippling recall scandal three years ago.
In an interview with Reuters, Eckrodt said he expected the Japanese market to stay flat for the next few years, but that he was confident Mitsubishi would be able to grow with the help of a series of new models.
"It's a race against strong competitors but we expect 400,000 units for this fiscal year, and then we'll try to increase that step by step when the new models come," Eckrodt said, speaking on the launch day of Mitsubishi's Grandis minivan.
Including the Grandis, Mitsubishi Motors has 14 new models due to come out before the 2008 financial year, which should set the stage for a further expansion of its sales volume, Eckrodt said.
Securing solid sales in Japan has become increasingly crucial for Mitsubishi since its sales in the United States have been skidding recently despite heavy spending on incentives.
So far this year, Mitsubishi's domestic sales of full-size cars are up 22 percent. But that is mainly because it didn't have the help of new models like the Colt subcompact, launched in November, to lift sales in the year-earlier period.
Underscoring the tough conditions in the Japanese market, even the once-popular Colt sold fewer than half the monthly sales target of 7,000 units last month.
The target for the new Grandis is a more conservative 3,000 units, but the competition looks set to be just as harsh. Since 2002, the minivan segment has seen three new models from Toyota Motor Corp. and another one from Nissan Motor.
Later this year, Nissan and Honda Motor will follow with one fully-remodeled minivan each.
Mitsubishi also has the added task of overcoming an image problem after the systematic cover-up of customer complaints over two decades came to light three years ago. The scandal eventually led to the recall of nearly two million cars worldwide.
Even Eckrodt conceded that expanding sales in Japan hinged on improving its image, as well as its products and sales strategy.
"We have to do some homework still to be close to breaking even (in Japan) sometime probably in 2005," Eckrodt told an earlier news conference.
He added, however, that Mitsubishi was taking concrete steps to improve its chances, citing, among other things, its plan to spend 35 billion yen ($300 million) over the next two years to renovate its showrooms.
Under a new domestic sales strategy, Mitsubishi also wants to improve its sales service through intensive training programs.
Turning to the U.S. market, Eckrodt, a 36-year veteran of Mitsubishi partner DaimlerChrysler AG, conceded that sales have been soft recently, but said new model launches would help Mitsubishi succeed in that market over time.
"For the medium term, we will be very successful and we are optimistic," said Eckrodt, who celebrates his 61st birthday and first anniversary as Mitsubishi's president next month.
Mitsubishi's sales of cars and light trucks in the United States are down 21 percent so far this year, hurt by fierce competition as Detroit's 'Big Three' automakers sweeten their price deals and rival Japanese automakers launch a raft of popular new models.
Because of Mitsubishi's heavy dependence on the North American market -- one of its few sources of profit during the past few years -- analysts say the automaker also faces huge risks from the dollar's fall against the yen.
But Eckrodt said that for last year, the stronger euro helped offset the unfavorable swing in the dollar, and that Mitsubishi had an "intelligent hedging policy" to shield it against future volatility.
Thanks in large part to the healthy euro which makes exports from Japan cheaper, Mitsubishi expects to return to the black in Europe in 2004.
Mitsubishi Motors, owned 37 percent by DaimlerChrysler, said last month it expected to rake in 38 billion yen in group net profit for last business year, more than three times the year-earlier profit and the best in its history.
Forecasts for the current year, including for profits and sales volume, are due on May 26.