DETROIT -- Mitsubishi Motors Corp. will return to sustained profitability in 2006, the head of its North American operations said Tuesday.
Finbarr O'Neill, CEO of Mitsubishi Motors North America, said it would be difficult for the automaker to book a profit this year, as its U.S. arm implements a sweeping turnaround plan.
But he said the corporate restructuring, aimed at reducing unprofitable sales to fleet customers in the United States and slashing profit-eroding incentives, was on track and delivering the right results.
"I think as we go into '05 we'll be moving towards profitability, and in '06 I think we should have a strong record of profitability," O'Neill told reporters.
"That's our target, and we expect to make it there," he added.
O'Neill said he was referring both to Mitsubishi North America and to its parent company, which is Japan's only money-losing carmaker.
O'Neill spoke after an address in suburban Detroit to the Society of Automotive Analysts in which he outlined the company's U.S. turnaround and its efforts to cut its former reliance on huge discounts, cash rebates and customers with shaky credit histories to pump up sales volumes.
Those same efforts have caused Mitsubishi's U.S. sales to plunge this year, an experience that O'Neill likened in his address to that of a patient kicking a drug habit.
"We decided not to go for the methadone," he said. "Right off the heroin -- cold turkey."
O'Neill denied that Mitsubishi intends to slash the size of its U.S. dealer network to balance it with demand.
He said 13 or 14 dealers had dropped out of the network this year, however, as Mitsubishi moved to lure customers with longer warranty periods instead of discounts.
More than half of Mitsubishi's exclusive U.S. dealers have been losing money this year, O'Neill said.
"Unless dealers are profitable we cannot be profitable," he said.