TOKYO -- Trying to reverse plunging U.S. sales, Mitsubishi Motors Corp. is raising dealer incentives "in top regional markets," strengthening its support for dealer advertising and resuming lease programs in limited regions.
The company also is close to deciding what to do about its troubled Mitsubishi Motors Credit of America financing arm. (See story, Page 4)
Those actions will "lay the groundwork for new-model launches next year," says COO Hideyasu Tagaya.
In the meantime, the company is taking an equally important step: facing reality. Mitsubishi has sharply scaled back its forecast for North American sales. It now predicts sales of 185,000 in the fiscal year ending March 31, 2005, down 29.5 percent from 264,406 in the previous year.
In May, Mitsubishi had predicted just a 14.7 percent drop to 233,000.
The new forecast is in line with a broader admission by the company of the harsh reality that it faces.
Mitsubishi also slashed its forecast for sales in Japan. And it says its net loss for the fiscal year will be worse than previously projected.
But even the new North American sales figure may be ambitious. In the fiscal first half ended Sept. 30, Mitsubishi's North American sales dropped 39.7 percent to 86,948.
The company attributes its sales slide to a retreat from unprofitable fleet sales. But retail sales fell, too.
Mitsubishi issued the new forecasts along with its results for the six months to Sept. 30.
The company's net loss widened to ¥146.16 billion, or $1.32 billion at the Sept. 30 exchange rate, from $722.3 million a year earlier. In the second quarter ended Sept. 30, Mitsubishi's net loss widened to $823.7 million from $261.9 million.
Net worsened more than operating profit, in part because of restructuring costs in Japan and Australia.
Also, Mitsubishi spent $179.2 million on inspections for Mitsubishi owners in Japan who have been unnerved by a recall scandal related to defects in Mitsubishi vehicles.
In North America, Mitsubishi's second-quarter revenues fell 28.4 percent to $977.2 million. The carmaker's operating loss was $101.5 million. A year-earlier figure was not available.
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