TOKYO — Mitsubishi Motors Corp. will refocus its lineup on utility vehicles and electrified drivetrains and lean heavily on emerging markets under a new three-year business plan that aims to boost global sales 29 percent from this year's forecast.
In North America, the company targets a 36 percent sales increase to 150,000 units in the fiscal year ending March 31, 2017, and will boost exports of its Outlander Sport compact crossover from its Normal, Ill., factory, its only assembly plant in the region.
In Europe, Mitsubishi aims to lift sales by a third to 160,000 units in that time frame, from the 120,000 units it expects to sell in the current fiscal year ending March 31, 2014.
The business plan also aims to raise money through selling new shares so that it can buy back preferred shares in an attempt to normalize the company's shareholder structure. The move could open the door to future capital tie-ups with other manufacturers.
President Osamu Masuko, unveiling the blueprint today, said his company will strengthen its SUV and crossover offerings, expand its footprint in emerging markets and maximize technology and product sharing alliances with other carmakers.
The plan, dubbed New Stage 2016, starts with the fiscal year beginning April 1, 2014, and runs through the fiscal year ending March 31, 2017.
Mitsubishi, riding record profits, will channel more money into r&d and capital expenditures. It will also step up the pace of cost cutting in a push to lift operating profit 35 percent to 135.0 billion yen ($1.37 billion) in the final year of the plan, from a target of 100.0 billion yen ($1.02 billion) in the current fiscal year. Masuko's goal on operating profit margin: 5.2 percent, compared to this year's 4.7 percent.
SUV offensive
Over that period, Mitsubishi plans to launch a raft of new or refreshed global SUVs, vans or crossovers. Doing so will push global sales to 1.43 million vehicles in the final year of the plan, from 1.111 million vehicles forecast for the current fiscal year ending March 31, 2014.
"We intend to grow our global sales through the introduction of strategic vehicles," Masuko said, adding that the focus will be on the brand's traditional strength in SUVs.
Mitsubishi will trim two vehicle platforms from its nine-platform lineup, and reduce its product portfolio to 13 models, from 18. That will help the company cut costs by 110.0 billion yen ($1.12 billion) over the three-year period, up from savings of 90.0 billion yen ($914.3 million) in the outgoing business plan, which ran from the fiscal year ended March 31, 2012, through the current fiscal year ending next March.
The company will also push electrified drivetrains in a bid to make 20 percent of its vehicle output either all-electric or plug-in hybrid by 2020, he said. That will entail the development of a next-generation electric vehicle technology that gets a longer driving distance on each charge and a lower price point. Mitsubishi will downsize EV components and aims to introduce a wireless charging system.
Sedans will be deprioritized and some will be supplied on an OEM basis by rivals.
First up in strategic vehicles will be a revised Triton pickup, due next year and targeting emerging markets. From the fiscal year starting April 1, 2015, Mitsubishi plans to introduce new versions of the Pajero Sport crossover, the Pajero SUV and the Delica D:5 van.
Masuko did not say what new markets those nameplates would be expanded to. But the redesigned Pajero is expected to return to the United States.
In that period, Mitsubishis also plans to introduce an updated Outlander Sport crossover, and new compact plug-in hybrid crossover and a large plug-in hybrid SUV.
The Outlander Sport is already built and sold in the United States, and that market would presumably get the redesign. Mitsubishi did not say where the models would be sold.
A clutch of key strategic models, comprising the Outlander, Outlander Sport, Pajero, Pajero Sport and Triton, will take an even bigger share of Mitsubishi's global sales. That share should rise to 63 percent of its global retail volume, from 57 percent today.
Shareholding overhaul
Key to the plan is buying back the preferred shares held by Mitsubishi group companies.
Normalizing the shareholder structure is a key milestone in Masuko's recovery plan, which is quickly gaining momentum. He led Mitsubishi to an all-time high net income of 37.98 billion yen ($385.8 million) in the fiscal year ended March 31, 2013, and targets an 84 percent leap to another record net income in the current fiscal year ending March 31, 2014.
This fiscal year would mark the fifth straight year of rising net profits.
Dissolving those shares, a portion of which will be converted to common stock, could clear the way for Mitsubishi to attract other investors – especially other carmakers interested in capital tie ups. Cash-strapped Mitsubishi is seen as needing those alliances to share costs, fill out a sparse lineup and leverage economies of scale.
Indeed on the eve of unveiling the mid-term plan, Mitsubishi announced it was furthering technology and vehicle development ties with the Renault-Nissan Alliance. That deal includes plans to sell a South Korean-built Renault-based sedan in the United States.
The preferred shareholders, Mitsubishi Heavy Industries Ltd., Mitsubishi Corp., Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Trust and Banking Corp., hold about 34 percent of the automaker. They stepped in a decade ago to save the Mitsubishi Motors after DaimlerChrysler dumped it as its Asia partner amid a defect cover-up scandal in Japan.
But Japanese media have blamed those holdings, which get priority in dividend payouts over common shares, for torpedoing an earlier attempt by Mitsubishi to form a capital tie-up with France's PSA/Peugeot-Citroen. Those companies scrapped such talks in 2010.
Mitsubishi plans to issue 210.0 billion yen ($2.13 billion) in new shares and use that money to buy back a chunk of the preferred shares, at a discount from their original purchase price. The preferred shareholders will also convert some of their preferred shares into common stock. Under the plan, the total number of outstanding shares should drop 10 percent to 1.115 million, thereby mitigating the dilution of selling new shares.
The plan, which requires shareholder approval at a Dec. 26 meeting, aims to complete the new share offering and the preferred share buyback by June 30, 2014.
Gains in N. America
The new plan targets aggressive sales growth in booming emerging markets. Sales in the ASEAN countries of Southeast Asia should climb 44 percent. China sales are seen rocketing 82 percent. Russia volume is expected to advance 22 percent.
But Mitsubishi is also forecasting big gains in mature markets such as North America, where Mitsubishi has seen sales plummet in recent years.
Mitsubishi forecasts North America sales to climb by more than a third to 150,000 units in the fiscal year ending March 31, 2017. That's up from a projected 110,000 vehicles in the current fiscal year ending March 31, 2014.
Introducing new models will spur sales, Masuko said. The Mirage small car just went on sale, and Mitsubishi plans to introduce a plug-in hybrid version of the Outlander crossover.
Yet, Mitsubishi's targets are still far below its historical sales levels. Mitsubishi's sales in the United State alone peaked at 345,111 units in 2002.
Masuko wants to combat perennial operating losses in North America by cranking up the capacity utilization rate at the Normal, Ill., plant. "We intend to improve the manufacturing efficiency of our U.S. plant by producing more vehicles for export," Masuko said. He did not say what the new target export level would be, but he said the company is looking at possibly adding production of another nameplate at the plant.
Masuko said the Outlander plug-in hybrid, already on sale in Japan and Europe, may not arrive in the United States until 2015, because a bottleneck in battery supply.
By leaning on partners, Mitsubishi will farm out sedan assembly to other companies and focus its r&d budget on utility vehicles and electrified drivetrains.
At this month's Tokyo Motor Show, it will unveil three electrified concepts: a plug-in hybrid SUV, a plug-in crossover and a microhybrid van with an engine start-stop system.
Renault sedans
Expansion in North American will be buttressed by the Renault-Nissan vehicle cooperation deal announced Nov. 5.
Under that deal, Mitsubishi Motors Corp. plans to sell a Renault-based mid-sized car in the United States. The car will be the first of two Renault-based sedans sold by Mitsubishi under the product and technology exchange. The cooperation also includes joint development of an electric car and a new compact car, both to be sold globally.
The larger sedan, which was not named by the companies, will made at a Renault-Samsung plant in Busan, South Korea. The car also will be sold in Canada.
Masuko said that car is intended as a replacement for the Galant.
The second sedan would compete in the global compact segment.
The deal will mark the rare arrival of a Renault-based vehicle in the United States and helps bolster a beleaguered Mitsubishi lineup that is short on new vehicles, especially sedans. Mitsubishi killed the Galant and the Lancer sedan is rapidly getting dated.
If the Renault tie-up proceeds smoothly, it is possible Mitsubishi may not independently develop a next generation for its C-segment Lancer, spokesman Shigeru Jibiki said. But those plans are still under consideration, he said. "We want to focus on our strengths and focus our investments there," Jibiki said. "Our focus is more on SUVs and not sedans."
Indeed, the chart showing vehicle silhouettes representing product rollouts during New Stage 2016 did not include a single three-box sedan.
Renault left the United States in 1987 after it sold its interest in American Motors to Chrysler Corp.
The agreement builds upon several product exchanges between Renault-Nissan and Mitsubishi, as the companies seek partners to maximize plant capacity and cut costs through volume.
EV sharing
As part of the latest deal, the companies also aim to share technologies and "product assets" related to electric vehicles and recent product platforms.
Nissan is the global market leader in electric vehicles, with its Leaf EV, while Mitsubishi, which markets its own EV called the i, has made EVs and hybrids a central pillar of the company's mid-term business plan.
Mitsubishi and Nissan will further cooperate to develop a new small car to be sold globally. An electric version of the car is also planned. That car will be based on a jointly developed platform for Japan's minicar segment, a type of car restricted in overall dimensions and restricted to engines no bigger than 0.66-liters.
Masuko said he will bost r&d spending about 30 percent to an average of 80.0 billion yen ($812.7 million) a year over the next three years, compared with 63.0 billion yen ($640.0 million) a year over the outgoing three-year business plan.
