How does the U.S. market look?
If North America is doing well and sales grow to 16.5 million or 17 million, we would be very thankful. My concern is other countries. I'm not truly relaxed about the situation because the world economy will inevitably influence the U.S. economy.
In North America, you are expecting Mitsubishi's first regional operating profit since 2007. What is driving the turnaround?
One of the major contributors has been the Outlander Sport, which is manufactured in the U.S. and selling well. And we are importing the Mirage hatchback from Thailand, and it's performing beyond expectations. When we introduced it, we didn't think it would sell as well as it is. There was a hike in volume, and it helped revitalize the dealers. And it is contributing to our profit.
How is profitability at the assembly plant in Normal, Ill.?
We are exporting from the U.S. plant to Russia, Latin America and the Middle East. Because of the declining economy in Russia, the Ukraine issue and declining oil prices, Russian auto sales are dropping. So we expected a better result from Russia.
The drop in Russian volume is being absorbed by the North American market. But if we were able to sell as planned in Russia, it would be extra positive sales for us.
Can Mitsubishi add new products to the Normal plant?
We don't have plans to add new models at the moment. To produce vehicles locally, you have to secure a certain volume.
How does Mitsubishi plan to expand its U.S. lineup?
We've actually started to review the small sedan we manufacture in Thailand for sale in the U.S.
The Mirage reception was much better than expected. So it's not the case that we can't introduce small cars to the U.S. market. If the fuel economy is good, it will be accepted. That is why we are considering an introduction of the small sedan. We haven't really decided what the sedan's name will be.
We also have the Outlander PHEV plug-in hybrid, which is already sold in Europe and Japan. We are planning to introduce that to the U.S. market.
So there's going to be the small sedan and the Outlander PHEV. We'd like to introduce both to North America in the latter half of the next fiscal year [which starts April 1].
We do not have a D-segment sedan. So right now, we have only the Lancer sedan in the U.S. And we are still studying the possibilities for a D-segment sedan.
We are putting our emphasis on SUVs in the U.S. We already have the Outlander and Outlander Sport. But when you look worldwide, we also have the Pajero [previously sold in the U.S. as the Montero]. So we have to think about introducing the next-generation Pajero to the U.S.
Including the plug-in hybrid version of the Pajero?
That is also under study at the moment. U.S. fuel economy regulations will become even stricter after 2020. So we need to introduce electrified drivetrains. When we do the full model change of the Pajero, there's going to be a PHEV version. And we would like to introduce it.
The U.S. introduction of the Outlander PHEV was delayed partly because of battery-production constraints. What is the status of expanding battery output?
Last year, battery production capacity was 30,000 units. So we were limited in terms of where we could sell it because of capacity constraints. In the current fiscal year, production capacity has expanded to 50,000 units. And in the next fiscal year, the capacity will expand to 60,000 units.
From fiscal year 2016 [ending March 31, 2017], we have to think about the volume because there will also be a plug-in version of the Outlander Sport. So the model lineup will increase, and we have to think about how to handle the battery issue.
What about a next-generation electric vehicle to succeed the i?
When you talk about pure EVs, Japanese minicars are very well-suited. So we would like to realize an all-electric version of a minicar, which we are actually cooperating on with Nissan now. In the future, there will be technological innovations in the battery, which will bring costs down. That means there will be pure EV versions for both A-class and B-class vehicles.
But that is for Japan, right? Have you abandoned plans for an EV for the U.S.?
No. We are thinking of pure EVs for the A-segment and B-segment, and that's not going to be too far in the future. But if you are asking whether people in America should expect electric vehicles in the C-segment and D-segment, we do not have such plans for that at the moment.
What percent of Mitsubishi's total sales today are electrified vehicles, including EVs and hybrids?
We make about 50,000 such vehicles. That's 50,000 out of 1.08 million. So that's about 4.6 percent.
You want to raise that to 20 percent by 2020.
That's a big jump. But there are stricter carbon dioxide regulations in Europe and the U.S. So this is not an impossible target. The big question is whether we can get sound business from China. There are big environment issues there with air pollution. There is more of a need for these electrified drivetrains there. If we can manage that well, including local procurement of batteries, the Chinese market could be a good market for Mitsubishi.
Mitsubishi wants 150,000 in sales in North America for the fiscal year ending March 31, 2017. And it expects 116,000 this year. Is the goal conservative?
One step at a time. The North American market is doing quite well. Unless there is a dramatic change in the U.S. economy, I think it's going to be a business contributor.
So there are no plans to withdraw from the market?
You always ask that question. But we are trying to introduce new vehicles. We aren't thinking of withdrawing whatsoever.
What has been Mitsubishi's response to the Takata airbag recalls?
This is a very important issue. We don't use a high percentage of Takata parts. It's fairly limited. We are retrieving the parts and doing investigations of the failed parts. And if necessary, we would expand the regions of our investigations.
Mitsubishi has about 12,000 affected vehicles in four markets: Florida, Hawaii, the Virgin Islands and Puerto Rico. We are told by [the National Highway Traffic Safety Administration] that these parts experience failure in high-temperature and high-humidity areas. This is a voluntary recall, so we are contacting the customers who have these vehicles.
Who is your usual supplier?
Toyoda Gosei and Autoliv.
Will Mitsubishi stop using Takata?
That is not under review yet. We have to do appropriate countermeasures first before we change suppliers.