Mitsubishi pivots to North America as new profit engine as earnings dip

TOKYO — Mitsubishi, one of the smallest mass-market brands in the U.S., is getting bullish about North America with plans to enhance the local lineup with vehicle updates annually through 2030.

The Japanese carmaker will introduce these new or updated models in the region to undergird its emerging role as the Mitsubishi Motors Corp.'s main earnings engine, Senior Executive Officer Koichi Namiki said July 23 while announcing fiscal first-quarter financial results.

The region already generates more than half the company's operating profit.

The rollout comes as Mitsubishi tries to flesh out its meager four-nameplate lineup in the world's second-biggest auto market and stoke an upswing in U.S. sales momentum.

Mitsubishi now expects North America to generate 30 percent of its total global revenue in its 2030 fiscal year, up from about 25 percent today, President Takao Kato told Japan's Nikkei business daily. Executives at the earnings briefing declined to confirm the sales target but noted that North America is by far the company's biggest contributor to profits.

"Our view is that we will be able to increase our market share, sales volume and profit in North America by utilizing our current sales network and our ability to sell," CFO Kentaro Matsuoka said at the Tokyo earnings briefing.

"It is a huge market, and we are profitable now. Given the foreign exchange rates, we are focusing firmly on North America," he said. "Given that more than half of our profit comes from North America and we are making profits there, we will tap that market in our business."

Mitsubishi Motors Corp. is pivoting to North America as it rides the tailwind of a depreciated Japanese yen, which makes its exported vehicles more affordable in terms of dollars. Dollar-denominated sales from the U.S., meanwhile, deliver windfall revenues when converted back to yen. Mitsubishi ended U.S. production in 2015 and has been importing vehicles since.

Under its ongoing revival plan, Mitsubishi had planned to make its traditional stronghold in Southeast Asia a driver of growth. But sluggish volume there as well as increased competition from Chinese competitors has added urgency to the need for a balanced multimarket approach.

Mitsubishi's U.S. sales climbed 12 percent to 51,130 vehicles in the first six months of the year, despite having only four nameplates. The Outlander crossover, which comes in a plug-in hybrid variant, is the brand's bestselling nameplate. But the Mirage small car and the Eclipse Cross compact crossover saw the biggest sales increases over the first six months. The fourth nameplate is the Outlander Sport.

Mitsubishi's U.S. sales growth outpaced the overall market's 2.2 percent increase.

Industry sales in Southeast Asia, by contrast, are estimated to have dropped 9.4 percent in June for an 11th consecutive month of declines, according to Global Data. For the first half of the year, regional sales are expected to have declined 8.6 percent year on year, it said.

Retailers briefed on Mitsubishi's U.S. revival plan told Automotive News in May that Mitsubishi will bring an entry-priced plug-in hybrid crossover and a sporty passenger van this decade in a bid to "nearly double" its U.S. lineup. To help move the metal and lift consumer interest, Mitsubishi will bulk up its U.S. dealer network and introduce new retail concepts.

Mitsubishi has also said it wants to leverage partnerships to bolster its portfolio, most likely with a new electric vehicle from Nissan and a next-generation 1-ton pickup jointly developed with Nissan. Japanese ally Nissan has had a controlling 34 percent stake in Mitsubishi since 2016.

"We told North American dealerships that we would plan to introduce a new model every year, moving towards around 2030," said Namiki, the global chief of product strategy. "We plan to keep rolling out new products in North America, not just upgrades. We are thinking of various plans."

Optimism for the U.S. comes as Mitsubishi reported sliding earnings in its fiscal first quarter ended June 30. Operating profit fell 21 percent to ¥35.5 billion ($220.7 million) in the three-month period, from $281.1 million a year before. Net income declined 38 percent to $183.4 million, and revenue dipped 1 percent to $3.9 billion.

But regionally, North America added the lion's share of global operating profit, some $1.3 million, or about 58 percent of the parent company's total in the quarter. Regional operating profit in Southeast Asia, by contrast, retreated by a third to $254.9 million.

In the just-finished quarter, North American retail sales declined 7 percent to 40,000 vehicles. It was the second-biggest market behind Southeast Asia, which reported flat sales at 59,000.

Mitsubishi volume in Europe expanded 45 percent to 16,000 vehicles in the April-June quarter.

Looking ahead to the current fiscal year ending March 31, 2025, Mitsubishi forecasts operating profit to decline 1 percent to $1.2 billion.

Profits will stagnate despite an expected 10 percent increase in global sales to 895,000 vehicles because of foreign exchange rate losses and increased sales expenses, the company said.

Mitsubishi sees its North American sales growing 13 percent to 185,000 vehicles in the current fiscal year. Southeast Asia is expected to expand 16 percent 277,000, and volume in Europe is forecast to increase 19 percent to 68,000.