TOKYO -- Mitsubishi's newly appointed CEO says the automaker's low-volume U.S business requires a rethink in line with the parent company's new "small but beautiful" strategy, but he added that pulling the plug on sales in the region is "probably" not an option.
Takao Kato, who helped establish Mitsubishi's joint manufacturing plant with Chrysler in Illinois some three decades ago, conceded Mitsubishi's U.S. strategy is still a work in progress.
"If you are a big-scale OEM, of course you will be able to secure a profit. But will that be appropriate for us too, at MMC?" Kato said in a Monday news conference, his first since being named CEO last week. "This is something we believe we should deliberate on going forward."
Kato, 57, who currently leads Mitsubishi Motors' important Indonesia unit, will take the reins from Chairman and CEO Osamu Masuko pending approval at a June 21 shareholders' meeting.
Masuko, 70, who has led the company since 2005, will stay on as chairman.
Kato said he will continue to implement the "small but beautiful" strategy championed by Masuko. That approach aspires toward a more profitable business with steady growth, even if it means missing out on rapid volume expansion. Mitsubishi will also redouble its focus on its strengths, such as small cars for emerging markets, especially in its Southeast Asia stronghold.
Kato will have a guiding hand in penning a new mid-term business plan that the Japanese automaker intends to unveil in the current fiscal year that started in April.
Masuko said he wanted a new CEO to lead the plan and stay on to implement it. Masuko added that he chose Kato because of Kato's experience in navigating different cultures.
Aside from establishing the U.S. plant in Normal, Ill. (now home to Rivian Automotive), Kato also helped set up a new assembly plant in Indonesia that opened in 2017 and a joint-venture plant with PSA Group in Russia in 2011. Chrysler eventually pulled out of the U.S. joint venture, called Diamond Star Motors, and Mitsubishi ceased its independent, money-losing operations there in 2016.
"It's not easy to be in that market," he said of the U.S.
When asked if Mitsubishi might consider pulling out of the U.S. market, as Japanese rival Suzuki Motor did in 2012 after long struggling to ignite sales, he said probably not.
"Sales are being continued. North America is one of the biggest markets. Therefore, exiting from the sales market would probably not be an option," Kato said.
Masuko drove Mitsubishi to record profit after years of losses, and under his tenure as CEO, U.S. sales rose every year. But Mitsubishi's U.S. volume has plunged from a peak of 345,111 in 2002. It sold 118,074 vehicles in 2018, and sales were up 12 percent through April this year.
Masuko's recovery work at Mitsubishi was derailed in 2016 when the company admitted to cheating on fuel-economy ratings for several nameplates sold in Japan.
The bogus fuel economy results were discovered when Nissan, who was partnering with Mitsubishi in a minicar joint venture, noticed discrepancies and called Mitsubishi out on it.
That triggered a plunge in Mitsubishi's sales and share price, opening the door for Nissan CEO and Chairman Carlos Ghosn to engineer a bailout deal in which Nissan took a controlling stake in the financially troubled Mitsubishi. Masuko now has a seat on the four-member governing board that oversees the alliance between Nissan, Mitsubishi and their French partner Renault.
After Mitsubishi's latest leadership overhaul, Masuko will continue to oversee alliance matters, while Kato will be in charge of daily operations at Mitsubishi.