Mitsubishi seeks products from partners as profits fall on incentives

TOKYO — Mitsubishi wants to lean on friends to flesh out its meager five-nameplate lineup.

The Japanese carmaker, fielding one of the smallest portfolios in the U.S., is in talks with alliance partners to source rebadged vehicles, Executive Vice President Hiroshi Nagaoka said.

Speaking at the company's earnings announcement Thursday, Nagaoka did not specify what companies. But Mitsubishi Motors Corp. has partnered with Nissan and Renault since 2016, and Nissan Motor Co. holds a controlling 34 percent stake in Mitsubishi.

"In North America, we will receive a supply of vehicles from our alliance partners to a certain extent. We will receive what is necessary in our overall product lineup," Nagaoka said. "In the electrification shift, new cars will become necessary. So we are discussing with our partners."

Nagaoka, who oversees engineering, product strategy and design, declined to say what vehicles are under discussion, which factories might supply them or when the models might land on dealership lots.

The need for more metal grows increasingly urgent following reports Mitsubishi plans to discontinue the Mirage four-door hatchback, one of America's most affordable cars. Last summer, Cox Automotive said the Mirage was the only vehicle in the U.S. transacting under $20,000.

Mitsubishi's U.S. lineup consists of the Mirage hatchback and Mirage G4 sedan, as well as the Outlander Sport, Eclipse Cross and Outlander crossovers.

Nagaoka's comments came as Mitsubishi reported a 19 percent slide in operation profit for its fiscal third quarter ended Dec. 31. Higher incentives took a big bite out of earnings.

Mitsubishi is trying to focus more on upmarket, higher-margin vehicles such as the Outlander midsize crossover instead of its traditional go-to products in the economy segment, Nagaoka said.

Selling expenses are on the rise, but Mitsubishi wants to stay below the industry average.

"In the U.S., we used to use incentives to sell models and used low prices as our weapon in the past," Nagaoka said. "But we are now offering the Outlander PHEV to cater to premium customers by highlighting the value of our products and improving our overall customer experience."

Mitsubishi's average spending per vehicle more than quadrupled to $1,829 in the October-to-December quarter from $392 a year earlier, according to data from Motor Intelligence.

But Mitsubishi's spending was still under the industry average of $2,538 per vehicle.

Outlays on the Outlander led Mitsubishi's lineup in spiffs at $2,817. The Outlander is the brand's bestselling nameplate in the U.S., with deliveries climbing 15 percent to 49,182 in 2023. It was the only Mitsubishi nameplate with a sales increase last year.

Mitsubishi is developing a commercial lease program for the Outlander plug-in hybrid, said Executive Vice President Tatsuo Nakamura, head of global sales.

Leasing deals will be aimed at helping Mitsubishi tap tax credit incentive programs, he said.

Higher sales expenses, including incentives, lopped ¥9.8 billion ($69.5 million) off parent operating profit in the quarter. Rising costs for labor and raw materials also dented results.

Operating profit declined to ¥55.9 billion ($396.5 million) in the quarter ended Dec. 31, from ¥69.1 billion ($490.1 million) a year earlier. Net income retreated to ¥35.3 billion ($250.4 million) from ¥48.1 billion ($341.2 million) a year earlier.

Global wholesale deliveries increased 2.2 percent to 273,000 vehicles in the three-month period, as retail sales declined 3.9 percent to 196,000.

North America is Mitsubishi's second-biggest market after Southeast Asia. Sales there climbed 5.8 percent to 36,000 vehicles in the quarter, as U.S. sales fell 5.6 percent to 19,604.

European sales declined to 13,000 vehicles from 19,000 the year before.