Mitsubishi forecasts US$3.4 billion loss for 2020 – ends Pajero production, poised to leave Europe

Mitsubishi Motors Corporation (MMC) is expecting a second straight year of losses for the current business year, and has projected it to be significantly higher than that for 2019, when it reported a 25.78 billion yen (RM1.04 billion) net loss.

Japan’s sixth-largest automaker, a member of the Renault-Nissan-Mitsubishi Alliance, said it anticipates a net loss of 360 billion yen (RM14.4 billion) for fiscal 2020 as sales plunge due partly to the Covid-19 pandemic. The company revealed the forecast at its first-quarter financial results briefing yesterday, in which it also outlined its mid-term business plan.

It has projected an operating loss of 140 billion yen (RM5.63 billion) for the coming year, compared to an operating profit of 12.8 billion yen (RM515 million) it reported for fiscal 2019. In 2018, the company posted a 111.8 billion yen (RM4.5 billion) operating profit.

The company reported a 53.3 billion yen (RM2.14 billion) operating loss in the first quarter ended June 30, which was its second operating loss in three quarters. The coronavirus outbreak has amplified the struggles faced by the automaker. Before the pandemic hit, it had already been battling falling sales in China and its largest market, Southeast Asia, which accounts for one-quarter of its total sales.

In May, it was reported that the company was planning to cut fixed costs by 20% in the next two years by shrinking its workforce, scaling down its production and close unprofitable dealerships. Yesterday, the company announced a freeze on new model introductions in Europe, signaling that it is poised to pull out from the Continent. It will also reduce its presence in North America, Reuters reports.

“To pave the way to recovery, the top priority of all executives is to share a sense of crisis with employees to execute cost reductions,” said MMC CEO Takeo Kato. The company will focus its resources on the ASEAN and Chinese market, detailing its future line-up plans for the regions in its mid-term “Small but Beautiful” three-year business plan that was unveiled yesterday alongside the announcement on financials.

The restructuring plan also sees the end of the Pajero, as reported previously. The company will cease production of the SUV – which remains in its fourth-gen form – next year, and close subsidiary Pajero Manufacturing’s facility in Gifu prefecture. The Gifu factory also produces the Delica D5 mini-van and the Outlander SUV, and production of these will be transferred to Mitsubishi’s factory in Aishi prefecture.

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