The European operations of Mitsubishi Motors Corporation posted a 58% operating profit increase to EUR280m for the fiscal year (FY) ended 31 March 2007.

Among reasons for the improvement, Mitsubishi Motors Europe (MME) cited a vehicle sales increase of 5.45%, strong parts & accessory sales boosted by the success of the new L200 truck line, an improvement in the exchange rate between the euro and yen, successful launches of new Pajero, Outlander and L200 models contributing to a 4% increase in total sales revenue to EUR4,418m, and further fixed cost reductions of 13%, building upon the 17% reduction achieved in FY05.

MME also cited significant restructuring in Germany involving the relocation of Mitsubishi Motors Deutschland's headquarters from Trebur to Hattersheim, the closure of the parts warehouse and the commencement of a direct-to-dealer parts delivery service from MME's newly expanded warehouse in Born, The Netherlands, a consequent "very strong" profit contribution from the German unit and Mitsubishi Motors France's return to operating profit.

In a relatively stable European market (down 0.52% between fiscal years 2005 and 2006), MMC´s European operations made 281,787 retail sales, an increase of 5.45% year on year. This was in line with the target of 280,000 units.

MME ranked second amongst MMC's business regions, contributing strongly to the MMC's return to net income in FY2006 (Y8.7bn).

"For FY 2007 Mitsubishi Motors´ European operations will aim to continue to build upon the progress made over the last four years. MME will therefore continue to target profit generation over opportunistic volume in FY07 and beyond," the automaker said.

This fiscal year will see significant changes for MME. Since 1 April, Russia became a "stand-alone" region reporting directly to MMC in Japan rather than MME.

"This strategically pioneering and pragmatic step recognises the very real opportunities to further build business scale in this fast growing market and the fact that product requirements are very different from western & central Europe," MME said.

"In this respect Mitsubishi is ahead of all other import brand manufacturers represented in Russia which properly reflects the brand's strength in the market."

This decision will allow MME to focus exclusively on western and central Europe where, with the launch of C-segment representation [a major new Lancer line], the opportunities to develop the business above the current 200,000 units are considerable."

The FY07 launch of the redesigned Lancer will take the Japanese automaker into the heart of the European market, filling a significant gap in its product range.

One of several derivatives made possible though MMC's ambitious 'Project Global' platform - already successfully previewed with the second generation Outlander - the new Lancer line-up (four-door 'Sports Sedan' and 'Evolution' five-door 'Sportback' with petrol and diesel engines and manual or CVT automatic transmissions) will allow Mitsubishi as a brand to "dramatically" increase its European product coverage from around 30% to about 50%.

"This will obviously attract new customers to Mitsubishi," the automaker said.

Further initiatives for significant business improvement in FY07 will include continued strengthening of dealer networks in western and central Europe, adding to the 56 new dealers in Germany, 15 in Italy and 17 in France appointed over the past 18 months.

MME expects a growing contribution from parts and accessory sales resulting from the growth and renewal of its vehicle parc over the past decade (from 2m in 1997 to 3m in 2007).

It also expects stronger sales in markets where it has passed control to independent importers (Denmark, Spain, Switzerland, Sweden) and will continue to focus upon reducing fixed costs and improvements in marketing expenditure efficiency.

Tim Tozer, the president & CEO of Mitsubishi Motors Europe, said: "Very pleasingly, European sales of Mitsubishi Motors have delivered strong profits to MMC for the fourth successive year.

"Despite now focusing within mature competitive markets, I am certain that European sales will continue to represent a source of stable and sustainable profit for Mitsubishi Motors Corporation in fiscal 2007."