The European operations of Mitsubishi Motors Corporation (MMC) have reported an operating profit for the third year in a row. At EUR177m, the FY2005 result was up 234% over FY2004's EUR53m.

MMC attributed the result to a 10.5% increase in vehicle sales, "strong" parts and accessory sales (EUR467.9m turnover), a 17% reduction in fixed costs, an improvement in the exchange rate between the euro and the yen and efficiency improvements such as reducing the number of European ports of entry for ships from Asia from 15 to 6, resulting in shorter order lead-times.

In what the automaker described as "a fairly stable European market (up just 1.04% between FY04 and FY05), MMC´s European operations reported total sales of 267,220 vehicles, up 10.5% on the FY2004 total of 241,758 units.

"This result marks the third successive year of growth for Mitsubishi Motors Europe (MME), ahead of its set 254,000 unit target and in line with its "natural weight" in the European market of ± 250,000 sales per year," MMC said.

"For FY 2006, Mitsubishi Motors´ European operations will build on the progress made over the last three years, preferring profit to sheer volume, while continuing to keep the pressure on costs."

FY2006 changes will include the relocation of Mitsubishi Motors Deutschland´s head quarters and its restructuring; the "refocusing" of Mitsubishi Motors France - involving the progressive disposal of non-strategic wholly-owned dealers and the appointment of up to 15 new independent dealers; the closure of Mitsubishi Motors Deutschland's warehouse in Trebur, Germany and the associated commencement of a direct-to-dealer parts delivery service to all German dealers from a newly expanded parts warehouse in Born, The Netherlands; and improved coordination of stock management through the port of entry consolidation and the move to harmonised vehicle specifications for various country groupings.

In September 2006, Mitsubishi will launch the US-built Galant in Russia and Ukraine providing, it said, these markets "with a strong competitor [to Toyota's Camry which will be built in St Petersburg from 2007] in the rapidly growing 'business class sedan' segment and allowing loyal customers of the best-selling Lancer to progressively trade up within the Mitsubishi family".

The new Outlander, already on sale in Japan and on sale in the US from October, will be launched Europe in the last quarter of FY2006 - the first quarter of 2007.

Mitsubishi Europea is also expected to launch its new C-segment Lancer model line during 2007. The current model is the top-selling fully imported car in Russia.