Mitsubishi Motors CEO Rolf Eckrodt said on Wednesday that he was confident about turning around the company’s rickety domestic fortunes, forecasting a 13% jump in sales this year despite stagnant car demand in Japan, Reuters reported.
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The news agency said Mitsubishi’s passenger car sales plunged 12% in the business year ended March 31 due to a dearth of new models as the car maker concentrated on restructuring itself after a crippling recall scandal three years ago.
In an interview with Reuters, Eckrodt said he expected the Japanese market to stay flat for the next few years, but that he was confident Mitsubishi would be able to grow with the help of a series of new models.
“It’s a race against strong competitors but we expect 400,000 units for this fiscal year, and then we’ll try to increase that step by step when the new models come,” Eckrodt told Reuters as Mitsubishi launched its new Space Wagon-replacing Grandis minivan.
Including the Grandis, Mitsubishi Motors has 14 new models due to come out before the 2008 financial year, which should set the stage for a further expansion of its sales volume, Eckrodt told Reuters.
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By GlobalDataThe news agency said that securing solid sales in Japan has become increasingly crucial for Mitsubishi since its sales in the United States have been skidding recently despite heavy spending on incentives.
So far this year, Mitsubishi’s domestic sales of full-size cars are up 22%. But that is mainly because it didn’t have the help of new models like the Colt subcompact, launched in November, to lift sales in the year-earlier period, Reuters noted.
Underscoring the tough conditions in the Japanese market, even the once-popular Colt sold fewer than half the monthly sales target of 7,000 units last month, Reuters said.
The news agency said the target for the new Grandis is a more conservative 3,000 units, but the competition looks set to be just as harsh. Since 2002, the minivan segment has seen three new models from Toyota and another from Nissan. Later this year, Nissan and Honda Motor will follow with one fully-redesigned minivan each.
Reuters noted that Mitsubishi also has the added hurdle of overcoming an image problem after the systematic cover-up of customer complaints over two decades came to light three years ago. The scandal eventually led to the recall of nearly two million cars worldwide.
Even Eckrodt conceded that expanding sales in Japan hinged on improving its image, as well as its products and sales strategy, Reuters said.
“We have to do some homework still to be close to breaking even (in Japan) sometime probably in 2005,” Eckrodt told an earlier news conference.
According to Reuters, he added, however, that Mitsubishi was taking concrete steps to improve its chances, citing, among other things, its plan to spend 35 billion yen ($US300 million) over the next two years to renovate its showrooms. Under a new domestic sales strategy, Mitsubishi also wants to improve its sales service through intensive training programmes.
Discussing the US market with Reuters, Eckrodt, a 36-year veteran of Mitsubishi partner DaimlerChrysler, conceded that sales have been soft recently, but said new model launches would help Mitsubishi succeed in that market over time.
“For the medium term, we will be very successful and we are optimistic,” Eckrodt, who celebrates his 61st birthday and first anniversary as Mitsubishi’s president next month, told Reuters.
The news agency noted that Mitsubishi’s sales of cars and light trucks in the United States are down 21% so far this year, hurt by fierce competition as Detroit’s ‘Big Three’ automakers sweeten their price deals and rival Japanese makers launch a raft of popular new models.
Because of Mitsubishi’s heavy dependence on the North American market — one of its few sources of profit during the past few years — analysts have told Reuters that the company also faces huge risks from the dollar’s fall against the yen.
But Eckrodt told Reuters that for last year, the stronger euro helped offset the unfavourable swing in the dollar, and that Mitsubishi had an “intelligent hedging policy” to shield it against future volatility.
Thanks in large part to the healthy euro which makes exports from Japan cheaper, Mitsubishi expects to return to the black in Europe in 2004, Reuters said.
Mitsubishi Motros Europe announced Thursday that it would sell the new Grandis from 2004, the fifth in a series of much-needed new model roll-outs.
According to Reuters, Mitsubishi Motors, owned 37% by DaimlerChrysler, said last month it expected to rake in 38 billion yen in group net profit for last business year, more than three times the year-earlier profit and the best in its history.
