Mitsubishi Motors Corporation (MMC) has announced a new mid-term business plan titled New Stage 2016 for the three years from fiscal 2014 to fiscal 2016.
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Under the mid-term business plan titled Jump 2013, MMC was able to achieve record-high profits in both ordinary income and net income in the past fiscal year and this year expects to achieve profits that exceed the previous year’s results.
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Further growth will be achieved with strong-selling pickup trucks, SUVs and crossover models as strategic products while steadily meeting the globally growing need for eco-car technologies and safety technologies, and rising mid-to long-term sales in Asian markets.
The five basic policies of New Stage 2016 are: Revenue growth by launching strategic models; enhancing the MMC brand and identity; reinforcing MMC production base in ASEAN countries, establishing an SUV brand with a strong foothold in emerging markets and effective use of resources through business partnerships.
Strategic models
MMC regards pickup trucks, SUVs and crossover models, which represent the major part of the global sales of the MMC Group as strategic products, and plans to successively introduce new models of the Triton (L200 in some markets) and Pajero Sport, (Montero Sport or Nativa in some markets) which can be considered MMC’s key models, in fiscal 2014 and fiscal 2015.
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By GlobalDataIn addition, MMC is currently working on the development of the next-generation RVR (ASX or Outlander Sport in some markets), Delica D:5, and Pajero (Montero or Shogun in some markets), and technology development for the expansion of plug-in hybrid EV models, and plans to achieve revenue growth by successively introducing those strategic products and technologies into the market starting from fiscal 2015.
The target retail sales volume of the MMC Group in fiscal 2016 is 1,430,000 units representing a growth of around 30% compared with the current sales volume forecast for fiscal 2013, by increasing the proportion of strategic products – pickup trucks, SUVs and crossover models – to 63% of sales volume (retail sales volume of MMC brand vehicles) in fiscal 2015 from 57% in fiscal 2013 and 74% of net sales in fiscal 2016 from 69% in fiscal 2013.
Technology
MMC will continue developing next-generation technologies. Electric vehicle technology is considered to fill an important role in complying with environmental regulations which are being strengthened globally, and MMC aims to increase its production ratio of EV and PHEV vehicles to 20% in 2020 as a leading company in electric vehicle technology.
At the same time, MMC, in addition to the development of next-generation engines that achieve both driving performance and environmental performance, will further evolve MMC’s unique technology, the S-AWC four-wheel integrated vehicle dynamics control system and a group of active safety technologies that are used in the Outlander, called e-Assist”, while expanding the range of models in which those technologies are used. Moreover, MMC will aggressively pursue the integration of information technology in vehicles by adopting connected car technology by which vehicles are connected to the internet using smartphones.
Emerging markets
MMC has been aggressively strengthening business in emerging markets, and has prepared a foundation for future expansion of profits in each region, by establishing new plants or commencing production at joint venture companies particularly in ASEAN countries, China and Russia. MMC expects to realise benefits from those measures, and further move forward with the expansion of sales and profits of business in emerging markets, centring on Asia.
Among these regional endeavours, in the ASEAN region MMC will aim to further develop business centring on Thailand and Indonesia, where MMC has a strong presence, and position the Philippines as another core market and strengthen operations there, thereby building a flexible framework in which MMC will be able to carry out production and sales including the introduction of new models in accordance with demand trends in each country.
Mature markets
In addition, MMC recognises that structural reform in mature markets and growth in emerging markets as being mutually inseparable. Therefore MMC will accelerate measures to improve profits in mature markets.
In Japan, MMC will aim to further develop the minicar business through NMKV, which is a joint venture established with Nissan Motor Company engaged in the design and development of minicars, and at the same time, will work towards improving sales efficiency and profitability by narrowing the number of models and expanding the sales volume per model.
In North America, MMC will aim to improve sales volume by revitalising sales networks through the introduction of new models and by strengthening advertising, and will at the same time work towards improving production efficiency at US plants by producing vehicles to be exported to foreign countries.
In Europe where MMC achieved lower fixed costs and improved profitability through the sale of NedCar in the Netherlands in 2012, MMC will seek recovery of sales volume and expansion of profits by maximising the effect of the introduction of major models such as the new Triton (L200) model.
Structure
MMC will also take action on fundamental cost improvement by aggressively driving forward reform of its operating structure. It aims to achieve an optimum balance of global production capacity by on one hand expanding production in emerging markets in which demand is expected to grow, while on the other hand maintaining adequate product capacity in mature markets and moving forward with streamlining and introducing next-generation production technology at plants in Japan. So, MMC’s overseas production ratio is expected to grow.
On the other hand, MMC is proceeding with an increase in operating rate at the Mizushima Plant which is the base of minicar manufacturing through projects carried out by NMKV, and will aggressively move ahead with effective use of resources through business partnerships.
Costs
In addition, by reducing the number of previous generation models and region-specific models, MMC plans to reorganise and integrate its number of platforms from nine as of fiscal 2013 to seven by the end of fiscal 2016, and the number of models from 18 as of fiscal 2013 to 13 by the end of fiscal 2016, and will proceed with cost reduction by the reorganisation and integration of models.
MMC will continue activities aimed at decreasing total costs under a committee directly controlled by the president which since its establishment has steadily been achieving results, and will aim to decrease costs for the MMC Group by the scale of JPY110bn in fiscal 2016 as compared to fiscal 2013.
R&D
In carrying out the measures described above, a further strengthened framework in emerging markets, pioneering research to enhance product competitiveness and development of advanced technologies such as eco-friendly technologies are essential. The MMC Group plans to annually spend on average JPY100bn in capital expenditure and JPY80bn yen on research and development costs during the period of New Stage 2016.
In addition, MMC will aim to utilise its management resources while pursuing revenue/profit opportunities through partnerships with other automobile manufacturers, which are beneficial for both parties.
Quality
When it comes to vehicles, MMC believes that quality is the most important aspect required by customers to safely travel in their vehicles. In order to continue to meet customers’ expectations, MMC aims to be at the top level in the industry for all aspects of vehicle quality, and the MMC Group as a whole will focus on efforts aimed at quality upgrades.
As achievement targets, MMC will aim, for new models to be introduced in fiscal 2013 onwards, to halve compared to fiscal 2012: the number of failures which occur within three months from delivery; the ratio of defective components from supplier; the period from any occurrence of failures to determination of countermeasures.
The MMC Group expects to further improve profitability by steadily carrying out the various measures described above, and aims to achieve JPY2,600bn in net sales (the forecast for fiscal 2013 is JPY2,130bn), and JPY135bn in operating income (JPY100bn yen) as its target results for fiscal 2016.
