• Three year plan targets more than 30% increase in unit sales and revenues
  • Operating profit margin to reach 6% or more
  • Capital expenditure and R&D investment to increase to more than JPY600bn over the three year period
  • Product renewal to accelerate with launch of six new models including Eclipse Cross SUV
  • Market expansion planned in ASEAN, US and China
Mitsubishi plans a big push in ASEAN markets, has just opened an assembly plant in Indonesia and recently began Outlander build in Malaysia

Mitsubishi plans a big push in ASEAN markets, has just opened an assembly plant in Indonesia and recently began Outlander build in Malaysia

Mitsubishi Motors on Wednesday launched Drive for Growth, a three year strategic plan it said would deliver sustained and profitable growth, targeting an increase of more than 30% in both annual unit sales to 1.3m vehicles and in revenues to JPY2.5 trillion.
 
Under the plan, the automaker aims to achieve an operating profit margin of 6% or more by the end of fiscal 2019, up from 0.3% in fiscal 2016. The plan combines a product renewal programme with targeted market expansion and operating efficiency improvements.
 
Chief executive Osamu Masuko said: "Drive for Growth is a new roadmap for Mitsubishi Motors. We will rebuild trust in our company as our highest priority, successfully launch new vehicles, and achieve a V-shaped financial recovery. These will be the foundations for our future sustainable growth, which will involve increased capital expenditure and product development spending."
 
The plan involves a 60% increase in annual capital expenditure to JPY137bn in fiscal 2019 – lifting spending as a proportion of sales to 5.5% a year.

R&D expenses will rise by 50% to JPY133bn over the same period. In total, this will amount to more than JPY600bn in investments.

"Even with these increases, Mitsubishi Motors will maintain financial discipline and generate positive free cash flow during the period. The company intends to establish a competitive dividend policy comparable to those of other Japanese automotive manufacturers," it said in a statement.
 
As part of its investment drive, Mitsubishi Motors plans to strengthen its line of four wheel drive SUVs and pickups and to launch 11 models including the Xpander and Eclipse Cross. The product renewal programme will coincide with a market expansion drive in the ASEAN region, Oceania, US, China and Japan.
 
Masuko said: "This is an ambitious programme to maximise our strengths in growing product segments, especially four wheel drive, and to pursue growth in markets where our brand has strong potential, particularly the ASEAN region. This growth programme will also involve an efficient and disciplined operating structure as we continue to manage costs."

Under Drive for Growth, Mitsubishi Motors is targeting market share of 10% in ASEAN. Sales activities will be reinforced in the US. The company's presence in China will be strengthened with the introduction of models such as the Outlander and Eclipse Cross. And the company will invest in its sales network and product range to return to profitability in Japan by the end of the plan.
 
The strategic plan is based on three strategic initiatives:
 
Product renewal: During the period of the plan, Mitsubishi will launch 11 new models, of which six will be entirely new model changes – averaging two a year – while the remainder will be important updates of existing vehicles. By the end of the plan, the company expects its five best selling global models consisting of SUV, 4WD, and plug in hybrid electric vehicles (PHEV) to account for 70% of total sales volume. Reflecting the shift to lower emission models, the company also announced it plans to provide electrified options across its core model range including an EV kei car from 2020.
 
Focus on core markets to drive revenue growth: This year's opening of a new assembly plant in Indonesia, and the recent launch of the Xpander multi purpose vehicle, will drive the growth of the ASEAN business, the group's largest and most profitable operation. ASEAN volumes are expected to rise from 206,000 units a year to 310,000 units a year in 2019. Mitsubishi will also launch new models to assist the turnaround of its important minicar business in Japan. In the US, the company will improve its dealership networks, targeting a 30% increase in unit sales to 130,000 units in fiscal 2019. In China, Mitsubishi Motors will double the number of dealerships and more than double sales to 220,000 units in fiscal 2019.
 
Cost Optimisation: The automaker will tightly manage production costs, with a target to reduce monozukuri costs by 1.3% per year, in spite of large investments in R&D. Alongside cost management, the company will benefit from growing synergies from its membership of the Renault-Nissan-Mitsubishi alliance. Mitsubishi Motors is seeking synergies totalling more than JPY100bn over the course of the plan with the bulk of these to come from efficiencies in procurement and costs avoided in R&D.
 
Mitsubishi Motors will contribute its expertise in PHEV technology, its capabilities in SUVs and pick-ups, and market strengths in the ASEAN region to the wider synergy programme of the Alliancewhich aims to double annualised synergies to more than EUR10bn by the end of 2022.
 
"We are refreshing our product line up, investing in R&D and targeting core market growth," added Masuko. "Drive for Growth will enable us to continue the transformation of the company over the next three years."