A top official at Japan's Mitsubishi Motors Corp. reportedly said on Friday he believed its North American operations would return to profit in January-March, the final quarter of this business year.

Reuters noted that MMC said earlier this week that U.S. sales were likely to be 50,000 units short of its full-year target of 233,000 as MMC reduced unprofitable sales to fleet customers and reined in profit-eroding sales incentives.

But Osamu Masuko, managing director in charge of Mitsubishi's overseas operations, reportedly said as long as dealers did not use aggressive, loss-inducing methods of selling cars, the region should return to the black in the final quarter.

The automaker posted an operating loss of 19.3 billion yen ($US172.6 million) in North America in April-June as retail sales plunged 30% from a year earlier to 53,335 units, Reuters said.

In the 12 months to last March 31, losses totalled 125.97 billion yen due to a disastrous policy of offering customers with shaky credit histories new cars with no interest and no payment for the first six months - many customers defaulted on the loans, the report added.

"This was no way of doing business," Masuko reportedly told a small group of reporters at Mitsubishi's headquarters. "Sales volume will fall, but as long as we sell cars in a sound manner we will be able to turn a profit in the fourth quarter. We're not going to repeat the mistake of chasing volumes at the expense of profits."

According to Reuters, Masuko said sales methods had been "normalised" since July, as Mitsubishi switched to attracting customers with longer warranty periods instead of big discounts, rebates and risky credit. Its sales in July skidded 53% to 11,192 vehicles.

"As far as we can tell, showroom traffic has improved in the past month, but this is typically the season for strong sales in the United States, so we'll have to see whether this holds up in September," he reportedly said.

Reuters said he added that Mitsubishi had too many sales outlets in the United States - enough to sell 500,000 units a year - and this needed to be reduced to balance with demand. Mitsubishi currently has about 630 sales outlets in the United States.

"We are under no illusion that we'll go back to selling that many vehicles any time soon," the straight-talking Masuko told the news agency. "We need to slash dealerships by quite a bit."

Reuters noted that Mitsubishi, Japan's only loss-making carmaker, has said it will suspend one of two production lines at its Illinois plant in October to bring output more in line with demand, but Masuko said, however, that he hoped to return to two-line production in the 2006-07 business year.

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