Mitsubishi Motors has forecast its second straight year of losses due to a fall in sales caused in part by the coronavirus pandemic.
The automaker expects an operating loss of JPY140bn yen ($1.33bn) for the fiscal year ending March 2021 as it embarks on a plan to shrink its workforce and production, and close unprofitable dealerships to cut 20% of fixed costs in two years, Reuters reported.
This would be Mitsubishi’s biggest loss in at least 18 years according to company financial records dating back to 2002.
“To pave the way to recovery, the top priority of all executives is to share a sense of crisis with employees to execute cost reductions,” chief executive Takeo Kato told Reuters.
The coronavirus crisis has exacerbated struggles at the company which had already been battling falling sales in China and southeast Asia, its largest market which accounts for a quarter of its sales, the report said.
As part of its restructuring plan, Mitsubishi, a junior member of the Nissan-Renault automaking group, said it would stop making the Pajero SUV crossover model next year, and close the plant in Japan which makes the vehicle.
MMC said it would reduce its presence in Europe and focus on growing in Asia.
The restructuring plan was designed to lift the company’s operating profit to JPY50bn yen in 2022/23 and boost operating margin to 2.3% from -9.5% now.
Reuters said Mitsubishi reported a JPY53.3bn operating loss in the first quarter ended 30 June, its second operating loss in three quarters, after vehicle sales more than halved to 127,000 units from a year earlier.
The company booked extraordinary losses of JPY116bn in the period and expects such losses to total JPY220bn this year.
To preserve cash, the automaker said it would not pay a dividend this year, Reuters noted.