Mitsubishi Motors, like every other carmaker, has problems to deal with.
A few days ago Mitsubishi Motors Corporation (MMC) held their annual shareholders meeting with limited numbers and strict social distancing. Some directors were in another office entirely, and many shareholders were watching elsewhere via livestream.
The report from MMC CEO Takao Kato spoke of the problems of the company, particularly with the challenges in attaining profitability. Long story short: they didn't. The company landed in the red, according to Kato.
The CEO said they did see this coming, and so they decided to make a change in their mindset: Mitsubishi Motors will no longer focus on so-called mega-markets. Kato mentioned that the company had been pouring significant resources to improve their presence and performance with a mega-market policy; the examples of these mega-markets being China and Europe.
While Mitsubishi was able to improve their performance in these mega-markets, the cost was too high. The improvements in their product line, their sales network, and human resources did yield improvements, but it increased their fixed costs in Fiscal Year 2019-20 (April 1, 2019 to March 31, 2020) versus FY 2015-16 by 30%.
“Even though we increased volume in the mega markets, we have not yet achieved the level of profit we expected.” said MMC's CEO.
So the company's management decided on a new direction, and they'll be shifting their focus away from the mega-markets. This time they're focusing on their strongest region: Southeast Asia. Yes, us.
“We made a shift in our policy to 'small but beautiful' in the second half of FY 2019, under which we will start an extensive structural reform in FY 2020.” said Kato.
Small but beautiful? Well, that's all well and good as the company has now identified the ASEAN market and Oceania as their core region and will be dedicating more resources to the region.
“Our regional strategy sets ASEAN as a core region and we aim to increase sales in the region where we can offer our core products.” continued Kato.
Historically, Mitsubishi Motors has done well in Southeast Asia. In FY 2018-19, Mitsubishi sold a total of 1.244 million vehicles worldwide, but Indonesia, Australia, Thailand, and the Philippines is already account for 379,000 of that total; or over 30%. In the Philippines, Mitsubishi Motors has consistently ranked second in terms of sales volume and market share after Toyota. The story in Indonesia is very similar too for Mitsubishi based on the success of the Xpander.
“Our product strategy sets pick-up trucks, truck-based SUVs, and MPVs which are our main products in ASEAN as core products. We will strengthen our existing products and those in the pipeline.” said Kato.
The move makes strategic sense for Mitsubishi Motors, especially since they have been designated as the leader of the Renault Nissan Mitsubishi Alliance in Southeast Asia. During Nissan's recent shareholders' meeting, COO Ashwani Gupta (also a former MMC COO) stated that they are looking at utilizing the alliance even further, and are even evaluating the possibility of manufacturing truck-based models at the Mitsubishi Motors Philippines Corporation (MMPC) factory in Laguna.
MMC CEO Takao Kato didn't elaborate on Gupta's statement, but he did say that they are starting a potential collaboration with Nissan both in Indonesia and the Philippines.