Mitsubishi To Exit Western Markets And Focus on The Tiger Economy
Mitsubishi is barrel rolling to losses amounting to $1.33 billion by the end of 2020. Such an economic downturn would be the biggest loss suffered by the automaker in the last 18 years. The company has been on a downward sales spike for some time. European and North American territories have gradually become less profitable. Mitsubishi exited the American market in 2016, closing its production facility in Normal, Illinois. But these are not normal times, while the Covid-19 pandemic has caused severe financial stress the cracks began showing at least 5 years ago.
In 2016 Mitsubishi was caught up in a fuel economy scam, a scandal all of its own making. The company was left vulnerable, facing fines and class action lawsuits. At this point, the Renault Nissan Alliance jumped in and poached the floundering company at its weakest point. Under the leadership of Carlos Ghosn, cost-cutting measures were introduced. Then Ghosn got caught up in a financial scandal of his own making which has impacted the Alliance’s profitability.
In addition to the pandemic, Mitsubishi is floundering to recover. The company was already facing falling sales in China and Southeast Asia, territories that account for a quarter of its sales. As part of a cost-cutting plan, Mitsubishi will close a production facility in Japan which effectively ends the production of the Pajero SUV.
The company will freeze the introduction of new models to European markets. The restructuring move is part of a wider plan designed to lift the company’s operating profit to $450 billion in 2022/23 and boost operating margins to 2.3 per cent from -9.5 per cent now.