Mitsubishi Motors Corp forecast on Thursday a 19 percent fall in operating profit this year as it reins in aggressive growth amid slowing global car demand and charts a new course after the ouster of former chairman Carlos Ghosn.
Japan’s sixth-largest automaker, in which Nissan Motor Co holds a controlling stake, expects profit to fall to 90.0 billion yen ($821.02 million) in the year to March, after a 14 percent rise to 111.8 billion yen in the year just ended. Mitsubishi said the need to invest heavily to develop and market new, on-demand transportation services and lower-emissions vehicles to comply with tighter regulations would put pressure on the automaker’s growth prospects in the coming years.
It expects global sales to rise 4.9 percent to 1.31 million vehicles in the current year, slowing from the 13 percent growth seen in the year ended March as it sees sales growth slowing in Southeast Asia, a key market which has more than doubled in the past decade.
Mitsubishi CEO Osamu Masuko said that the automaker would accept slower sales growth by easing the pace of expansion in ASEAN countries and growth markets of China and the United States in the coming years to ensure sustained profitability.
“We need to drastically revise our strategy even if we experience a temporary stall in performance,” Masuko told reporters at a briefing. “It’s not realistic to adopt a strategy based only on expansion. We need to prioritize healthy growth.”
Masuko said that he would resist relying on discounting and fleet sales to grow overall sales, a strategy which has stung partner Nissan in the United States.
Mitsubishi is contending with slowing demand for cars, ongoing global trade frictions and the need to develop new technologies just as it and its partners Nissan and France’s Renault SA grapple with the fallout from the arrest of Ghosn, the group’s former chairman who is facing charges of financial misconduct in Japan.
Ghosn has been accused of enriching himself at a cost of $5 million to Nissan. Since his initial arrest in November, he has also been charged with temporarily transferring personal financial losses to his employer’s books and understating his salary during his time at the helm of Japan’s No. 2 automaker.