TOKYO, Japan — Southeast Asia is a crucial market for Mitsubishi Motors, which is struggling. However, the automaker faces a tough battle for survival, with Japanese rivals vying for market share and Chinese upstarts providing low-cost electric vehicles. The automaker has a significant presence in Southeast Asia, with a market share of around 15% in the Philippines, 10% in Indonesia, and 7% in Thailand. Mitsubishi, on the other hand, only has a 1.7 percent market share in Japan. Through the fiscal year ended March 2020, the area accounted for 77 percent of the automaker’s total consolidated operating profit of 366.1 billion yen ($3.3 billion). However, the company’s operating margin has plummeted, posing a significant issue. The margin in Southeast Asia was 15.3 percent in fiscal 2015, when Mitsubishi set an all-time high in operating profit. In fiscal 2019, the figure fell to 11.5 percent, then plummeted to 2.9 percent the next year. Similarly, the operational profit per car sold fell from 279,000 yen in fiscal 2015 to 49,000 yen in fiscal 2020. Although no direct comparisons can be made, Toyota Motor’s earnings per vehicle in Asia, including China, for fiscal 2020 were 357,000 yen. Despite the global epidemic, the statistic is approximately 20,000 yen more than it was five years ago.
Thailand is home to a Mitsubishi Motors plant (Photo by Rei Nakafuji)
The drop in profitability is mostly due to Mitsubishi’s dwindling market share. According to Marklines, Mitsubishi’s market share in Thailand, the region’s largest car market, declined to 6.7 percent in fiscal 2020 from 8.6 percent in fiscal 2019. Mitsubishi has been reluctant to introduce new models in the region, which has damaged the brand’s popularity. It’s been six and a half years since the Triton truck, which is still a popular vehicle, was entirely overhauled. Isuzu Motors and Toyota, two Japanese rivals, have surpassed Mitsubishi in terms of new product introductions. Mitsubishi isn’t resting on its laurels. From fiscal year 2022 onwards, the carmaker will introduce at least five new models in Southeast Asia. The minivans Triton and Xpander will be entirely revamped. Automobiles geared exclusively for the Southeast Asian market will also be developed by the business. To boost rollout efficiency, a common platform will be built for usage in numerous new models. Mitsubishi’s approach also includes electrification. By 2030, the carmaker wants electric vehicles to account for half of its global sales, up from just 8% in the 12 months ending in March. The Triton will be redesigned with a hybrid version, and Mitsubishi will sell a tiny electric vehicle in 2023 for less than $18,000. “In Southeast Asia, electric vehicles have yet to gain traction, so [the industry] is still in the early stages of price formation,” said Koichi Sugimoto, an analyst at Mitsubishi UFJ Morgan Stanley Securities. “Mitsubishi can’t afford to be late in launching electrics because its business is heavily reliant on the region.” Mitsubishi will compete with Chinese electric vehicle manufacturers that will target customers with low prices. Through a joint venture with Thai conglomerate Charoen Pokphand Group, Shanghai-based SAIC Motor began selling electric vehicles in 2019, and Great Wall Motors is close to launching an EV in Thailand that costs less than $10,000. Mitsubishi President Takao Kato stated, “It will be vital to minimize EV costs by sharing similar components with Nissan.” “For the medium to long term, we will be fighting against Chinese manufacturers,” he continued. Mitsubishi wants to increase its overall operating margin to 6% in fiscal 2025, which would be on line with the 6.1 percent it had in fiscal 2015, when it was at its top./n
