Mitsubishi focuses on ASEAN countries to meet FY2013 targets

Strengthens cooperation with Nissan to launch jointly-developed mini vehicles in Japan

2013/07/18

Summary

 Summary

MITSUBISHI Concept CA-MiEV
MITSUBISHI Concept CA-MiEV
Auto Shanghai 2013

 Facing the last year of its mid-term business plan, Mitsubishi Motor Corporation (MMC) plans to exceed its targets by achieving JPY100 billion operating profit and JPY 50 billion net profit. The sales volume is expected to fall short of the mid-term target of 1.37 million units. MMC plans to boost sales to 1.169 million units in FY2013 mainly from the sales from ASEAN region to cover the loss of that of matured markets of Japan, Europe and the U.S. In FY 2012, approx. half of MMC's sales were achieved in "the Asia and other regions." MMC is promoting its global strategic models including the Thai-made Mirage. In Japan in June 2013, MMC has launched the eK Wagon, a new mini vehicle developed by MMC's and Nissan's joint venture, NMKV Co., Ltd,

Revenue and operating income by region

JPY 100 million
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Plan
Revenue Japan 4,885 3,984 3,685 3,633 3,571 3,295 4,700
North America 4,027 2,322 1,754 1,898 1,952 1,577 2,100
Europe 9,316 6,317 2,692 4,900 4,748 4,007 5,100
Asia & others 8,593 7,113 6,325 7,854 7,802 9,272 10,800
Total 26,821 19,736 14,456 18,285 18,073 18,151 22,700
Operating
income
Japan (189) (151) (12) 51 68 (276) (150)
North America (178) (396) (282) (279) (262) (200) (40)
Europe 797 53 8 (264) (156) (70) 200
Asia & others 656 533 425 895 987 1,220 990
Total 1,086 39 139 403 637 674 1,000
Source: Supplemental Information release for Financial Results
(Note) 1. The above table shows the net sales and operating income to external customers classified by their location. Thus, this is different from the information by segment (sales and profits classified by each location of Mitsubishi and its consolidated subsidiaries).
2. MMC positions Russia, Ukraine, and Kazakhstan as emerging markets, although they are included in Europe in the above table. Also, it positions Australia as a mature market, although it is included in "Asia and others".
3. A figure in brackets ( ) indicates a loss.

Rerated reports:
Nissan establishes mutual parts supply network in Japan, Korea and China (July, 2013)
Shanghai Motor Show 2013: Mitsubishi exhibits Pajero Sport/Lancer Fortis designed for China, starting production from 2013 (June, 2013)
Japanese OEMs aim for record high sales in FY2013 (June, 2013)



Emerging Markets: To achieve 12% market share in five major ASEAN countries

 MMC has been investing management resources to raise its market share in the five major ASEAN countries of Thailand, Indonesia, the Philippines, Vietnam and Malaysia to 12% by FY2015 as announced in the "ASEAN Challenge 12," its business expansion strategy.

 Thailand, in particular, has become MMC's largest market in FY 2012 with 142,000 unit retail sales, exceeding 134,000 units sold in Japan. In 2012, production of the Mirage Global Compact started at the third Thai factory to export to global markets including Japan. MMC will raise the production capacity in Thailand to 510,000 units/year.

 In China, MMC and Mitsubishi Corp. (MC) reestablished a local JV in 2012 to jointly hold 50% of the shares in an aim to increase production and sales of SUVs.

The ASEAN Challenge 12 announced in September 2011 Retail sales
(Thousands of units)
FY2012 FY2013
(Plan)
Five major ASEAN countries * To boost MMC's market share in the region to 12% by FY2015 from 8.3% in FY2012.
1st strategy: To launch the Mirage throughout the ASEAN region.
2nd strategy: To introduce locally produced models including medium and small SUVs and small passenger cars throughout the region.
286 331
Thailand * Producing the Mirage Global Compact, Triton pickup truck, Pajero Sport and Lancer EX.
* Started production of the Attrage, the new Mirage-based sedan, in May 2013, for a launch in July.
* In anticipation of expanding exports to the ASEAN markets, MMC will raise the annual production capacity of the third factory by 50,000 units to 200,000 units during FY2013, which will establish 510,000 units/year production operations in Thailand.
* Owns a component factory for knockdown (KD) kits.
142 157
Indonesia * Commenced local production of the Outlander Sport (RVR in Japan) in 2012 and will expand its sales together with the Mirage.
* Local production of the Mirage and other models is in consideration in addition to currently produced commercial vehicles,L300 and T-120 CVs.
87 103
The Philippines * Manufacturing the Adventure Asian Utility Vehicle, the L300 CV and the Lancer EX. To increase the annual production capacity to 50,000 units by 2015 and to 100,000 units by 2018 from current 30,000 units.
* To introduce the Attrage in FY2013.
36 45
Vietnam
and Malaysia
* Production of the Mirage scheduled for FY2013 in Vietnam. 21 26

Note: MMC announced in September 2011 that it was in serious discussion with a Malaysian OEM PROTON for larger collaboration. In March 2012, however, DRB-HICOM Group became PROTON's biggest shareholder and changed the OEM's strategy. MMC, therefore, gave up continuation of the talks by the end of 2012.

 

BRICs' Initiatives for FY2013

Retail sales
(Thousands of units)
FY2012 FY2013
(Forecasts)
China GAC Mitsubishi Motors Co., Ltd.(GMMC) to start local production of the Pajero Sport in July 2013. (Please refer to our related report.) 42 89
Russia The Pajero Sport to be added to the local production lineup in July 2013. 80 90
Brazil Started local assembly of the ASX(RVR) in June 2013 at MMC Automotores do Brasil Ltda. The Lancer assembly to be commenced in 2014. 61 66
India Started local assembly of the Pajero Sport at Hindustan Motors in October 2012. n.a. n.a.

Recent developments in the BRICs

China: Reestablishment of JV with GAC  MMC and Guangzhou Automobile Group Co., Ltd. (GAC) commenced the production of the ASX (RVR) in October 2012 at their JV, GMMC, in Changsha, Hunan, China. GAC, MMC and MC respectively hold 50%, 33% and 17% shares of GMMC. The initial production capacity is approx. 50,000 units/year, to be raised to 300,000 units by 2017. Production of the Mirage is under consideration.
 MMC and GAC had jointly established  another JV, GAC Changfeng Motor Co. Ltd. for manufacturing SUVs. MMC and GAC had  held 14.59% and 29% shares respectively. For more efficient operations, GAC Changfeng Motor was reorganized into GMMC, a new fifty-fifty JV by MMC/MC and GAC.
Russia:
CKD assembly
 MMC started the CKD assembly of the new Outlander in November 2012 at its JV with PSA in Russia. It plans to increase the local content ratio from initial 10% or so to 30% in 2014. The original operation at the plant was the final assembly of SKD kits.
Russia:
Strengthening sales network
 MMC announced in January 2013 that it would newly invest in Rolf Import (RI), its exclusive Russian distributor, in order to strengthen the local sales network. MC and MMC each acquired 9% of RI's shares from the Rolf Group of Companies. The transaction has resulted in MMC, MC, and the Rolf Group holding 9%, 49% and 42% of shares respectively in the new RI.
Brazil:
Increasing production capacity
 It is likely that MMC still considers possible investment in MMC Automotores do Brasil Ltda (MMCB), its Brazilian partner with no current capital ties, as part of its mid-term business plans announced in 2011. MMCB plans to add engine production in 2014 and to double the production capacity to 100,000 units/year by 2015.

Note: MMC will start studies on global expansion of technologies of the mini vehicle, a Japan-specific category. The firm will examine its possibility in Africa and other emerging countries.

 

 



Matured Markets: Improvement in production operations

 In the matured markets of Japan, the U.S. and Europe, MMC tries to bring better balance to its production capacities, while expanding sales. At the Mizushima Plant, MMC plans to consolidate production lines in January 2014 to reduce the annual capacity to 400,000 units. The firm sold a manufacturing facility in Europe and discontinued production of the local exclusive models in North America.

Japan Mizushima Plant * Added the second shift in May 2013 to cater to new mini vehicle production.
* To consolidate body assembly lines from four to two in January 2014 and decrease the annual capacity from current 600,000 units or so to about 400,000 units.
* Production volume planned for FY2013 is 350,000 units consisting of 90,000 non-mini vehicles and 260,000 mini vehicles. Production volume was 232,000 units in FY2012.
Nagoya Plant * Production volume planned for FY2013 is to exceed 200,000 units. It was  163,000 units in FY2012.
* To double the production capacity of the Outlander PHEV to 4,000 units/month from September 2013.
Pajero Manufacturing  * To increase production to 62,000 units in FY2013 from a little fewer than 50,000 units in FY2012 to export the Delica D:5 to ASEAN markets.
Powertrain Plants in Kyoto and Shiga prefectures  * Doubled the production capacity for clean diesel engines to output 120,000 units in FY2013.
Europe * Anticipated to improve profit in FY2013 from seven billion yen loss in FY2012 to 20 billion yen surplus by selling off its European production hub.
* Introducing the new Mirage, Outlander and Outlander PHEV in FY2013.
North America * To expand exports of the Outlander Sport (RVR in Japan), which has been produced locally since July 2012, to Latin America and Russia. The annual production capacity to be increased from 50,000 units to 70,000 units to support export expansion.
* Discontinued production of the North-American exclusive models of the Galant, Eclipse and Endeavor by 2012.
* Launched the Outlander in June 2013 and to release the Mirage in the fall of 2013. Introduction of the Outlander PHEV scheduled for 2014.

The sale of NedCar, MMC's manufacturing subsidiary in Europe

 In December 2012, MMC sold all the shares in Netherlands Car B.V. (NedCar), its production subsidiary in the Netherlands, to VD Leegte Beheer B.V., 100% owned by VDL Groep B.V., a Dutch bus manufacturer. On the condition that the employment of its entire employees should be assured, all the shares were transferred at EUR1. As a result, MMC posted a loss of JPY24.7 billion on sale in the FY2012 financial results.
 VDL plans to renovate the plant to start consignment production of BMW's MINI brand models from the second half of 2014.

 

 



Plans for Green Vehicles and new models

 From FY2014 through FY2016, MMC plans to launch seven models in the Green vehicle [Electric Vehicle(EV)/ hybrid vehicle (HV)/ Plug-in Hybrid Vehicle(PHV)] category. Although the OEM has not marketed an HV model yet, development of an HV is scheduled for completion in FY2014.

Mini vehicle/
Compact car
 To launch EVs. They are used to travel relatively short distances and have a limited cruising range.
Compact sedan  To launch HVs for emerging markets, where environmental awareness is growing, since HVs are competitive pricewise and require no charging infrastructure.
SUV  As cruising range demands are high in the SUV category, MMC will offer either PHVs or HVs, considering such factors as the sales regions and price receptivity.

 

EV/PHV/Concept cars released in 2013

SUV Outlander Plug-in Hybrid Electric Vehicle (PHEV)  MMC's first plug-in hybrid SUV, released in January 2013. It uses the system derived from EV systems and mounts an engine and a motor near front wheels and another motor for rear wheels. (Please refer to our related report for details.) The EV-only cruising range is 60.2 km per charge and the combined fuel efficiency is 67.0 km/liter, both via Japan's JC08 mode. MMC plans to launch the model in Europe in later 2013 and in North America in 2014.
mini-commercial vehicle MINICAB-MiEV TRUCK  The EV truck based on the Minicab Truck, launched in January 2013. It mounts the Y51 motor, smaller and lighter than the Y4F1, used in such models as the i-MiEV. With a lithium-ion battery of 10.5 kWh capacity, the cruising range is 110 km per charge in the JC08 mode.
Pickup MITSUBISHI
Concept GR-HEV
 The Sport Utility Truck (SUT) concept with a diesel-hybrid system on a pickup truck. The system based on the front-engine/rear-wheel drive system incorporates a 2.5-liter clean diesel engine, a motor and an 8-speed AT. It aims to reduce CO2 emissions during driving to the levels of 149 g/km or below.
Compact car MITSUBISHI
Concept CA-MiEV
 The next-generation compact EV concept (length: 4,050 mm) with a target cruising range of 300 km, debuted at the Geneva Auto Show in March 2013. In order to improve electric energy efficiency, the EV system brings together lightweight EV components in an integrated motor, inverter, and charger module that reduces power losses, as well as a 28 kWh lithium-ion battery and a regenerative braking system that improves energy recovery rate. A magnetic resonance wireless charging device is also fitted.
Compact car Mirage-based EV/HV  Development of the new Mirage-based EV and HV in consideration.

Note: MMC has halted production and sales of the Outlander PHEV since March 2013 due to a problem with the lithium-ion battery and recalled the model in June. Production is scheduled to resume in later August.

Concept Global Small Mirage and its derivative sedan, Attrage

Mirage  Production of the Mirage commenced at MMC's third factory in Thailand in March 2012. Under the concept "Global Small," the model satisfies the both needs for an eco car in developed markets and for an entry model in emerging markets. It will be exported worldwide from Thailand. It has been on the market in Japan since October 2012 and in Europe as the Space Star since February 2013.
Attrage  The Attrage, a four-door sedan for the global market based on the Mirage, is scheduled for a launch in Thailand in July 2013. Powered by the 1.2-liter MIVEC engine combined with either a CVT with an auxiliary transmission or a 5-speed MT, it delivers fuel economy of 22 km/liter on the NEDC.
Outlander  The remodeled mid-sized Outlander SUV was launched in July 2012 in Russia. Sales in Japan began in October 2012.
 MMC offers its active safety system named e-Assist as standard equipment for some Outlander models. It delivers three functions: Forward Collision Mitigation System (FCM), Lane Departure Warning System (LDW) and Adaptive Cruise Control System (ACC).

 Note: While MMC had called the Mirage the Global "Small" at the development and concept car stages, it also refers to this as the Global "Compact" after the release.

 

 



Japanese Market: Further collaboration with Nissan

 NMKV Co., Ltd, a fifty-fifty JV of Nissan and MMC for mini vehicle planning and engineering established in 2011, launched its first model in June 2013. The partners aim to reach 20% of the mini vehicle market over the medium term, while their combined share was 11.3% in FY2012.

 MMC's lineup is strengthened with the new product launch, while the development expense, a great burden for a single OEM, is shared with Nissan. The operation ratio of MMC's plant in Japan is raised. As for Nissan, the new JV solves the problem that it was unable to reflect its own intention in the development of mini vehicles since it had depended on OEM supplies for mini vehicles. (Please refer to our related report.)

 Nissan's luxury sedans, the Fuga and the Cima, have been supplied to MMC on an OEM basis and marketed in Japan respectively as the Mitsubishi Proudia and the Mitsubishi Dignity since July 2012.

The eK Wagon launched as the first mini vehicle developed at NMKV, the JV with Nissan

eK Wagon in the tall wagon category  In June 2013, MMC and Nissan launched a new mini vehicle, Mitsubishi eK Wagon/Nissan DAYZ, developed by NMKV, their fifty-fifty JV. The model achieves best-in-the tall wagon class fuel-economy of 29.2 km/liter in the JC08 mode. The front designs and some equipment are different between the two models. MMC aims to sell 5,000 units of the eK Wagon per month, while Nissan aims to sell 8,000 units of the DAYZ per month.
Super tall wagon  NMKV plans to launch a successor to the super tall Toppo wagon as its second model in 2014. MMC's model name is yet to be announced, while Nissan announced the name as the DAYZ ROOX.
Successor to the Pajero Mini  The partners also plan to introduce in 2014 a successor to the Pajero Mini, MMC's off-road mini vehicle discontinued in June 2012. MMC had supplied the Pajero Mini to Nissan on an OEM basis and Nissan had sold the model as the KIX.
(Note) 1. As for mini commercial vehicles, MMC supplies the MINICAB to Nissan, which sells it as the Nissan Clipper. Nissan, however, plans to replace the model by Suzuki's minivan, the Every,  and a mini truck, the Carry.
2. MMC will only develop mini vehicles through NMKV. Production of the i and the Toppo, its own mini vehicles, was halted at the start of the eK Wagon production.Production and development of  a mini commercial vehicle, the MINICAB, is reported to be discontinued in the future.

OEM supplies form Nissan

MMC's model name Commencement Model name Model type
Lancer Cargo 2008 AD  station wagon
Delica D:3 October 2011 NV200 Small commercial vehicle
Proudia July 2012 Fuga Luxury sedan
Dignity July 2012 Cima Super luxury sedan
Reference: Delica D:2 March 2011 Suzuki Solio 5-seater compact station wagon
Note:  In 2012, MMC and Nissan discontinued their development project in Thailand for the next-generation one-ton pickup truck. MMC currently manufactures the Nissan Navara one-ton pickup truck at its Thai factory on an OEM basis. Nissan, however, is expected to produce the model at its new Thai plant to be operational in 2014.

 

 



MMC aims at operating profit of JPY100 billion

 MMC plans to expand retail sales in Japan, the U.S., Europe and Asia to achieve 1,169,000 units in FY2013, up 18.4% y/y, which, however, will be approx. 200,000 units less than its FY2013 target of 1,370,000 units in the mid-term business plan. Although MMC anticipates sales growth in emerging markets such as the ASEAN countries and Russia as projected, sales in Japan and Western Europe are expected to fall compared to the forecasts made in FY2010.

 For FY2013, the OEM plans sales amount of JPY 2.270 trillion, up 25.1% y/y, operating profit of JPY 100 billion, up 48.1% y/y and net profit of JPY 50 billion. Although the sales amount is not anticipated to reach the mid-term target, both operating profit and net profit are projected to exceed the targets of JPY 90 billion and JPY45 billion respectively. The factors behind the positive earnings, in spite of the sales volume below the target, are the expected JPY57 billion growths from FY2010 in operating profit due to the improved product mix and JPY 90 billion such growth due to cost reduction and other efforts, in addition to the assumed dollar and euro exchange rates likely to swing over to weaker yen.

 The general shareholders' meeting in June 2013 passed a resolution to reduce the capital and the capital reserve to offset the accumulated losses of JPY 924.6 billion. In early 2000s when MMC suffered a series of recall problems, the OEM ran into financial difficulty and issued preference stock, A loss of approx. JPY 390 billion of which still remains as of June 2013. If MMC successfully disposes the preferred stock within 2013 and achieves the target net profit of JPY50 billion, it will be able to resume dividend payouts for the first time after 1997, according to the OEM.

Retail sales volume by major country

(1,000 units)
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
(Note 2) Plan
Calculation method (Note 2) Former method New method
Japan small vehilce 84 54 65 60 61 61 61
mini vehicle 135 114 106 104 91 73 87
Total 219 168 171 164 152 134 148
North America U.S. 124 84 54 62 75 57 64
Total 160 119 88 94 106 85 100
Europe Germany 32 29 24 29 29 22 26
UK 31 17 18 20 15 12 16
Russia 107 96 39 55 73 80 90
Ukraine 32 34 10 8 9 6 4
Total 341 272 170 218 218 181 212
Asia & others China 94 88 143 (Former)168 63 42 89
(New)65
Taiwan 39 31 43 (Former)47 36 29 24
(New)36
Thailand 27 19 23 48 74 142 157
Indonesia 34 40 40 59 73 87 103
The Philippines - 18 25 33 32 36 45
Malaysia - 13 11 (Former)17 12 13 18
(New)12
Australia 66 57 59 63 62 59 69
Brazil 50 43 38 46 56 61 66
UAE - 37 29 28 20 21 24
Total 640 507 531 (Former)629 525 587 709
(New)511
Grand total 1,360 1,066 960 (Former)1,105 1,001 987 1,169
(New)987
Source: Mitsubishi's Supplementary Information Release for Financial Results
(Note) 1. The total retail sales volume in each region includes those of the other countries in the same region.
2. Mitsubishi used to include other companies' brand vehicles in its retail sales volume if they were designed by Mitsubishi and Mitsubishi obtained income for their royalties. From FY2011, it changed to the new counting method to include only its own brand vehicles. For the FY2010 results, the data under the new calculation method are also included in the table. The figure differences totaled 118,000 units in the three countries: China (the old Lancer (V3) under the Soueast brand), Taiwan (mini vehicle based commercial vehicles (Veryca) under the CMC brand), and Malaysia in FY2010.

Consolidated Financial Results

(JPY Million)
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Plan
(Reference)
FY2013
Mid-term
plan
Revenue 2,682,103 1,973,572 1,445,616 1,828,497 1,807,293 1,815,113 2,270,000 2,500,000
Operating income 108,596 3,926 13,920 40,274 63,674 67,382 100,000 90,000
Ordinary income 85,731 (14,926) 12,980 38,949 60,904 93,903 90,000 -
Net income 34,710 (54,883) 4,758 15,621 23,928 37,978 50,000 45,000
Capital expenditure 56,700 71,900 47,100 52,500 71,000 51,400 80,000 -
Depreciation 71,900 79,000 69,000 62,700 53,400 50,300 60,000 -
R&D expense 77,600 64,000 44,400 49,400 55,000 59,900 73,000 -
Exchange rate(US$) JPY 115 JPY 101 JPY 92 JPY 85 JPY 79 JPY 82 JPY 95 JPY 90
Exchange rate(EUR) JPY 162 JPY 144 JPY 130 JPY 113 JPY 111 JPY 105 JPY 125 JPY 110
Source: Mitsubishi's Consolidated Financial Results
(Note):A figure in brackets ( ) indicates a loss.

Factors of increased operating income plans

(JPY 100 million)
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Plan
Operating income 1,086 39 139 403 637 674 1,000
Changes 684 (1,047) 100 264 234 37 326
Volume/vehicle type mix 543 (720) (856) 533 168 123 280
(Of which) Japan 45 (62) (105) 7 (21) (76) 120
(Of which) North America (120) (137) (86) 48 18 17 40
(Of which) Europe 422 (360) (290) 144 132 (3) 30
(Of which) Asia & others 196 (161) (375) 334 39 185 90
Impact from exchange fluctuation 146 (761) (418) (342) (105) (34) 280
Cost reduction etc. 154 365 544 211 272 432 200
Impact from rising raw materials costs - (317) - - - - -
Others - 335 578 (86) (106) (323) (174)
Sales cost (64) 174 252 (51) 5 (161) (260)
US sales finance business (95) (123) - - - - -

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