Mitsubishi has revealed that it is freezing the launch of new models in Europe, in a move that is likely to precipate a withdrawal from the market altogether.
The move, announced today, is part of cost-saving measures and a revamp of the company’s overall global operations.
The sales of existing models will continue in the UK for the time being, as will aftersales services.
The Japanese carmaker – creator of the popular Outlander PHEV – has ambitions to reduce its fixed costs by at least 20% over the next two years. It’s putting most of its emphasis and resources into the ASEAN (Australian and South-East Asian) region, where the company has a market share of more than 6%. That compares with only 1% per cent share of the European market.
The restructuring plan, called “Small but Beautiful”, looks to concentrate its resources on ‘core regions and technologies’.
Takao Kato, CEO of Mitsubishi Motors Corporation, said: “We will shift our strategy from all-round expansion to selection and concentration.
“First of all, we will complete our structural reforms and further strengthen our competitive areas – ultimately to build a corporate structure that can surely generate profits during this mid-term period.”
A separate statement from Mitsubishi announced that the company is expecting its global sales to fall by 25% this year, with an operating loss of ¥140 billion (approximately £1 billion) and an extraordinary loss of ¥220 billion (approximately £1.6 billion) for restructuring, for a total annual net loss of ¥360 billion (approximately £2.7 billion).
Another car brand pulling out of Europe?
Although Mitsubishi has not confirmed any longer-term plans, this announcement could well represent the start of Mitsubishi’s move away from Europe. The current economic environment is putting car manufacturers under enormous pressure, as Mitsubishi’s financial forecasting above shows, and a marketplace that is over-saturated with competitors is likely to be unsustainable for several of them.
Mitsubishi’s existing models are mostly getting old and uncompetitive with new rivals. In fact, the ASX small crossover and Shogun Sport SUV have the two lowest ratings we have analysed to date with our unique Expert Rating system, which aggregates new car reviews from 21 different UK sources. The company’s best-seller is the Outlander plug-in hybrid SUV, but that car has achieved its success over the last few years largely to a lack of competition – a situation that is rapidly changing.
A freeze on new models suggests that current offerings are unlikely to be replaced when they cease production or no longer comply with new EU emissions regulations, suggesting that this could be the first announcement in the firm’s exit from the market.
Addtional reporting by Jack Evans, PA Media