Mitsubishi has announced that it’ll be exiting British and European markets in the near-future. The announcement follows a massive £1.29 billion loss…
Farewell To Mitsubishi
Mitsubishi has announced plans to withdraw from British and European markets in the near-future. The announcement follows a massive £1.29 billion loss during the first quarter of the year. As a result, it won’t be releasing any new-generation vehicles for European markets. That said, it has confirmed that the sale of its current model range will continue for as long as residual stock levels and emissions legislation will allow. Its British dealerships, run by the Colt Car Company, will continue to offer parts, servicing and after sales support.
The future of the Japanese company lies in South-East Asia, according to executives. There it intends to increase its market-share from 6.4% to 11% over the coming years. That said, the region has also proven to be a tough nut to crack. Sales fell by 68% in the region during the first quarter of 2020; making it the worst theatre of operations for the company as a whole. The company intends to launch a replacement for the Outlander SUV in 2021. It also plans on releasing an all-electric SUV in the Chinese market.
The Road To Recovery
Mitsubishi’s enormous losses in 2020 have forced it to revise its entire financial strategy. Now dubbed the ‘Small but Beautiful’ model, the company’s strategy involves down-scaling and cost-cutting. Over three years, the automaker hopes to reduce its fixed costs by 20%. It also intends to restructure its production teams, reduce R&D expenses and close its Pajero factory in Sakahogi by 2021. Operations at the factory will be moved to the firms Okazaki facility in order to improve efficiency.
Takao Kato, Mitsubishi’s chief executive officer, has described the strategy as a move from growth to consolidation. He 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”.
An Unexpected Departure
Despite Mitsubishi’s woes, its departure seems to have taken some by surprise. Its car dealers, for instance, simply didn’t see it coming. The Colt Car Company itself said in a letter to its franchised partners that it “did not, at any point, anticipate receiving this news”. There are some 103 dealer operators under the Mitsubishi brand in the UK. Many were actually planning on updating their corporate identities, following a showcase of brand updates back in 2018.
Speaking to AM Online, one unnamed dealer speculated on the move. He said,” it is a question I’d asked in the past, whether the Alliance would dictate that Mitsubishi became the brand for America, Renault for Europe and Nissan for Asia. It remains to be seen if that plan materialises, but today’s development does indicate a significant restructure”. They stressed how devastating the news would be for smaller dealers, “the real issue is for those smaller dealers who only trade in Mitsubishi. Today’s news is going to be a massive blow for them and effectively ends their franchised business”.
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