Mitsubishi presents ambitious plan for growth, neglects Europe

Mitsubishi_Eclipse_CrossMitsubishi Motors has presented an ambitious growth plan for the next three years, called “Drive for Growth”. According to this plan, the brand will invest more than 600 billion Yen (€ 4,5 billion / US$ 5.3 billion), of which R&D spending will increase by 50% to € 1 billion (US$ 1.2 billion) to develop six all-new models (including the recently launched Eclipse Cross crossover for the US and Europe, and the Xpander MPV for Indonesia) and significantly update five existing models. As a result of this product offensive, worldwide sales should increase by 40% to 1,3 million units in 2020 and the company expects to return to profitability with a profit margin of 6% by the 2019 fiscal year. This is the first business plan by Mitsubishi since Nissan took a controlling 34% share in its struggling rival in 2016. According to Mitsubishi CEO Osamu Masuko “this is an ambitious program to maximize our strengths in growing product segments, especially four-wheel drive, and to pursue growth in markets where our brand has strong potential, particularly the ASEAN region.”

Besides the ASEAN (Association of South East Asian Nations) region, the brand has also presented growth figures for the Oceania, United States, China and Japan regions. Mitsubishi ultimately plans for a market share of about 10% in Southeast Asia, which requires an increase of sales by 50 percent in three years time, to 310.000 per year. In the United States, the brand plans to increase its sales by 30% by 2019 to 130.000 a year. In China, Mitsubishi is looking to double its sales to 220.000 cars. The brand did not release specific sales targets for Japan and Oceania (both currently about 100.000 annual sales), and tellingly completely neglects to mention Europe in its press release.

Mitsubishi_Xpander-MPVWhat does that mean for the brand in the old continent? With about 10% of its annual global sales, Europe is currently still too big to simply decide to pull out, a move that would be more likely for Honda or Subaru, brands for which European sales are insignificant compared to their global volumes. But Mitsubishi’s volume in Europe, at around 100.000 annual sales, is also not large enough and offers too little potential for growth to justify significant investment into dedicated products. Besides that, Renault-Nissan is already strong in Europe with approximately a 15% share of the market and its acquisition of Mitsubishi was strategically planned to strengthen the alliance in areas where it was relatively weak. That means the brand will develop its future models specifically for the markets it targets as growth markets, a great example of which is the Xpander MPV, which will mostly appeal to buyers in Indonesia and other ASEAN countries, but will not be sold outside of those markets. Europe will likely get the cars that have been developed for the US, Japanese and Australian markets, and hope they’ll appeal to European consumers too. If they don’t, the brand will slowly fade into oblivion and risks being ultimately removed from the European market altogether, in a similar way Daihatsu has disappeared a few years ago.

Time will tell how this plan will unfold for Europe, but European car buyers can be very critical, singleminded and brand loyal to their local brands. If Mitsubishi wants to retain or even expand its share of the European market, it will have to launch revolutionary products (like the Outlander PHEV a few years ago), and stand out from the crowd in terms of design, product and brand image. Considering the brand’s history in these fields, I’m afraid the brand is unlikely to top 100.000 sales in Europe again.

What do you think the brand’s chances are in Europe? And what it could/should do to succeed?

About Bart Demandt

Bart is a 36-year old Dutchman who’s always had a thing for cars, the automotive industry and statistics. He’s combined these passions by writing about them on CarSalesBase.com. His daily driver is an Alfa Romeo GT 3.2 V6 which he just can’t seem to say goodbye to thanks to the mesmerizing exhaust note.
You can find all his articles Here.

Comments

  1. “….. but European car buyers can be very critical, single-minded and brand loyal to their local brands”.
    Spot on! In particular the ‘single-mindedness’ 😉

    As “My Aygo rulez!”; “Nothing beats my ferocious Karl!”, “I drive a E34 b/c Audi suxz” etc

  2. They could rebadge Renaults and sell it in USA, at least limos and Espace.

  3. I honestly don’t think they’d be missed in Europe. The days of the Evo are long gone and they don’t look like they’re coming back, and there’s nothing they can do with electric or plug in cars that can’t be sold by a wider retail base by either Renault or Nissan.

    The L200 will become a Nissan Navara clone for the next gen, the Outlander will be twined with the X-Trail, the Pajero might be twined with the Patrol, the Eclipse with the Qashqai… The Space Star could be sold by Nissan as their entry level car if they really needed it, but it’s not like it’s doing amazing either.

    I can realistically see them leaving the EU market when their next generation of cars ( based on Renault-Nissan plattforms ) start coming out at around 2020.

  4. Honda, Mitsubishi and Subaru have something in common concerning their European adventure: lack of a decent compact car policy. Although these cars aren’t the most profitable ones in the business, every brand wanting to be successful in Europe needs a steady flow of compact cars. There is a reason why top brands are doing great these days. They have entered these segments as well, because it’s easier for them to attract new target groups.

    Honda can’t rely solely on the Jazz. European customers have always loved B segment cars instead of small MPVs. Or do the Japanese think Opel, Peugeot, Citroen, Renault, Ford (and others) are stupid for abandoning the Meriva, 1007, C3 Picasso, Modus and B-Max respectively? It’s time for Honda to realise Europe is not the same as Japan or the USA. In addition, I think Honda has neglected former Civic IMA drivers. With the poor sales numbers of the new Civic and HR-V, it’s clear they need a fresh start in the entry-level segments.
    According to my view, the same is true for Subaru. The Impreza/WRX is done by now, the Levorg is a disaster and offering cars with standard AWD isn’t interesting enough for the vast majority of Europeans. So you can’t trust the Forester, Outback and/or XV to carry the brand in Europe. Unless you’re happy Europe being your least important market, you need something else!

    As for Mitsubishi, the Space Star/Mirage is a budget car. That’s fine, because this way dealers attract a certain kind of customer. However, the problem with this car is people buying it can’t grow to a larger car without having to pay significantly more money considering the ASX is the next least expensive Mits. The gap is too big for budget customers and there is no true alternative whereas crossover/SUV enthusiasts can choose between the ASX, Eclipse Cross, Outlander and Pajero.
    With Renault-Nissan taking control, there is a chance Mitsubishi decides to go into another direction as they have done many times before. What happened to the Colt? Why did they neglect the Space Star MPV buyers? Many Mitsubishi customers were left alone by their own brand.

    It’s very important for a brand to be well-adjusted. In this respect, Honda, Mitsubishi and Subaru should look at Nissan, Toyota and to a lesser extent Mazda when they want to turn things around in Europe. If they’re still not convinced about changing tactics they can look at Hyundai-Kia as well.

    • @Losange:

      Imagine this Honda boardroom evaluation:

      Mr X: “What did we sell in the US in 2017?”
      Mr U: “1.500.000 units – trend is up”
      Mr X: “What did we sell in China in 2017?”
      Mr C: “1.500.000 units – trend is up”
      Mr X: “What did we sell in ROW in 2017?
      Ms W: “2.000.000 – trend is up”
      Mr X: “How many of the 2.000.000 were sold in EU?”
      Ms W: “100.000”

      Mr X: “Alright. Forget about Europa. Zero priority. Even with a lot of effort/investment we might grow to 200.000. That’s still not profitable. どうもありがとうございます – doumo arigatou gozaimasu”

      • I know non-European markets are more important for them, but why are they still trying then? If you make an effort with importers and dealerships, at least make a true effort. Honda EU sales were up last year compared with 2015 so it’s not like customers have completely forgotten them.

  5. Janet Lewis says:

    No need for Mitsubishi to be in Europe. Demographics are likely to make it a shrinking market. It is low margin. And most importantly the Alliance can more than cover Europe through Renault and Nissan. It is the lack of growth and profit opportunity that has led Honda to not bother to make an effort in Europe. It has focused on profitable markets like the US, China and ASEAN as well as its very profitable motorcycle business in India and ASEAN. Just like most auto brands don’t feel a need to be in Japan unless it is home territory, similarly why compete for a shrinking pie in Europe?

    • Well Europe is still by far the third most important continent considering worldwide sales figures. High or low margins depend on more factors (e.g. domestic production). In this respect, Mitsubishi can’t be a true competitor for Nissan and Toyota. The only valid argument for Mitsubishi leaving Europe is the possible internal competition. On the other hand, Skoda, being part of VAG (i.e. automotive colossus), seems to have no trouble growing in Europe. I still think it’s more an issue of offering the right cars at the right time and not relying too much on one hit wonders (e.g. Outlander PHEV). It’s up to Nissan to decide what’s going to happen with Mitsubishi in Europe.

      I’m not the biggest fan of Mits, but every brand leaving a market makes the industry even more monotonous.

  6. JB Lewis says:

    For the record, of the 1.3m units targeted for FY3/20, Mitsubishi is aiming for sales of 220k in Europe. This compares with 310k in ASEAN, 100k in Oceania, 190k in N.Am., 240k in North Asia (mainly China) and 110k in Japan. Total “other” including Europe is Y350k. The highest growth vs FY3/17 is in China followed by ASEAN.

  7. I think Mitsu may leave the EU mostly because their lineup is overlapping with Nissan’s. All Mitsubishi’s models are either old, or totally unappealing to the mass market, so its not like they will be hugely missed. Also, I don’t agree with this statement:
    “European car buyers can be very critical, single minded and brand loyal to their local brands. ” European buyers are hardly more loyal than American or Asian buyers. Just look at success of Hyundai/Kia, Nissan, Toyota, or even minnows like Suzuki and Mazda. European market is very competitive and if you don’t have a product that buyers want, then your sales are low, as simples as that. Subaru, Honda and Mitsubishi just don’t want to invest in models to make them more suitable for this market.

  8. 9exponent says:

    Mitsubishi will now be taking the same approach to Europe that it has had towards North America for the past two decades. Stall until either it’s dealerships die off, or the market miraculously shifts in its favor.

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