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June 23, 2020 04:04 AM

Mitsubishi to scale back European presence in 'small but beautiful' strategy

Nick Gibbs
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    The Mitsubishi Outlander plug-in hybrid midsize SUV was the best-selling plug-in hybrid vehicle in Europe through April.

    Mitsubishi Motors will have a smaller presence in Europe as it realigns its global markets to reduce costs amid the coronavirus pandemic.

    CEO Takao Kato said the region is one of the 'mega markets' where Mitsubishi will look to make savings.

    "We will gradually reduce our commitment to mega markets," Kato told shareholders on June 18.

    Mitsubishi's previous growth plan for markets such as Europe and China outlined in the 2017 financial year led to cost increases of 30 percent in the most recent financial year ending March 31 compared to four years previously but had not resulted in profits, Kato said.

    "Under such circumstances, we made a shift in policy to 'small but beautiful,'" he said.

    The strategy means Mitsubishi may also reduce its presence in the U.S. Although Kato did not mention North America or the U.S. by name, the company confirmed that it considers the U.S. a megamarket.

    Mitsubishi will concentrate on its profitable business in countries that make up the Association of Southeast Asian Nations (ASEAN) trade bloc including Thailand and Indonesia.

    The company will focus on pickups, truck-based SUVs and minivans, which are popular in those markets, Kato said.

    Mitsubishi exports the L200 pickup to Europe from Thailand, suggesting the model may continue in the automaker's slimmed down European operation.

    Mitsubishi has the lead for the Renault-Nissan-Mitsubishi alliance in ASEAN countries under the alliance's new leader-follower strategy, which gives control of regions or technologies to the strongest brand in that particular area.

    Mitsubishi has sold cars in Europe since 1975 and also built cars in the Nedcar facility in the Netherlands starting in 1995. It sold Nedcar to the VDL Group, a Dutch industrial company, in 2012 and the contract manufacturer now makes Minis for BMW.

    Mitsubishi indicated it wanted to strengthen its European operations in 2019 when it set up a new company to oversee regional sales after years of relying on local importers.

    The strategy had only a small effect on the automaker's vehicle sales in the region. Its European Union volume grew by 3.4 percent to 138,000 last year for a 0.9 percent market share, according to data from industry association ACEA.

    Mitsubishi gained leadership in plug-in hybrid vehicles with the Outlander midsize SUV, which was launched in 2014. It was Europe's best-selling plug-in hybrid vehicle in the first four months despite increased competition with the arrival of more plug-ins from other automakers.

    A new Outlander plug-in is scheduled to launch later this year.

    Under the Renault-Nissan alliance leader-follower strategy, Mitsubishi has the lead brand for plug-in hybrid technology in the compact and midsize segments, although it's not clear how this will continue if Mitsubishi moves its development focus towards simpler pickup-based body-on-frame vehicles.

    Mitsubishi said more information about its European plans would come when the company announces its new midterm plan "in a few weeks" during its financial results for the quarter ending June 30.

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