The COVID-19 pandemic spared no one. It retired struggling businesses worldwide and delivered disastrous dents to many of the others. In the automobile world, one of the hardest-hit names was Mitsubishi. Japan’s number six automaker suffered immense losses in the last financial year and the Coronavirus demolished any hopes for it to bounce back in the ongoing fiscal.

Mitsubishi reported a 53.3 billion yen (~USD 506 million) operating loss in the first quarter that ended on June 30, 2020. The company anticipates an operating loss of 140 billion yen (~USD 1.33 billion) by the end of March 2021. If that comes out to be accurate, it will become Mitsubishi’s most significant loss in the last eighteen years dating back to 2002. So, to diminish the damage as much as possible, the Japanese brand will make some drastic decisions in the coming future.

One, it would stop making the Pajero SUV and close down the Japanese facility, which makes that SUV. Two, it will shrink the workforce and production, and shut loss-making dealerships to cut 20 per cent of fixed costs in two years. And three, it would reduce the focus on markets in North America and Europe, and divert more energy and funds for growth in Asia. As per Mitsubishi, the restructuring plan should lift the business’ operating profit to 50 billion yen in 2022-23, while uplifting operating margin to 2.3 per cent from the current 9.5 per cent in the negative.

For growing in Asia, Mitsubishi will have to rely heavily on its alliance with Renault and Nissan. Earlier this year, the latter two revealed plans of how they jointly intend to implement the leader-follower strategy in several markets across the globe. It will be interesting to see how Mitsubishi takes advantage of such an ecosystem.

Story source: Reuters