Mitsubishi's sales glass is half full

Mitsubishi Australia boss Rob McEniry has declared his company is on target to shed its 'one car' mantle and cement its position as a 'broad-based' and profitable operation.

The President and CEO of Mitsubishi Motors Australia Limited ('MMAL'), McEniry delivered his 'half year' report to media yesterday and announced improving fortunes for Mitsubishi both here and abroad.

Not quite profitable, as of the end of the 06/07 financial year, MMAL is "certainly heading in the right direction", according to Mr McEniry, who went on to explain that the financial results will show "certain significant gains" over the 2005/06 results.

In a slightly curious case of one-upmanship, McEniry alluded to recent losses reported by Ford and Holden as a case of "financial results moving south" when MMAL's diminishing losses, year-on-year, indicated the company's results were "heading north."

After Japan, the US, China and Russia, Australia is the fifth largest market in the world for Mitsubishi Motors Corporation (MMC), said McEniry.

For this reason, the local market is very important to Mitsubishi and MMAL has benefited from the strong support of MMC.

On the subject of the parent company, McEniry advised that MMC, which had posted a massive $A5 billion loss in the 2004 fiscal year -- and had not posted a profit in four years -- has posted a "modest profit" for the 2006 fiscal year.

McEniry reiterated his comments from earlier presentations (more here and here) that the local arm's strategy was to rely on broad-based sales growth across all market segments, rather than rely on just one product line which might be subject to sales fluctuations -- as is the case currently with the 380 model, which continues to struggle to gain traction in the large car segment.

"What do we mean by broad-based?" he asked. "Basically…it meant improvement in growth in all areas of the business -- and this includes our distribution network and…the performance of our dealers."

"Importantly, last year, it meant 'right-sizing' and re-engineering our manufacturing business and in fact our total operations to align production levels and our operations with market demand…"

Referring to the appointment of new Mitsubishi dealers, some of whom had approached MMAL to take on the franchise, McEniry said "Our network is currently reporting significant increases in profitability."

"Further, we are embarking on a new customer interaction process and dealership showroom interior upgrade as part of our 'McDonaldsization' plan...that will deliver consistent customer values at all our dealerships across the country."

Speaking in regards to aggregate sales growth for all product lines, McEniry said "We all know the market is booming today, but our sales growth at Mitsubishi has, in fact, outstripped the market in every month of the year."

Year-on-Year growth in every state had improved during 2007, with the exception of MMAL's home state of South Australia. This surprising shortfall was deemed to be due to fewer company car registrations there and the negative press concerning Mitsubishi's on-going viability in Australia.

Sales growth had improved across most segments in which MMAL competes, but the best performances were in the SUV and LCV segments, reflecting the new Outlander and Triton entries in those respective segments.

Compared June 2007 YTD figures with June 2006 YTD, the Colt had enjoyed a 69.8 per cent growth in sales (1759 units for 2007, versus 1036 for 2006).

This welcomed sales growth did come from a low base, of course. The Colt was comprehensively out-sold by most other light car competitors for the same 2007 YTD reporting period. Toyota, by comparison, sold 15,352 units of the Yaris and even Suzuki sold 6901 units of the Swift.

Lancer, compared the same way, had posted sales growth of 33.3 per cent, versus the eight per cent growth of the whole small car segment (9401 units for 2007, 7051 units for 2006).

As for the Colt, the Lancer's numbers are a net gain for a car that was underperforming last year. Its 2007 YTD figure of 9401 is barely ahead of Ford's Focus (9350) and shy of the Holden Astra (10,258), let alone the 17,776-unit swag for the Mazda3 or 22,755 for the Toyota Corolla.

McEniry claims the Lancer's results would have been better for the year so far, if not for supply problems from Japan. This issue will pose even greater concern during July and August, as Australia's run-out allocation is sold and the new model will not be available until October.

Pajero's sales growth -- comparing the new NS model with last year's NQ -- showed a 49.7 per cent improvement, June 2007 YTD with June 2006 YTD.  That's 3953 units for 2007 and 2640 for 2006. Sales growth was ahead of both the Ford Territory and the Toyota Prado over the same period, but Territory still sold over 9000 units and Prado nearly 7500.

Sales of the 380 have dropped, but Mitsubishi says it expected the car to feel the pinch after the launch of the VE Commodore and the Toyota Aurion.

Mitsubishi's strategy going forward is to position the 380 as the "best value contender" in the large car segment and will rely on a new Series III version of the car (details of which are currently embargoed -- more next week) and a value-added retail special model such as the 380 Platinum to attract private buyers.

McEniry says MMAL won't resort to "smoke and mirrors" to boost 380's fortunes but it is hard to see how the company can produce the model in the long term when sales are still well below its latest projected volumes of around 1000-1100 units per month.

Mitsubishi said there are no plans for diesel or hybrid versions of the 380, nor an AWD version. Furthermore, no LHD export sales potential exists without very significant re-engineering and the potential tie-in with Proton now appears to be dead in the water.

MMAL's Tonsley Park production line was refitted with new infrastructure in 2005, offering greater flexibility and a higher level of automation. Combined with a more flexible workforce, MMAL can adjust production to suit demand and leave low levels of inventory in stock.

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