Mercedes 2003 Annual Report Download - page 68
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Mitsubishi Motors Corporation
North American performance offsets positive developments
in Europe, Asia and the rest of the world. For the first six
months of the financial year ending on March 31, 2004, Mitsubishi
Motors Corporation (MMC) recorded an operating loss, according
to Japanese GAAP, of ¥76 billion (€570 million), compared with a
profit of ¥23.5 billion in the same period of 2002. This is attributed
to difficult market conditions in North America, where lower unit
sales, higher sales incentives, provisions for credit risks and
currency-translation effects led to a significant loss. On a more
positive note, MMC’s European operations were profitable for the
first time, and in all other regions MMC was able to improve its
results.
In the first nine months of the fiscal year (April to December
2003), there was a slight drop in worldwide unit sales to 1,134,700
compared with 1,147,800 vehicles in the same period of 2002.
Growth in Europe (+5%) and in Asia (excluding Japan) and other
regions (+5%) only partially offset the decrease of 22% in North
American sales. Sales in Japan of 249,000 vehicles exceeded the
level of the same period of the prior year by 6%.
Revenues in April through December 2003 fell slightly by 4% to
¥1,832 billion (€13.9 billion). This was mainly due to developments
in North America, where revenues fell by 35% as a result of intense
competition, a tightening of credit approval terms in the financial
services business and lower unit sales. In contrast, MMC was able
to boost revenues in Japan (+26%), Europe (+14%), and Asia
(excluding Japan) and other regions (+3%).
Measures taken to improve profitability in North America. In
order to strengthen competitiveness in North America, MMC has
taken wide-ranging measures in its North American business. These
measures comprise further cost reductions, the sale of assets, and
the postponement of capacity expansion in the United States. In
addition, to prepare for the market launch of the new Galant in the
third quarter, dealer inventories were reduced from 91,000 to
54,000 vehicles in the first half of the 2003 financial year. Moreover,
the North American financial services business was reorganized,
the range of services offered was reconfigured and risk control
was more effectively organized. Loan approval terms have been
tightened significantly in order to reduce the risk of future defaults.
Restructured sales network in Japan. MMC is working intensively
on restructuring its sales network in Japan and providing further
training with the overall aim of boosting unit sales. Between 2003
and 2005, MMC will invest around ¥35 billion (€259 million) in this
project. In January 2003, MMC integrated two separate distribution
channels into a unified sales network. In addition, new contracts
setting out specific dealer standards will be concluded with all
dealerships by April 2004. Additional measures designed to ensure
greater customer satisfaction include CustomerFreeChoice, an
ordering system for individualized vehicles, and a unique customer
hotline operating seven days a week – an unprecedented high
service level for Japan.
European business profitable for the first time. In the first nine
months of the 2003 financial year, unit sales in Europe increased
to 158,900 (April through December 2002: 151,000 vehicles).
Based on sales growth, the restructuring of European activities,
and its strong market position in the rapidly expanding eastern
European market, MMC expects its European business to record its
first-ever profit for the full financial year. This profit goal would be
achieved one year earlier than planned and before the introduction
of the Colt compact car and the Grandis multi purpose vehicle
(MPV) in spring 2004.