Mitsubishi 2005 Annual Report Download - page 29

Download and view the complete annual report

Please find page 29 of the 2005 Mitsubishi annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 84

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84

27
MITSUBISHI MOTORS CORPORATION
Annual Report 2005
Putting an End to a Vicious Cycle
Our previous policy of over-ambitious sales growth saw
excessive reliance on fleet sales and incentives, and
sales financing products insufficiently analyzed for their
risk. This over-expansion had the effect of driving down
used car prices, which hurt new car sales and damaged
the image of the Mitsubishi Motors brand. This vicious
cycle was a primary reason for the downturn in North
American operations.
However, MMC has not changed, and will not change,
its stance on the importance of the North American market.
In fiscal 2004, North American operations posted a
large operating loss, although losses narrowed from the
previous fiscal year. This mainly reflected a temporary fall
in sales volume due to measures initiated in 2004 to
normalize sales activities and end the above-mentioned
vicious cycle. Selling expenses associated with clearing
excess inventories of older models was also responsible.
Measures to normalize sales activities are steadily
delivering results. By actively launching new models in
fiscal 2005 and beyond, MMC expects North American
operations to return to operating profitability on a
consolidated basis in fiscal 2006. MMC is making every
effort to put in place a structure that will deliver profits.
0
100
200
300
400
500
600
05 06 07 08
-120
-100
-80
-60
-40
-20
0
20
05 06 07 08
0
50
100
150
200
250
05 06 07 08
Plan* Plan* Plan*
Business Strategies
Eclipse
■
North America
Operating Profit (Loss)
(¥ billion)
Net Sales
(¥ billion)
Unit Sales
(Thousand units)
Rebuilding Brand Image and Shifting to a Stronger
Earnings Structure
North American operations have been realigned in a
structure which unifies production, sales and finance
under a new management team. Rich Gilligan, former
head of production, has been appointed CEO of Mitsubishi
Motors North America, Inc. (MMNA), and new heads of
each major business function, including a new executive
vice president in charge of sales and marketing, have been
appointed. In fiscal 2004, MMNA reduced fleet sales to
23% of total sales, from more than 30% in fiscal 2003.
In fiscal 2005, plans call for further lowering fleet sales to
around 10% of total sales to improve prices of used
Mitsubishi vehicles. Inventory clearing is also bringing
down sales incentive expenses. These measures are
helping to steadily rebuild the Mitsubishi Motors brand in
North America.