Mitsubishi has been in the news a lot recently, thanks mainly to its potential involvement in the merger between Nissan and Honda. That hasn't improved the company's outlook, however, with the Japanese automaker publishing an abysmal net profit forecast for the financial year ending March 2025.
In its third-quarter financial results presentation, Mitsubishi adjusted its annual net profit forecast to 35 billion yen, or roughly $226 million at current exchange rates. That's a massive 76 percent lower than its previous prediction of 144 billion yen issued in May 2024.
The adjustment comes due to lackluster sales in the wholesale sector, marketing expenses in North America, and increasing supplier costs due to inflation, according to Nikkei Asia.
Mitsubishi also adjusted its sales targets for the year, dropping from 895,000 to 848,000 units. Still, that's more than the 815,000 it moved the year prior. Most of that loss comes from Mitsubishi's largest region, Southeast Asia. Specifically, the company is struggling in Thailand and Indonesia, where it was previously successful.
"There was a demand of one million vehicles annually in Thailand in the past," CEO Takao Kato said on an earnings call Monday, according to Nikkei Asia. "It has not recovered significantly after the COVID-19 pandemic, decreasing even more rapidly in the financial years of 2023 and 2024 due to the high level of household debt."
Kato went on to say Thailand's unfavorable exchange rates and ongoing household debt increases will continue to have a negative impact on profits. Things have gotten to the point where Mitsubishi has had to restructure its offices in the region, which included the early retirement of 300 employees.
Things aren't all bad. Though rumors have previously pointed to Mitsubishi being ousted from the Honda-Nissan merger, Kato says it's unlikely Mitsubishi "will not be involved at all." He said the company will wait and see how the merger plays out before making any decision about when and how to get involved.
"Our strengths are in plug-in hybrids, [Asia-Pacific] market presence, and a product lineup focused on pickup trucks," he said. "We are looking at how these could be utilized and what kind of support we can expect in the North American market and developing auto intelligence—both of which we are not so strong in."
Source: Nikkei Asia
