Mitsubishi Profits Bounce Back After Scandal
Mitsubishi Motors has reported earlier this week a four-fold jump in operating profit for the first quarter of the 2017 fiscal year, marking the first true signs of resurgence since the automaker admitted to overstating the fuel economy figures of some of its Japanese models last year.
Operating profits leapt to 20.6 billion yen ($185.2 million) for the April-June quarter, up from 4.6 billion yen a year ago after domestic sales were hit hard by the aforementioned scandal. Later in 2016, Nissan purchased a controlling stake in the struggling company for $2.3 billion, with Renault-Nissan Chairman and CEO Carlos Ghosn pledging to turn the company around.
Over the first quarter, Mitsubishi global sales rose 9%. They nearly doubled in Japan and rose in China, the world’s largest auto market, where Mitsubishi began manufacturing the Outlander SUV last year. In Southeast Asia, where Mitsubishi is about to launch a new MPV, demand for SUVs and pickup trucks has been on the rise. In the United States, sales are slightly ahead of last year and on course for reaching Mitsubishi Motors North America’s stated goal to reach 100,000 sales in 2017.
Though analysts predicted Mitsubishi’s resurgence, they didn’t expect it would be so strong. Analysts polled by Thomson Reuters I/B/E/S estimated the company would post a 15.1 billion yen profit, about 75% of what Mitsubishi managed to achieve. Mitsubishi still believes it will post a net profit of 68 billion yen in the current year ending March 2018, a stark contrast to the 198.5 billion yen net loss of last year.
Mitsubishi no doubt has Nissan to owe for its recovery. According to Mitsubishi Motors Chief Financial Officer Koji Ikeya, cooperation with Nissan generated 3.5 billion yen in synergies alone in the quarter through June.
Though it no longer makes the cars that had earned it a reputation for performance and youthful excitement, Mitsubishi is alive once again.
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Source: Automotive News