TOKYO — Mitsubishi Motors Corp. plans a massive cost-cutting campaign as the COVID-19 pandemic hammers sales and sends the struggling automaker into the red.
The plan calls for saving ¥100 billion ($927.6 million) by slashing fixed costs by 20 percent through the fiscal year ending March 31, 2022.
Mitsubishi swung to a net loss of $129.9 million in its fiscal fourth quarter ended March 31. The reversal marked a third-straight quarter of net losses for the carmaker.
North American retail sales fell 18 percent to 45,000 vehicles in the January-March period. North America delivered a $37.1 million operating loss for the quarter, compared with a $41.7 million profit the year before.
CEO Takao Kato outlined the cost-cutting plan as a preview of a new midterm plan Mitsubishi expects to announce after the April-June quarter.
The strategy will be shaped by a joint midterm with its alliance partners, Nissan and Renault. That plan is expected to be unveiled Wednesday, May 27.
Mitsubishi's strategy calls for more focus on regions where the automaker already has momentum, such as Southeast Asia, while scaling back in others. Kato said cost cutting will be a top priority in the U.S.
"We have large fixed costs in the U.S. at the moment, so we will first focus on cutting the fixed costs there as part of our structural reform," he said.
The belt-tightening will include costs associated with advertising, selling and administrative expenses. The company will also review capital expenditures and R&D outlays, and it will reallocate personnel resources.
Mitsubishi's fixed costs spiraled to unsustainable levels as the company pursued its previous business plan, which prioritized all-around growth in international markets from Europe and China to North America, Japan and Southeast Asia. That spread Mitsubishi's resources too thin.
"It is not realistic for a carmaker of our size to maintain an all-round expansion strategy," Kato said.
Naoto Okamura contributed to this report.
