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Mitsubishi maps out midterm growth plan

Mitsubishi Motors Corp said it would focus on promising new car markets to secure medium-term growth, announcing a target of boosting net profit by 2-½ times in three years.

Under its new business plan, the struggling Japanese automaker said it would target net profit of ¥50 billion ($480 million) in the year ending March 2011, up from the ¥20 billion it has forecast for this year.

“We need to pick our battles in order to achieve sustainable growth,” President Osamu Masuko told a news conference.

Since 2004, Mitsubishi Motors has relied heavily on other core Mitsubishi group firms such as Mitsubishi UFJ Financial Group Inc, Mitsubishi Corp and Mitsubishi Heavy Industries Ltd for funding to rebuild itself after incurring big losses in North America and dissolving capital ties with the former DaimlerChrysler, once its top shareholder. It has not paid a dividend in about a decade.

While the company is back in the black, Mitsubishi Motors lacks the brand power and momentum that many of its domestic rivals have in North America, Japan and China, and the automaker is counting on Russia, the Middle East and other newly motorizing markets to survive.

In recognition of its shortcomings and limited resources, the automaker identified specific regions where it would concentrate on growing aggressively, and outlined a product strategy that it said would fit more effectively in each region.

In Russia and Ukraine, where Mitsubishi Motors has cultivated a strong brand image, it will expand its sales network and sport-utility-vehicle-based product line-up, while beefing up partnerships with local distributors. It expects sales in Russia, where it is considering a local assembly plant, to jump by two-thirds to 169,000 vehicles in three years.

In the Middle East, Mitsubishi Motors will set up a company to manage sales, marketing and services in the region. It will also take steps to boost its presence in Brazil, China and India, where demand for cars has raced ahead, it said.

The Middle East, Latin America and Africa combined are expected to account for more than a fifth of its global sales by 2010/11, with a 25% rise to 313,000 vehicles.

Meanwhile, in the mature markets of Japan and North America, the maker of the Outlander SUV said it would focus on profitability rather than selling more cars, predicting a fall in its sales in both regions by the end of the midterm plan.

Mitsubishi Motors said it would aim to shore up its Chinese operations - it is in talks with partner Hunan Changfeng Motors Co to form a 50-50 local venture - but is expecting an 18% sales fall during the plan due to a dearth of new models.

Mitsubishi Motors expects to post an operating profit of ¥90 billion in 2010/11, up 13% from an estimated ¥80 billion for 2007/08. It expects global sales to grow 6.4% to 1.422 million vehicles during the period.

The automaker did not disclose how many new vehicle models it would launch, but said it would focus on small cars for the more energy- and environment-conscious developed markets of Japan and Europe, including by launching its electric vehicle globally.

Over the past few months, Mitsubishi Motors has announced various steps to shore up its health, including the closure of its loss-making Australian factory and an expansion of its original-equipment-manufacturing deal with Nissan Motor Co. (Reuters)