New Outlander Helps Mitsubishi During Chip Shortage
It’s an odd time in the automotive industry. In the wake of a difficult 2020, automakers almost immediately ran into another snag with a global microchip shortage that made it impossible, in some cases, to build vehicles as designed. The same is true for troubled automaker Mitsubishi, but during a financial presentation today, company executives announced that, surprisingly, supply chain issues worked in its favor.
Due to the chip shortage, Mitsubishi’s inventories fell as it wasn’t able to build new vehicles as quickly. The upside is that the automaker could draw down its advertising spend and cut incentives for its vehicles. Both moves helped Mitsubishi increase its profitability right in time for the redesigned Outlander SUV to hit the market in April 2021.
Sales of the Outlander in the United States more than doubled between April and June 2021, jumping to 6,954 from just 3,020 during the same quarter in 2020. Company executives credit the new crossover’s design and technology for helping it attract higher-end clientele with better credit scores. In addition to its positive reception, the new Outlander helped bump sales for Mitsubishi’s three other models. Overall, the brand’s retail sales volume increased by over 106 percent to 25,146 units in the April-June quarter.
In North America, Mitsubishi’s quarterly operating profits landed at $21.7 million, which is positive news after a rough 2020 left the automaker with an operating loss of more than $101 million. Company CFO Koji Ikeya recognizes that there are learning opportunities from the last year. “Going forward, we will work to maximize the effect of new products such as the Outlander,” he said during the presentation.
Mitsubishi’s positive sales news comes as its efforts to overhaul its structure and business operations have proven successful. The automaker blew its goal of reducing fixed costs by 20 percent over two years out of the water, achieving that mark in half that time. A shift to more digital marketing helped lower costs, and ultimately, Mitsubishi improved its quarterly operating income by almost $97 million.
After a loss in 2020, the automaker says that it expects to pull in an operating profit of $361.8 million this fiscal year, ending on March 31, 2022. That’s better than its initial forecast by almost $100 million and accompanies a forecasted increase of 21 percent in global sales. Mitsubishi reports that it expected to sell 967,000 units this fiscal year—10,000 more than previously predicted.
Mitsubishi is the source of information for this article. It was accurate on July 27, 2021, but it may have changed since that date.