(October 19, 2017) TOKYO, Japan — Mitsubishi has launched "Drive for Growth," a three-year strategic plan to deliver sustained and profitable growth, targeting an increase of more than 30 percent in both annual unit sales to 1.3 million vehicles and in revenues to 2.5 trillion yen.

Under the plan, Mitsubishi Motors aims to achieve an operating profit margin of 6 percent or more by the end of fiscal 2019, up from 0.3% percent in fiscal 2016. The plan combines a product renewal program with targeted market expansion and operating efficiency improvements.

Osamu Masuko, Mitsubishi Motors chief executive, said: "Drive for Growth is a new roadmap for Mitsubishi Motors. We will rebuild trust in our company as our highest priority, successfully launch new vehicles, and achieve a V-shaped financial recovery. These will be the foundations for our future sustainable growth, which will involve increased capital expenditure and product development spending."

The Drive for Growth plan involves a 60 percent increase in annual capital expenditure to 137 billion yen in fiscal 2019 — lifting spending as a proportion of sales to 5.5 percent a year. R&D expenses will rise by 50 percent to 133 billion yen over the same period. In total, this will amount to more than 600 billion yen in investments. Even with these increases, Mitsubishi Motors will maintain financial discipline and generate positive free cash flow during the period. The company intends to establish a competitive dividend policy comparable to those of other Japanese automotive manufacturers.

As part of its investment drive, Mitsubishi Motors plans to strengthen its four-wheel drive SUVs and pick-ups, and to launch 11 models including the XPANDER and Eclipse Cross. The product renewal program will coincide with a market expansion drive in the ASEAN region, Oceania, United States, China and Japan.

Masuko said: "This is an ambitious program to maximize our strengths in growing product segments, especially four-wheel drive, and to pursue growth in markets where our brand has strong potential, particularly the ASEAN region. This growth program will also involve an efficient and disciplined operating structure as we continue to manage costs."

Under Drive for Growth, Mitsubishi Motors is targeting a market share of 10% in ASEAN. Sales activities will be reinforced in the US. The company's presence in China will be strengthened with the introduction of models such as the Outlander and Eclipse Cross. And the company will invest in its sales network and product portfolio to return to profitability in Japan by the end of the plan.

The strategic plan is based on three strategic initiatives:

1.    Product renewal: During the period of the plan, Mitsubishi Motors will launch 11 new models, of which six will be entirely new model changes — averaging two each year — while the remainder will be important updates of existing vehicles.

2.    Focus on core markets to drive revenue growth: This year's opening of a new assembly plant in Indonesia, and the recent launch of the XPANDER multi-purpose vehicle, will drive the growth of the ASEAN business, the group's largest and most profitable operation. ASEAN volumes are expected to rise from 206,000 units a year to 310,000 units a year in 2019. Mitsubishi Motors will also launch new models to assist the turnaround of its important mini-car business in Japan. In the US, the company will improve its dealership networks, targeting a 30 percent increase in unit sales to 130,000 units in fiscal 2019. In China, Mitsubishi Motors will double the number of dealerships and more than double sales to 220,000 units in fiscal 2019.

3.    Cost Optimization: Mitsubishi Motors will tightly manage production costs, with a target to reduce monozukuri costs by 1.3 percent per year, in spite of large investments in R&D. Alongside cost management, the company will benefit from growing synergies from its membership of the Renault-Nissan-Mitsubishi alliance.