Mitsubishi forecast a loss of 4.72 billion for FY2020

Mitsubishi Motors Corporation, Japan's sixth-largest automobile manufacturer, is expecting to suffer a heavy loss for the second straight year. However, the loss that the automaker chalked out for FY 2020-21 is a lot more than the preceding year. The total loss that MMC suffered in 2019 was 25.78 billion yen (0.34 billion SGD).

MMC recorded a total operating profit of 111.8 billion yen (1.47 billion SGD) in 2018. However, the automaker has now forecasted an operating loss of 140 billion yen (1.84 billion SGD) for the upcoming year. This forecast seems to be in-line with the present loss figure that MMC expects to incur in FY 2020-21, that is 360 billion yen (4.72 billion SGD).

Getting into deeper details, Mitsubishi Corporation has already incurred an operating loss of 53.3 billion yen (0.70 billion SGD) during the first quarter this business year that ended on the 30th June. The primary reason for the huge loss is the pandemic, due to which the sales of cars have hit rock-bottom. In fact, the company was already suffering from a dip in sales in China and Southeast Asia.

MMC has already taken quite a few steps to curb the losses. Back in May 2020, the automaker reported that it is working on bringing the fixed cost down by up to 20%. It would achieve this by reducing its manpower, shutting down unprofitable dealerships, and scaling down production. Following this, MMC has called off the introduction of new models in Europe, which clearly hints at the fact that it could shut its operation in the market.

The CEO of Mitsubishi has opened up about this bad situation saying that the prime focus will be on cost-cutting in order to mitigate losses. The chairperson further said that the company will direct their resources on the Chinese and ASEAN markets. Interestingly, the automaker also revealed a three-year business model for these regions.

MMC is on the path of rebuilding and one of the biggest decisions here is the end of production of the Pajero SUV. Moreover, the automaker will also shut the Gifu manufacturing facility down.

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