Mitsubishi Motors is launching a 3-year strategic plan to deliver sustained and profitable growth for the carmaker. With “Drive for Growth”, Mitsubishi is targeting a 30 percent increase in unit sales to 1.3 million units and revenues to 2.5 trillion yen (~P 1.13 trillion).

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

The Drive for Growth plan involves a 60 percent increase in annual capital expenditure to 137 billion yen (~P 62.16 billion) 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 (~P 60.35 billion) over the same period. In total, this will amount to more than 600 billion yen (~P 272.25 billion) in investments.

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. Under Drive for Growth, Mitsubishi Motors is targeting a market share of 10 percent in ASEAN.

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 6 will be entirely new model changes, averaging two each year, while the remainder will be important updates of existing vehicles. By the end of the plan, the company expects its 5 best-selling global models consisting of SUV, 4WD, and plug-in hybrid electric vehicles (PHEV) to account for 70 percent of total sales volume. Reflecting the shift to lower emission models, the company also announced that it plans to provide electrified solutions across its core model range including an EV kei car from 2020.

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.

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. Mitsubishi Motors is seeking synergies totaling more than 100 billion yen (~P 45.37 billion) over the course of the plan, with the bulk of these to come from efficiencies in procurement and costs avoided in R&D.