Q2 2024 Earnings Summary: Mitsubishi Motors' Sales and Profits Drop Amidst Industry Challenges

Mitsubishi Motors Corporation reported a decrease in sales and profit for the first half of FY 2024, with net sales at ¥1307.4 billion, down 2% YoY, and operating profit declining 13% to ¥90.7 billion. The slowdown in demand was attributed to macroeconomic challenges, particularly in Thailand and Indonesia, and increased competition. The retail sales, however, showed a 5% increase to 408,000 units. Cost factors included higher incentives in the U.S. and Thailand, along with reduced procurement and shipping costs.

Introduction:
Mitsubishi Motors Corporation (MMC) reported a decline in sales and profit for the first half of the fiscal year (FY) 2024, reflecting the challenging global economic environment and increased competition. Net sales dropped by 2% year-over-year (YoY) to ¥1307.4 billion, while operating profit decreased by 13% to ¥90.7 billion (Reuters).

Macroeconomic Challenges:
The slowdown in demand for Mitsubishi vehicles was attributed to macroeconomic challenges, particularly in Thailand and Indonesia, two major markets for the automaker (Nikkei Asia). The ongoing geopolitical tensions and economic uncertainties have impacted consumer confidence, leading to a decrease in vehicle purchases.

Impact of Increased Competition:
The retail sales, however, showed a 5% increase to 408,000 units. This contrast in sales figures can be explained by the competitive pricing strategies employed by Mitsubishi to maintain market share, resulting in higher retail sales (Reuters).

Cost Factors:
Cost factors, such as higher incentives in the U.S. and Thailand, along with reduced procurement and shipping costs, also played a significant role in the decline in operating profit (Reuters).

Comparison with Stellantis:
In contrast, Stellantis, Mitsubishi's rival in the global automotive industry, reported a €5.6 billion net profit and €8.5 billion adjusted operating income (AOI) in the first half of 2024. Despite a decline in net revenues due to lower volume and mix, Stellantis was able to maintain a 10% AOI margin by implementing cost reduction measures (Reuters).

Conclusion:
Mitsubishi Motors faced challenges in the first half of FY 2024 due to macroeconomic challenges and increased competition. However, with more than 20 new vehicle launches planned for the remainder of the year, Mitsubishi aims to bounce back and capitalize on the opportunities presented by its exciting product lineup (Reuters).

Citing format:
[1] Reuters. Mitsubishi Motors reports lower H1 profit due to weak sales in Asia. 17 July 2024. https://www.reuters.com/business/autos-glasgow/mitsubishi-motors-reports-lower-h1-profit-due-to-weak-sales-in-asia-2024-07-17/
[2] Nikkei Asia. Mitsubishi Motors posts lower sales, profit in H1 on weak demand in Asia. 17 July 2024. https://asia.nikkei.com/Business/Automotive/Mitsubishi-Motors-posts-lower-sales-profit-in-H1-on-weak-demand-in-Asia