Drop in South-East Asia sales push Mitsubishi shares to all-time low

Investors doubt a quick recovery after the car maker posted dismal quarterly sales in its key market

A man walks past a signboard of Mitsubishi Motors at its headquarters in Tokyo. The company has reported a sharp drop in sales in its key Asian markets. AP Photo

Japan’s Mitsubishi Motors faced doubts about a quick recovery after posting dismal quarterly sales in its key South-East Asia market partly due to the coronavirus outbreak, sending its shares down 12 per cent to a record low on Tuesday.

A day earlier, Mitsubishi Motors, a junior member of the auto alliance of Nissan Motor and Renault, reported that sales in South-East Asian countries, which normally account for a quarter of its global sales, plunged nearly 70 per cent to make up just 17 per cent of total during April-June period.

The car maker has relied on growth in Indonesia, Philippines, Thailand and Vietnam where it has dominated bigger rivals, and which have felt the brunt of the coronavirus pandemic later than China and other developed countries.

As a result, some experts say that Mitsubishi’s sales recovery may lag other car makers and complicate a restructuring plan it announced on Monday.

The company also projected an operating loss of ¥140 billion (Dh4.88bn) for the financial year ending March 31, 2021, its biggest loss in at least 18 years.

Mitsubishi Motors’ results were “shocking”, said analyst Mio Kato of LightStream Research. It termed the figures for the South-East Asia were particularly concerning.

“Asean [market] was meant to be its growth driver and was even positioned as its key attractive point to the Renault-Nissan Alliance. Asean sales have collapsed and it is now generating losses,” Kato said in a note to clients, referring to South-East Asian countries.

Globally it sold only 139,000 vehicles in the April-June quarter, a 53 per cent drop from a year ago.

Mitsubishi’s shares fell 12 per cent to ¥236 on Tuesday, marking a record low since their 1988 listing. The shares have nearly halved this year.

Some analysts were optimistic about the company’s longer term outlook and backed its recovery strategy.

“In the short term South-East Asia is not going to work that well for them, but in the longer term it’s the right thing for them to do,” said Chris Richter, deputy head of Japan research at CLSA.