Once a market leader in Ukraine, Japanese auto giant Mitsubishi Motors lost some ground over the last decade to other carmakers. But the company is seeking to regain its footing in a recovering Ukrainian car market.
Global upturn
Business is on the upswing for Mitsubishi Motors Corp., according to its earnings report made public on Feb. 5.
From April to December 2017, sales improved by 13 percent, mostly thanks to Japan, China and emerging markets in Southeast Asia. Net income bounced back to $642.8 million, a strong rebound from a $1.9 billion loss the previous year.
Mitsubishi Motors’ partnership with global leaders in electric cars, French Renault and Japanese Nissan, is thriving too. The Renault–Nissan– Mitsubishi Alliance ranked as the second biggest auto seller in the world
last year, following German carmaker Volkswagen. The alliance aims to dominate the market of zero-emission vehicles by 2022, proving that the future of automobiles is electric.
As more developed countries phase out fuel-powered cars, competition in the automotive industry will get even harsher, general director of Mitsubishi Motors distributor in Ukraine Keisuke Nishino believes.
“New manufacturers of electric vehicles come to market. The value of goods will shift from material to technology, thus IT companies will take bigger shares of profit,” he said.
But demand for cars will stay, especially in developing countries, Nishino says, despite the popularity of the sharing economy and even as major cities try to reduce car use.
For Ukraine, Nishino predicts a rapid growth in car sales over the next five years — to 300,000 units against present figure of 82,200. Per-capita car ownership in Ukraine remains among the lowest in Europe, at 26th place in 2016, a figure that gives hope to carmakers.
Business in Ukraine
In 2017, 82,200 cars were sold in Ukraine — a 25 percent jump compared to the previous year. However, this number is nowhere close to pre-crisis sales of 213,300 cars in 2013 and 623,000 cars in 2008. And only 2 percent of all cars sold last year were electric.
Mitsubishi Motors in Ukraine doubled its sales too, to 2,051 units, and increased its market share from 1.6 percent to 2.6 percent. Yet, the growth is slower than Nishino projected.
“It’s probably caused by imports of second-hand cars from neighboring countries. We don’t consider cheap used cars as competition,” Nishino said. “But a large number of used luxury cars for competitive prices affect our business negatively. There’s not much we can do to tussle with them.”
Used cars dominate the electric car segment in Ukraine — only 15 percent sold last year were new. In a bid to accelerate the transition to battery-powered vehicles, Ukraine removed a 20 percent value added tax and waived a 109 euros excise tax on electric car imports for one year.
This fall Mitsubishi Motors will roll out to Ukrainian dealerships its Outlander PHEV, a plug-in hybrid crossover that runs on both electricity and internal combustion engine. In fact, Ukrainian police officers were the first to drive PHEV model before the official sales in the country start. Last June Mitsubishi delivered a fleet of 635 Outlanders to the National police.
“We can’t expect big sales figures immediately but I think it’s good to have a choice on the market,” Nishino said. “Our target customers are people interested in new technology and valuing safety which not all used cars can guarantee.”
He says that Ukrainian infrastructure isn’t developed enough for electric cars nationwide, but that Kyiv and bigger cities have enough charging stations of the CHAdeMO, or Charge de Move, e-mobility standard. In addition, Mitsubishi will install three chargers in its dealership centers in Kyiv, Dnipro and Odesa.
Having worked with Mitsubishi Motors Corp. for 20 years, Nishino was one of the authors of the expansion to Ukraine’s market. He relocated to Kyiv with his wife and two kids less than a year ago to bring his plan into action.
“It wouldn’t be nice of me to design a project and not implement it myself,” he said in an interview with the Kyiv Post. The Kyiv office has operated since May 2016 after a merger with local dealership Niko Group. Today, Mitsubishi Motors has 28 dealership centers around the country.
“Mitsubishi used to be a number one player in Ukraine before 2008– 2009. Now Toyota took over, and Mazda and Nissan sell more than us. It’s time for us to recover our position on the market with the establishment of this company,” Nishino said.
Despite the fact that the Ukrainian economy remains a low $100 billion per year, the Japanese investor sees opportunities for growth. However, for the time being, the Mitsubishi Corp. doesn’t have any other plans for Ukraine beyond automobile distribution.
