Mitsubishi Motors: long-term performance & turning pointsSales (revenue) and profit-margin ratio
Sales (¥ bn)Net margin (%)
1960Split from Mitsubishi Heavy Industries, and the constraints of the Chrysler tie-up
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY1979 · unconsolidated
Revenue$3.8B
Net income$68M
Net margin1.8%
→
FY1997 · consolidated
Revenue$30.3B
Net income$95M
Net margin0.3%
1970Mitsubishi Motors established, wholly funded by Mitsubishi Heavy Industries
1970Four works taken over from the parent; trading begins
1971Chrysler acquires 15%; the US distribution agreement is signed
1977New Okazaki plant built at the Nagoya Motor Vehicle Works
1978Four-wheel vehicle production begins at Toyo Koki (later Pajero Manufacturing)
1980Mitsubishi Motors Australia set up with Mitsubishi Corporation
1981Mitsubishi Motor Sales of America set up for the US market
1982The Pajero SUV is launched
1985The basic joint-venture agreement with Chrysler is dissolved
1985Diamond-Star Motors founded with Chrysler for US production
1988Shares listed on the first section of the Tokyo Stock Exchange
1991All remaining shares in Diamond-Star Motors acquired
1994Sexual-harassment class action brought against the US subsidiary
1997Sokaiya payoff scandal breaks; Kawazoe Katsuhiko becomes president
Mitsubishi Motors was incorporated in April 1970 out of the automotive division of Mitsubishi Heavy Industries, and within a year had sold 15 per cent of itself to Chrysler in exchange for capital and a route into the United States. The price of that route was written into the distribution agreement signed alongside it, and the company spent the following two decades raising plants, opening sales companies in Australia and America and building the Pajero into a global name — all around a North American market it was not free to enter on its own terms.
The founding of Mitsubishi Motors and an unequal United States distribution agreement
By the 1960s the automotive division of Mitsubishi Heavy Industries was losing ground to Toyota and Nissan in passenger-car sales, and it was accepted inside the company that expanding the business would require an independent management structure. Chrysler Corporation of the United States, for its part, was looking for a foothold in Japan, and in 1969 the two sides reached an agreement to set up a joint venture. In April 1970 Mitsubishi Motors Corporation was established, wholly funded by Mitsubishi Heavy Industries, and in June of that year it began trading, having taken over four works from its parent — among them part of the Kyoto Works (today's Kyoto plant), the Nagoya Motor Vehicle Works (today's Okazaki plant) and the Mizushima Motor Vehicle Works (today's Mizushima plant). In 1971 the capital tie-up under which Chrysler acquired 15 per cent of Mitsubishi Motors' shares was formally concluded, and the company set out afresh as a carmaker funded by both Japanese and American capital.
The terms of the "United States distribution agreement" signed at the same time as that capital tie-up were, however, structurally unfavourable to Mitsubishi Motors. Under it the North American market was restricted to two-door models and to exclusive sale by Chrysler; exports to the United States of the four-door small cars that were the company's mainstay were in effect blocked, and Mitsubishi was not permitted to build a sales network of its own — the agreement worked as an "unequal treaty". Kubo Tomio (久保富夫), president at the time, later reflected that a tie-up that ties you down like this is one you should do without, and among senior management the revision of the contract was recognised as a task from early on. For the roughly ten years until the agreement was revised in 1981 the North American business was structurally constrained, and a structure in which management is swayed by the balance of power with a partner was seeded at the moment of founding.
The Pajero, and opening overseas markets on its own
In August 1977 the company built a new Okazaki plant at the Nagoya Motor Vehicle Works, and in December 1979 a new Shiga plant at the Kyoto Works, putting volume production of passenger cars and engines in place step by step. In October 1980, jointly funded with Mitsubishi Corporation, it established Mitsubishi Motors Australia Limited, and in December 1981, again jointly with Mitsubishi Corporation, Mitsubishi Motor Sales of America, Inc., setting to work on a sales network of its own for the American market. The Pajero, an SUV launched in 1982, raised the company's profile in overseas markets on the strength of a brilliant record in the Paris-Dakar Rally, and held its place for many years as Mitsubishi Motors' most emblematic product and the face of the brand.
In October 1985 the company established Diamond-Star Motors Corporation in the United States, a joint venture with Chrysler, and moved into local production in North America. In 1985 Chrysler raised its shareholding in Mitsubishi Motors to 20 per cent, and the relationship between the two deepened further. In December 1988 the shares were listed on the first sections of the Tokyo, Osaka and Nagoya stock exchanges, giving the company the standing of a major Japanese carmaker in name as well as in fact. In July 1995 Diamond-Star Motors was renamed Mitsubishi Motor Manufacturing of America, and in August 1997 the company acquired a majority of the shares of MMC Sittipol of Thailand, settling on a policy of building an overseas production base with South-East Asia at its axis.
1998The Daimler tie-up, and a crisis brought on by two recall cover-ups
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY1998 · consolidated
Revenue$28.5B
Net income-$778M
Net margin-2.7%
→
FY2015 · consolidated
Revenue$18.0B
Net income$976M
Net margin5.4%
1998Pays $36.7M (¥5bn) to settle the US harassment suit
1999Basic agreement with Volvo on a capital tie-up and co-operation
2000DaimlerChrysler takes 34% and stands as parent company
2001The first recall cover-up comes to light
2002Rolf Eckrodt becomes president
2003Truck and bus business split off as Mitsubishi Fuso; stake sold to Daimler
2004Second recall cover-up; the consolidated equity ratio falls to 1.4%
2005DaimlerChrysler sells its whole holding; the alliance ends
2008Vehicle production in Australia ends
2010PCMA Rus established in Russia with Peugeot Citroën
2012GAC Mitsubishi Motors established in China
2015Mitsubishi Motors Krama Yudha Indonesia established
2015Vehicle production in North America ends
Between 1998 and 2015 Mitsubishi Motors changed patron and then lost one. DaimlerChrysler took 34 per cent in 2000, recall cover-ups broke in 2001 and again in 2004, and by November 2005 the German group had sold out of the company altogether. What survived on Mitsubishi group capital was a smaller carmaker that spent the following decade leaving the developed markets — Australia in 2008, North America in 2015 — and moving its centre of gravity to South-East Asia.
Two recall cover-ups, and the end of the Daimler tie-up
In 1994 a sexual-harassment class action was brought at the company's American subsidiary, and in 1998 it paid $36.7M (¥5bn) in settlement. In March 2000 it signed a memorandum of understanding with DaimlerChrysler AG of Germany on a business tie-up spanning the passenger-car business as a whole, and in October of that year DaimlerChrysler acquired 34 per cent of Mitsubishi Motors' shares, taking a position equivalent to that of a parent company. In 2001, however, a recall cover-up came to light and an executive vice-president was referred to prosecutors; Mitsubishi Motors solicited early retirements and cut headcount, and in January 2003 it split the truck and bus business off by corporate demerger to form Mitsubishi Fuso Truck and Bus. In March of the same year it transferred 43 per cent of Mitsubishi Fuso's shares to DaimlerChrysler and 15 per cent to ten Mitsubishi group companies, and in March 2005 it transferred the whole of its remaining holding to DaimlerChrysler, withdrawing from the business.
In March 2004, though, a second recall cover-up came to light, the consolidated equity ratio fell to 1.4 per cent, and the company was driven into a critical state, effectively on the edge of insolvency. DaimlerChrysler signalled that it would refuse any further support for Mitsubishi Motors, and in November 2005 it sold its entire holding, dissolving the alliance. Mitsubishi Motors survived only through injections of capital from the Mitsubishi group companies, but having been abandoned by Daimler after Chrysler before it, the structural limits of a management model dependent on tie-ups with foreign capital were laid bare. Vehicle production at Mitsubishi Motors Australia ended in March 2008, and the retreat towards the core domestic business went on.
Shrinking in the developed markets, concentrating on South-East Asia
For Mitsubishi Motors after the truck and bus business was split off in 2003, the fragility of its base in the developed markets settled in as a structural problem. In 2008 it ended local production in Australia, and in April 2010 it established PCMA Rus in Russia, a joint venture with Peugeot Citroën Automobiles of France, as a move into the emerging markets. In September 2012, jointly funded with Mitsubishi Corporation, it established GAC Mitsubishi Motors Co., Ltd. in China, and in March 2015, again jointly with Mitsubishi Corporation, Mitsubishi Motors Krama Yudha Indonesia; a concentration of managerial resources on the emerging markets, chiefly in Asia, settled in as policy, and vehicle production at Mitsubishi Motors North America ended in November 2015 as part of the same movement.
The trend of shrinking in the developed markets became decisive with the exit from finished-vehicle production in North America, and the centre of gravity of the overseas business shifted to the emerging economies. The policy of concentrating managerial resources on markets centred on South-East Asia — Thailand, Indonesia and the Philippines — was carried over after the company joined the Nissan alliance in 2016. In the rebuild that followed the recall cover-ups the support of the Mitsubishi group was indispensable, yet it was difficult to draw a growth strategy of its own as a carmaker, and the company was driven once again into a position where it needed an outside partner. The worldwide roll-out of its principal models — the Pajero, the Lancer and the Galant — was maintained, but the weakness of its sales networks in the developed markets went unremedied as it plunged into the next phase of alliance.
2016Joining the Nissan alliance, and three-way merger talks with Nissan and Honda
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY2016 · consolidated
Revenue$20.8B
Net income$666M
Net margin3.2%
→
FY2026 · consolidated
Revenue$18.3B
Net income$63M
Net margin0.3%
2016Falsified kei-car fuel-economy data comes to light; Aikawa resigns
2016Strategic alliance signed with Nissan; Nissan takes 34% in October
2019Converts to a company with a nominating committee
2020The Small but Beautiful plan: Europe cut back, South-East Asia the focus
2021Net loss of $2.8B (¥312bn) after $2.7B (¥298bn) of extraordinary losses
2021Pajero Manufacturing ends production; the Gifu plant closes
2022Moves to the Prime Market in the TSE restructuring
2023Vehicle production at PCMA Rus in Russia ends
2024Vehicle production at GAC Mitsubishi Motors in China ends
2024Nissan sells part of its Mitsubishi Motors holding back to the company
2024Merger talks by Nissan, Honda and Mitsubishi Motors announced
In April 2016 falsified fuel-economy data ended the company's independence for a third time: within weeks Nissan had agreed to take 34 per cent, and Mitsubishi Motors entered the Renault-Nissan alliance. The decade that followed brought a heavy net loss in the year to March 2021, the end of the Pajero, the closing of one overseas plant after another, and by December 2024 talks on merging with Nissan and Honda.
The strategic tie-up with Nissan Motor and the Renault-Nissan alliance
In April 2016 falsified fuel-economy data on kei cars — the light vehicles peculiar to Japan — developed jointly with Nissan came to light, and president Aikawa Tetsuro (相川哲郎) announced that he would resign to take responsibility at the shareholders' meeting in June. Chairman and CEO Masuko Osamu (益子修) asked Nissan's chairman Carlos Ghosn for support the day after the press conference, and in May 2016 Mitsubishi Motors formally signed a strategic alliance agreement with Nissan Motor covering a capital and business tie-up; in October of that year Nissan acquired 34 per cent of Mitsubishi Motors' shares by taking up a third-party allotment, and the company joined the Renault-Nissan alliance. Capital injection and managerial support from Nissan were to steady the business base, and the policy set out was to pursue concrete synergies such as the joint development and production of pick-up trucks and kei cars in South-East Asia. In June 2019 the company converted to a company with a nominating committee, strengthening its governance in parallel. Within the three-way alliance with Nissan and Renault, Mitsubishi Motors was expected to contribute in technical fields of its own such as plug-in hybrid and four-wheel-drive technology.
In the year to March 2021, however, weak sales led the company to book extraordinary losses of $2.7B (¥298bn), including $1.1B (¥118bn) of impairment on six domestic sites and $639.5M (¥70bn) of business-restructuring costs, and it fell as a result to a net loss of $2.8B (¥312bn) — a grave turn. In August of that year the production business of Pajero Manufacturing Co., Ltd. ended and the plant in Gifu closed, a symbolic turning point at which production of the Pajero, once the company's mainstay model, was brought to a halt. In the Tokyo Stock Exchange's market restructuring of April 2022 the company achieved the move to the Prime Market, but in December 2023 vehicle production at PCMA Rus in Russia ended, and in February 2024 vehicle production at GAC Mitsubishi Motors in China ended as well: the contraction of the overseas production network continued as the keynote of the company's business structure.
Three-way merger talks with Nissan and Honda, and the problem of leaning on South-East Asia
In December 2024 it was made public that Nissan Motor, Honda Motor and Mitsubishi Motors had begun talks on a merger of the three companies. Results for the year to March 2024 secured a profit, with revenue of $18.4B (¥2.79tn) and net profit of $1.0B (¥155bn), but the advancing withdrawal from the developed markets had left an earnings structure leaning on South-East Asia, and the view had spread in the market that taking part in a wider framework was unavoidable if the group's overall sales volume was to be maintained and the funds for investment in electrification secured. CEO Kato Takao (加藤隆雄) took the view that, given the strength of demand for plug-in hybrids, shifting to electric vehicles in one leap carried a high risk, and on the path of electrification too he kept his distance from the larger makers and declared a focus on PHVs. In November 2024 Nissan Motor sold back to Mitsubishi Motors part of the shares it had acquired in the third-party allotment of October 2016, and a reordering of the Nissan-Mitsubishi alliance was under way. The three-way talks surfaced as an issue that would repaint the competitive structure of the Japanese motor industry.
The history of Mitsubishi Motors is characterised as a process of entrusting its survival, one after another, to tie-ups with outside partners — Chrysler, DaimlerChrysler and Nissan. Taking the 1971 capital tie-up with Chrysler as its starting point, then the tie-up with DaimlerChrysler in 2000 and with Nissan Motor in 2016, the record of changing principal partner roughly every fifteen years shows how hard it is for a carmaker to keep the business going alone, and at the same time reproduced a structure in which management is easily swayed by the balance of power with a partner. The two recall cover-ups exposed structural problems in the quality-control system and produced the result of repeatedly losing the trust of partners, and the structure of dependence on partners has continued unbroken up to the opening of the three-way talks in December 2024.
The turning points, read in full: what was at stake, what was chosen and what the revenue did around it. The Japanese edition is the edition of record and carries the sourced dossier behind each decision — background, options weighed, outcome — linked under every decision.
Key decision · 1970
The founding of Mitsubishi Motors and the capital tie-up with Chrysler (1970)
The first shape of management swayed by its partners
The core of this founding decision lies in handing North America to a foreign partner's sales network in exchange for independence. Separating from Mitsubishi Heavy Industries to become a dedicated carmaker was in itself unavoidable if the business was to break out of a build-to-order mentality and step into competition. But the new company set out with little accumulated strength and had nothing like the power to open the American market on its own; it had no choice but to lean on Chrysler's capital and distribution rights. President Kubo, a designer by background, spoke early of putting the contract right because he had seen that this dependence would shut off the growth of Mitsubishi's own brand.
The structure in which management is thrown about by the balance of power with a partner took its shape at that founding moment. President Tate corrected the unequal contract, but the dependence itself did not disappear. In 2000 the company entrusted a third of its capital to DaimlerChrysler, and in 2016 it came under Nissan. Chrysler in 1971, Daimler in 2000, Nissan in 2016 — at every turning point Mitsubishi Motors entrusted its survival to foreign capital or to another company. The first move in that repetition was the Chrysler tie-up bundled together with the founding of 1970.
The sokaiya payoff scandal and the end of Nakamura's shadow rule (1997)
A rotten core cannot be put right by changing the president
The core of this decision lies in trying to settle the aftermath of a scandal by swapping out the president's head. The promotion of Kawazoe to president and the reform of decision-making by committee made sense in returning hollowed-out decisions to substance. But both the payments to sokaiya — corporate racketeers — and the sexual harassment in the United States had their root in a single point, as Nikkei Business named it: the shadow rule of chairman Nakamura, who held the power of appointment. Install a new president without reaching into that shadow rule head-on and the rotten core remains. An absent sense of compliance is not the kind of thing that vanishes when the faces around the management table change.
Mitsubishi Motors was described as a company whose core of management had rotted not because of the individual scandals but because of a disposition that kept inconvenient information from passing upward and ignored even demands from outside. That disposition survived Kawazoe's reforms, and each time the company sought rescue — from Daimler in 2000, from Nissan in 2016 — it erupted as the same disease of concealment. The discipline of foreign capital or of another company brings capital and control, but it cannot transplant a sense of compliance. The crisis of 1997 can be read as the point at which the structural problem running through the rest of Mitsubishi Motors' history first showed itself.
A rebuild staked on foreign capital, ending the opposite way from Nissan's
This decision was often spoken of alongside Nissan, which in the same period achieved a rebuild without sanctuaries under Renault. But the two companies' illnesses were alike only on the surface. Nissan's slump lay in a fixation on second place at home and in the collapse of an expansion strategy, whereas Mitsubishi's illness lay in an absence of compliance that took the form of quality fraud. What Daimler brought was capital and discipline, not the power to replace the very organisational culture that produced concealment. The habit of shutting out bad information survived under the tie-up, and can be seen as having erupted as the second recall cover-up.
Mitsubishi Motors chose Daimler by elimination, after both GM and Ford had walked away; it was not conviction. President Kawazoe's optimism in saying that managerial autonomy was preserved, while accepting a controlling 34 per cent stake, misread the logic of foreign capital. For a company that had changed principal partner on a cycle of roughly fifteen years — Chrysler in 1971, Daimler in 2000, Nissan in 2016 — dependence on foreign capital was a means of survival and at the same time a fate of having management swayed by the balance of power. Being abandoned, when it mattered, by the partner to which it had entrusted its rescue engraved the weight of a carmaker that cannot stand alone, as the reverse side of Nissan's success story.
Self-directed rebuilding led by the Mitsubishi group after Daimler's exit (2004)
The author's view
This rescue plan was coherent on one point: taking management that had been entrusted to foreign capital back into the hands of domestic capital. The Mitsubishi group, however, avoided shedding blood directly through debt forgiveness, protecting its own profit and loss with preferred shares and a debt-equity swap while passing the burden to ordinary shareholders through the device of a downward revision of the conversion price. That a financing built to preserve the pride of a great zaibatsu name should have eroded the trust of the capital markets at the very first step of the rebuild can be seen as a point that dragged on for years afterwards.
Even so, Mitsubishi Motors survived largely thanks to the judgement of president Masuko Osamu, who chose not to withdraw but to seek a reversal through the products, and to the cohesion of a Mitsubishi group that went on supporting the company through loss after loss. The burden of North America nonetheless remained after the return to profit, and the course led on, by way of the fuel-economy fraud of 2016, to coming under Nissan. The self-directed rebuild of 2004 succeeded in prolonging life, while falling short of its original ideal of standing alone.
The fuel-economy data fraud and coming under Nissan (2016)
A third choice of dependence on foreign capital, or on another company
The core of this decision is not the fraud itself but the speed with which, the moment the fraud was exposed, the company barely considered rebuilding on its own and ran in a single bound to another company's capital. Telephoning a competitor's chairman the day after the press conference and entrusting 34 per cent within a little over three weeks was a display of chairman and CEO Masuko's decisiveness, and at the same time proof that the people involved had themselves concluded that Mitsubishi Motors could no longer rebuild trust and funding under its own power. The summing-up that its model line-up had outgrown its size was, turned over, a confession that it could not choose by itself to shrink to a size that fitted.
Chrysler in 1971, Daimler in 2000, Nissan in 2016 — Mitsubishi Motors changed partner roughly every fifteen years, each time taking a slump or a scandal as the occasion. What these have in common is that, while the discipline of foreign capital or of another company brought capital and control, it could not replace the disposition of holding inconvenient information inside. Under Nissan the clean-up after the fuel-economy fraud went ahead, but the more a company borrows its framework of governance from another, the harder it is to grow the power to discipline itself. This decision repeated, at the third time of asking and in the shortest span yet, the cycle in which every choice to be rescued thins the shoots of independence.
From expansion on every front to concentration on South-East Asia (2020)
The weight of choosing not to chase scale
At the centre of this decision is a reckoning with the previous strategy, which had made the expansion of scale an end in itself. The few years spent chasing share in every market under Nissan raised unit volumes but brought no profit with them, and left the company with nothing but fixed costs. The coronavirus crisis brought that contradiction to the surface at a stroke, and the choice to pull back from a Europe that did not pay and lean on a South-East Asia that did can be seen as a rational tidying-up for a small maker of limited strength. Cutting production capacity to the point of letting go of the Pajero, its signature model, shows the strength of the resolve to break with the path of expansion.
But concentration, turned over, is also dependence. There is no guarantee that a single market will go on being the earner, and if that region shakes, results will shake with it. Narrowing the technical pillar to plug-in hybrids and entrusting the next-generation fields to the alliance likewise holds only for as long as the strength remains a strength. Small but Beautiful, the choice not to chase scale, is a textbook answer on selection and concentration and at the same time a wager that narrows in advance the room to escape should the one point it has narrowed to give way. How far Mitsubishi Motors can deepen this concentration looks likely to remain subject to changes in the South-East Asian arena, and to changes in its own role within the alliance.
This English edition follows the Japanese one chapter by chapter. The Japanese edition remains the edition of record: it carries the source-by-source citations, the financial tables and the shareholder and executive records. 日本語版（詳細）— Mitsubishi Motors full history in Japanese →
Mitsubishi Motors Corporation — 有価証券報告書 (annual securities reports), including the 沿革 corporate-history section and the consolidated filings for the years to March 2002, 2003, 2004, 2005, 2007, 2015, 2021, 2022 and 2025; company news release of 20 Oct 2016 on the alliance with Nissan Motor.
Nikkei Business — 日経ビジネス (Nikkei BP): 31 Jul 1978 (editor's interview with Kubo Tomio); 3 Nov 1997 on the payoff affair; 9 Feb 1998 (Kawazoe Katsuhiko on becoming president); 20 Apr and 27 Apr 1998; 3 Apr and 2 Oct 2000 on the Daimler tie-up; 26 Jul 2004; 21 Aug 2017 (Masuko, CEO, Nikkei Business Digital); 13 Feb 2023.
Shukan Toyo Keizai — 週刊東洋経済 (Toyo Keizai Inc.): 27 Jul 2002 on the Eckrodt rebuild, including the interview with Rolf Eckrodt; 15 May, 5 Jun and 25 Sep 2004 on the crisis; 21 Nov 2020 on the turn to South-East Asia. Toyo Keizai Online, including its coverage of the reorganisation of sites and a Reuters report.
Nihon Keizai Shimbun — 日本経済新聞 (Nikkei Inc.), 18 May 2016, on president Aikawa Tetsuro and the fuel-economy data fraud.