Hit by an 89% drop in its annual profit, Mitsubishi Motors says it is targeting to cut fixed costs by 20% or more in the next two years in a bid to stay competitive, Reuters reports.

The Japanese automaker, the country’s sixth-largest, reported an operating profit of 12.8 billion yen (RM517 million) for the year ending in March, down substantially from the 111.8 billion yen (RM4.5 billion) it posted a year ago. The company did not provide an earnings forecast for the current business year or issue a year-end dividend, which it did last year.

While the Covid-19 outbreak will undoubtedly have an impact on this year’s performance, the company’s struggles have been ongoing in the past year. It sold 1.13 million vehicles globally in the year ended March, down by 9% from the previous year, and sales have fallen in China and also in its largest market, Southeast Asia, which accounts for one-quarter of its total sales.

The company said it will remain committed to Southeast Asia, and will focus on growth in ASEAN countries to survive the aftermath of the pandemic. The approach is part of the Renault–Nissan–Mitsubishi Alliance plan that will see each company expand in their regions of strength. Mitsubishi said it would give more details when it reports first-quarter results.

“Before the virus we had been mulling which under-performing regions and vehicle segments to cut our exposure to. In the wake of the virus, we need to pick up the pace of making these changes. To stay competitive in a post-coronavirus market, we need to immediately shrink our area of focus to regions and segments in which we excel,” its CEO Takao Kato said via a video teleconference.

Automakers are facing major issues as a result of the pandemic. Earlier, Honda reported that its operating profit for the year had dropped by 13%, and Toyota, while posting a 2.44 trillion yen (RM98.7 billion) this year, expects that operating profit to drop by 80% in the coming year.