Mitsubishi, which makes the Galant sedan and Outlander SUV, warned that the outlook for the global auto industry remains "severe", but projected it would eke out a small profit by the end of the fiscal year in March.

Mazda Motor Corp said China was a bright spot, with sales rising 35 per cent there, but that otherwise sales around the region dropped during the fiscal first half. Japan's Toyota Motor Corp, the world's No 1 automaker, reports earnings on November 5.

Mazda, which has overtaken Mitsubishi to become fourth-biggest among Japanese automakers, reported a net loss of 20.8 billion yen (US$230 million) for the April-September period compared to a net profit of 29.5 billion yen a year earlier.

Global sales during the six months dropped 37 per cent to 990.3 billion yen, although the new Mazda 3, called Axela in Japan, showed strong sales, the Hiroshima-based company said.

cut costs

Facing weak demand and the yen's appreciation, which erodes overseas income, the company has tried to cut costs. It trimmed its forecast for full year losses to a net loss of 17 billion yen from 26 billion yen.

Sales in China jumped 35 per cent to 85,000 vehicles, lifted by demand for the Mazda 6 and Mazda 3 models.

But in North America, sales fell 21 per cent to 158,000 units, while European sales declined 31 per cent to 123,000, largely on weakness in Russia. In Japan, sales decreased 15 per cent to 105,000 units.

Mitsubishi Motors, meanwhile, reported a net loss of 36.4 billion yen ($403 million) for the April-September period, down from a net profit of 12.8 billion yen last year. Sales tumbled 53 per cent to 573 billion yen.

"The situation facing the automobile industry continues to be severe," it said in a release.

To boost competitiveness in the second half, the company plans to expand the number of environmentally friendly cars that qualify for tax breaks and subsidies to 15 from 10. It also plans to launch a new compact SUV in February.

Earlier this year, Mitsubishi rolled out a fully electric car called thei-MiEV that can be recharged from a regular home socket. The four-seater costs 4.59 million yen (US$50,900) and will initially be sold mainly to local Japanese governments and companies.