Rumors of Mitsubishi’s demise in America are greatly exaggerated. That was the essence of Mitsubishi Motors President Osamo Masuko, in an article at AutomotiveNews [sub]. “We have never thought about withdrawing from the U.S. market, and we will not do so.” And the sales target is 200k vehicles, four times of current levels. And what is the target date for that rebound? Not stated.
What was stated by Masuko is that the current crop of duds in the lineup will have to be replaced: “I cannot speak about it too concretely, but from what we know at the moment, it is not possible to continue with the models that we have had,”. Quadrupling sales without a specific plan for new models? Sounds even more ambitious than VW’s American re-conquest.
Mitsubishi was the posterboy of the sub-prime auto financing debacle, offering zero and low-interest loans to anyone with a pulse during the early naughts. And it all came to naught. Mitsubishi sold 354k cars in 2002; they’re currently at 36k so far this year. That lead to plenty of analysts speculating whether Mitsubishi was going to pack up and follow Isuzu with a one-way ticket home.
People have been asking me for the past six years whether Mitsubishi’s going to withdraw from the market,” Masuko said in a Tuesday interview. “But it never enters my mind.”
The auto industry can basically be categorized into two groups: those who innovate and those who coast.
By “innovation” I mean constant reinvention: product, marketing, branding; the whole shooting match. Those manufacturers who are constantly trying to improve all facets of the business and who bring compelling product to the marketplace are being rewarded (Hyundai, Audi). Those who are resting on their history, coasting on previous successes, or who have lackluster product are getting shellacked (Honda, Chrysler).
The fact is, most cars these days are “good enough” and you don’t have to worry about a major blowup or being stranded. You need to have something to make you standout. Mitsubishi, Isuzu, Chrysler, etc. all have decent enough product but one has to ask: is it good enough or relevant enough to overcome the Hyundais and Toyotas at one end and the Audis, BMWs and Lexuses at the other end?
I would argue not.
1. New Galant (ZT concept-based) – make style, performance and refinement the focus while retaining the basic larger size (high-priority)
2. Lancer / Lancer Sportback – Fine
3. Evolution – Fine
4. Federalized New Colt – to do battle with the Fiesta, Mazda2, Fit, and new Aveo (high-priority)
5. Federalized eK – add some spunk to the lineup with something to compete with the xB/cube/Soul; et al
6. i / i-MIEV
7. Outlander – Fine
8. Outlander Sport – Fine, but why is it called that?
9. New Eclipse (RA concept-based) – Borrow Evo components and downsize to return to its sporty roots.
10. New Endeavor – larger/more luxurious than Outlander (low-priority)
philadlj –
Decent product alone makes not a profitable automaker.
Take a look at Mazda, a brand that also has always puzzled me why it hasn’t had better success in the US. I think that their current 6 is a great car and with a nip-tuck on that gawd-awful smiling 3 it would make a great car as well, but they still struggle.
Again, the auto market is saturated and there is a significant excess of production capacity and supply. As people buy fewer cars (in North America) and downsize, the ability for the marginal players to compete successfully will be diminished.
With an all-new line, Mitsu might have competitive product, but even then, the issue is with brand definition. What does Mitsu stand for, and who’s going to buy their cars?
Look at Subaru. They’ve leapfrogged Mitsu based on strong niche branding and product that builds off their heritage, and are now Mazda-sized.
Can Mitsu come back with great, new small product? Maybe. Right now, there’s no “soul” to the company, that’s the problem.
“2. Lancer / Lancer Sportback – Fine
7. Outlander – Fine”
No, they are not fine
Outlander has crappy interior and Sprtback is a gas gazzler. Lancer is also not up to other compacts, like Corolla in “average joe” definition. So, the average people don’t buy it.
One easy idea: Do something w/ the next Galant! A cut-rate Japanese Impala will not work. Make it smaller or more stylish. *something* to distinguish it from the other players. That Galant of 2002 was a good looking vehicle and that certainly did help along w/ the 0/0/0 deals they were making then. The new one is just BLAH.
Next: Smaller, cheaper, lighter, faster Eclipse. You can do it!
Once that’s handled: Bring back the Galant VR-4!!
I like the current Galant more than the one before. The 2000+ version cried “reskin of 4G”. There was a lot of useless empty space inside, so the car became wider for no benefit.
Yeah, that’s gonna happen.
It’s both a product and identity crisis. Either one makes it tough. Both together are disaster. Take a look at Mazda (mentioned upthread). A strong product line, but they chose the wrong identity for the American market. Yes, their cars are more fun to drive than Honda/Toyota, but apparently the number of Americans who value that over a perception of resales value and dependability is very small. To most folks “Zoom Zoom” means “not for me.” On the other side, look at how the Big 3 destroyed their very strong identity over time with horrible product.
Then you have Mitsubishi. How’s their product? It’s okay. Is there any compelling reason to choose based on product? Nope. Well, what’s their identity? Who the hell knows. Are they for tuner kids screeching around in EVOs with enormous bolted-on spoilers? Someone who wants something that sort of looks like an Outback wagon without the Subaru brand name?
They need to find a strong, appealing identity and a product line to match.
That’s a tough order.
As near as I can tell, every automaker selling in the US plans to increase sales anywhere from 50% to 400%. Good luck with that.
So let’s see – Mitsu wants 200K sales here, and VW wants 800K, up against rising sales for Hyundai, Ford and others.
HReardon makes some excellent points – who’s going to buy all this in a market that’s probably capped at 12-14 million units for the foreseeable future? Where exactly do the wonder boys running these under-performing operations expect these million units of sales materialize? I want whatever they’re smoking.
I worked with MMSA for two years. There are good people there, but they’ve been functioning like the Detroit Tigers or Pittsburgh Pirates — a second-tier team, always rudderless. Even when they’ve been up, they were really down. That sub-prime financing debacle 0-0-0 was a Ponzi scheme about the deal.
Still, Sammy B’s right about the products. 0-0-0 would never have worked if the 1999-2003 Galant — with styling that echoed the 5-series BMW — wasn’t attractive, reliable a nice driver, a good deal and not a “me too” car. By contrast, the current model was a turd the day it hit the street (which was seven years ago).
Mitsubishi could steal a page from Jaguar, which redid the 68-86 XJ styling in 1995 — and do the same to Galant to see if it revives sales What’s more likely, though, is that Masuko and whatever U.S. exec installed in Cypress will talk big for a couple more years; then they’ll go home. And I’m sorry to say it.
The difference is that the Pirates are profitable. It was recently reported that the last three years profit is slightly more than the 2010 payroll. So you can be bottom tier and survive, er, kinda thrive.
Time for Mitsubishi, Mazda and Isuzu to combine forces. M&M make the cars and Isuzu the SUVs and trucks.
Twotone
I’m planning to trade my Mitsubishi Adventure for a Isuzu Crosswind. I have nothing but good luck with Isuzu.
Sounds even more ambitious than VW’s American re-conquest.
That’s what I was thinking just with the headline. One difference in VW’s favor is that their sales are not going in reverse.
Not every brand can be Number One (or Number Ten, ftm) especially when you’ve got but a handful of brands all duking it out with similar market share percentages. Companies like Mits and Mazda (don’t know how they got dragged into this conversation) have to be content with the crumbs left behind.
I love Mazda, hate the grin, think the 6 got too big for its natural niche, but all the Miatas and RX-8s in the world can’t make up for the fact that most buyers don’t care about “zoom-zoom”; they just want “start-start” reliability. As for Mits (what we called ’em in the electronics stores) like someone said above they’ve got no identity. When the Eclipse bloated into a modern-day version of a early-70s Ford Mustang that’s when they lost their mojo.
I think, before Mitsu packs it will be Suzuki outta here first. Honestly, they have no idea how to sell and market cars. They market Kizashi as family car while it has identical size and interior measurements to Mazda3. Of course, they will miss all those compact buyers but will not sell this thing to any family. They over-contented it and overpriced it. Should of just make it and stake it against Mazda3, civic and Corolla and result would of been different. But they wanted Audi A4. Are you kidding me? No, they may be ok as machine to machine but Suzuki vs Audi – that makes me laugh because the nameplate thing is still alive.
I do find it interesting that Suzuki has more success with their motorcycles than they do with automobiles. Sometimes it’s as though they really would prefer pulling their automotive arm out of the U.S. market completely.
It would be interesting to know what percentage of the 36k YTD sales were to rental fleets. The Lancer and Outlander are the only two models that have any appeal to consumers, and there are better alternatives to both of those…
The Galant has never been competitive, although it isn’t the absolute worst car in the class. It has the Chrysler Sebring/Dodge Avenger to thank for that! The Endeavor is ancient and suffers from horrible depreciation (some banks won’t loan more than 50% on it). But it’s also the most reliable vehicle in their lineup and is a steal for used car shoppers…kinda like the current KIA Optima…but that only hurts brand image and overall resale values for their respective companies.
Even if/when they have genuinely good product, they still may not sell. Case in point- Suzuki, especially the Kizashi and the SX4. The Mazda6 and CX-9 are also phenomenal vehicles that are at the bottom of sales charts. For every Mazda6 sold, 10 Camrys and 10 Accords hit the roads- it defies logic, but it is what it is!?
I think what we’re seeing with second-tier Japanese brands is a repeat of what the mass-market British, French and Italian brands decided about the U.S. in the late Sixties into the Eighties. At a certain point, the barriers to success (exchange rates/dealers/quality/product) outweighed the marketing effort being made. Isuzu saw it. Suzuki probably gets it and I agree with Beelzebubba; they are probably next. Subaru certainly found its niche. While the jury’s out on Mazda, they do offer a genuine sports quotient well-defined by the MX-6 Miata and RX-8. If they do go down in this market, they can do it with their heads held high. I think Mitsubishi will give in eventually.
@Beelzebubba: Fleet sales remain a large chunk of Mitsubishi’s sales equation. It’s probably at around 20% now. That’s not nearly as bad as back in 2002-2003, when it was well over 30%. If that percentage had continued, I think they’d have packed up and gone home already.
The current Galant has never been competitive, but the earlier generation was. All four of the models you mention (Lancer/Out Galant/Endeavor) could do OK with better design, but not 250K annual OK.
In many ways, Mitsubishi has the same basic problem as GM does but in a microcosm. It’s about the deal, not the car. This is a market where getting credit is hard and jobs are tight. The most common Mitsubishi buyer (read: rejected by Toyota and Honda) is unlikely to be in the market to begin with. So, how do you sell cars profitably in this situation, especially when no one’s excited by them? I don’t know.
The number projections are a joke. Mitsubishi once had U.S./Canada sales projections of 500K units by 2005. I know because I wrote the speeches. They’ll be lucky to crack 50K in total this year. Galant was once good for 60-80K units a year, Eclipse another 50-70K.
I feel for the dealers. Can they make money selling 5-10 units a month? Maybe if those electric vehicles and other segment-busters are amazing, viable and “gotta-have” products. Otherwise, how can selling regular-segment ICE cars and trucks to compete with Corolla, Camry etc. with so little volume be viable?
As for the Eclipse, James2 is right about the Mustang analogy. On a press junket for the 2001 Spyder, Tom Bryant of Road & Track compared the 89-94 Eclipse to the 64-66 Mustang — light, lithe, fun. The 95-99 Eclipse was the 67-68 Mustang – more power, a bit more refined, but still fun. The 2000-2005 Eclipse was like the 69-70 Mustang – still powerful, but getting too grown up and refined to keep the original spirit. I’m pretty sure he’d see the current Eclipse as a 71-73 Mustang. To me, if that car is to continue, they must skip the Mustang II and Fox platform and proceed straight to the 2011 model with RWD and AWD, sophisticated fours and V-6s, otherwise don’t bother.
This reminds me of struggling politicians claiming they will absolutely never give up, haven’t even thought about it, blah, blah, blah. 48 hours later, they are outtahere!
VW clearly has a lot more credibility in going after increased US sales. VW is a growing global powerhouse with a US sales history problem. Mitsubishi is, well, not.
John’s right. VW has too much good going on here (Audi, Bentley, etc.) to retreat. They just need to calm down with those stupid outrageous sales projections.
Mitsubishi, well — I give them two more product launches before they close up shop.
I love my Eagle Talon TSi AWD!
You should – it’s a fantastic machine. So’s an EVO today. It’s the bread-and-butter stuff that’s killing them.
And that, perhaps points the real direction for Mitsubishi – as a Lotus competitor making small, AWD sports cars / coupes / sedans:
3000 GT / GTO
Eclipse GSX
EVO
Micro-volume and sold under the Honda umbrella, similar to the Scion sub-brand, using Honda-based engines…
Wow – if I’d known it was that easy, I would have planned to quadruple my sales years ago!
The talk about identity is dumb. What is Ford’s identity? And Government Motor’s identity is what, garbage cars made by union lazy-butts? Mitsubishi needs no stinkin’ identity. Just make a Galant that is competitve already. And something smaller than Lancer.
Back when Honda Toyota and Datsun made their entrance in North America they didn’t sell a lot compared to the Big3. Gaining territory was a slow process. At that time it would have been very difficult for any of them because there were a lot of men 50-60+ years old who wouldn’t go near them because most of those guys, especially those who were in the Pacific during WW2, had vivid memories (and terrific nightmares) of being shot at/bombed by Mitsubishi made aircraft. They were (unfortunately for our side) extremely well made.
Most of those people, all of them heros, have gone on to greener meadows, their nightmares finally over. In the meantime, those Jap autos that were first off the boats here have well established positions in the marketplace. That, along with the increase of Euro and Korean brands, and a downsized economy will make it difficult for all.
First come, first served.
1. Mitsubishi aircraft were rather poorly made. Designs often pursued wrong objectives, and production quality was low. The low readiness levels were systemic in IJN and Army throughout the war. Note I’m not saying anything about Nakajima who could not even make a decent liquid-cooled engine without copying a German design. Even Russians were better than that.
2. I know (knew actually) vets who drove Japanese cars.
By the way, anyone who doubts that they have the clout to compete (I know people who think they only make cars) here’s a link to a list of their huge mix of product. This is just their U.S. effort. Talk about ‘soup to nuts’!
http://www.mitsubishielectric-usa.com/search/prl.html
Complete list:http://en.wikipedia.org/wiki/Mitsubishi
Now tell me which market segments Mitsubishi is a world leader in? Any???? Being in a bunch of unrelated businesses does not a powerhouse make.
They are indeed part of a huge company. But with their car sales down by a third from the peak, how long will the parent company tolerate MMC’s foibles?
They would need, of course, a specific plan for this market but if they can come up with one that’s realistic, they should be able to get the OK, and pull it off. Their world-wide totals aren’t that shabby.
There have been lots of plans for Mitsubishi Motor Sales of America. There just hasn’t been anyone since Dick Recchia with the gumption, dedication and cojones to fight for it and stick with the plan. The fact that they’re losing key executives and not replacing them in some cases doesn’t bode well.
Their sales are down by a third worldwide. US sales are down even more.
Yeah, that generation had a hard time with Japanese and German until the last part of their driving years.
My Dad was a very proud WWII vet but after being let down by the Big Three, his last cars were Nissans. He expressed some hesitation about buying Japanese but got over it quickly.
On the other hand, we’re Jewish and lost family in the Holocaust. The old man would never buy a German car and got mad when my sister and her lowlife ex-husband bought a Beetle. While he always liked Fords (even owned stock) and didn’t hold a grudge against Ford Motor Co. for its founder’s beliefs, he stopped considering the Mercury Capri upon finding out it was built in Cologne. Inconsistent? Yeah, go figure.
>>>”…What is needed is more incentive discipline, according to the boss…”
WE will control how much you pay for the product. We control and determine the market, and how many units we sell. The customer does not enter into the equation, and will do what we want them to do.
Mitsu has had a distinct lack of leadership for quite some time. There’s no consistant message, either through marketing or worse, through product. Talk to anyone in NA about MMC and, outside of gamers, the common answer is “meh”.
What has to happen is a merger, probably of the weak sisters like Suzuki but maybe with someone like Chryco if Sergio can see his way past FIAT. Mitsu’s great strength has been their willingness to share, partnering up whenever it’s been practical.
I’m waiting for the day of turnkey manufacturing in NA. It’s going to happen sooner or later. “Need product? We can supply, give us the nameplate and we’ll make the vehicle.”
The only car in the Mitsubishi I really like is the Lancer Evo to be honest.