Jakeg97

iTrader: (56)

The Inside Story

By Michelle Krebs

Mitsubishi: Can This Brand Be Saved?

04-04-2005




Remember the famous deli scene from the film When Harry Met Sally? It's the one that closes with "I want what she's having."

Spend some time with the new executives of Mitsubishi Motors North America, and you'll want an order of their optimism, confidence, even exuberance. Or is it delusion?

Rich Gilligan, a Mitsubishi manufacturing guy since 1998 who spent three decades with Ford, was promoted to president and CEO of Mitsubishi Motors North America in January. He replaced Hyundai genius Finbarr O'Neill, who bailed from Mitsubishi after only 16 months at the helm.

To further boost U.S. operations, the parent company sent Hideyasu Tagaya from Japan to serve as chairman of North American operations. In addition, Gilligan, a month after taking over, recruited Mercedes-Benz marketing exec Dave Schembri, who was in charge of the Smart brand in the U.S., to be the new head of sales and marketing.

At the New York auto show in March, Gilligan and Schembri appeared absolutely and enthusiastically convinced of their ability to turn around Mitsubishi. They see what is invisible to most others — positive signs it can be done.

The biggest plus, they insist, is strong product — current and future. Unquestionably, product is the vital key to every auto company turnaround. It is one that is absent from the other failing Japanese brand in the U.S., Isuzu, which relies solely on rebranded General Motors models for its entire portfolio of now only a couple vehicles.

In contrast, Mitsubishi has a trio of promising new models coming this year alone. In June, Mitsubishi introduces the long-awaited, next-generation Eclipse coupe, which was once a favorite of enthusiasts. In October, it launches the newest and ninth version of its Lancer Evolution. Few cars have ever won over enthusiasts and achieved the cult status of the "Evo" high-performance sedan, the "rock star" of the Mitsubishi line, as Gilligan refers to it. This year's mild makeover is merely a prelude to a complete redo — the Evo X — next year.

In the fall, the Raider midsize pickup truck goes on sale. It marks Mitsubishi's first pickup truck since the 1990s. While the Raider is a Mitsubishi version of the Dodge Dakota, it has enough styling differentiation to make it interesting.

Instead of deep discounts and a long warranty, Mitsubishi's new advertising that launches in June from its new ad agency BBDO will make the cars the stars, Schembri insists. (New regimes always change ad agencies when they take over, just as homeowners change wallpaper in their new houses.)

"The most aggressive product offensive in Mitsubishi history," as Gilligan calls it, will continue into 2006. Upcoming models include the 2006 Eclipse Spyder next April, a special-edition Galant next May and the freshened Endeavor, Outlander and Lancer in the 2006 model year.

In addition to products, Mitsubishi's new officials see other promising signs. Mitsubishi has a long, mostly successful sales track record in the U.S. where it has sold 4 million vehicles since it came here in 1982; of those, half remain on the road.

Thanks to spirited cars and a catchy advertising campaign in recent years that featured a pounding beat and hip, young people, Mitsubishi has established a strong position in the market as fun cars for youth. In fact, Mitsubishi and VW vie for the title of youngest average buyers at 39; Toyota's Scion is at 40, says Schembri.

It should be noted, however, that Mitsubishi gained many of those young buyers by giving credit to ones who didn't deserve it and couldn't make the payments, forcing Mitsubishi to repossess the cars at a huge cost. More important than attracting a specific age demographic, says Schembri, Mitsubishi has a "fun-seeking status" regardless of age, ideal for wooing baby boomers who refuse to grow up.

Mitsubishi's new execs further point out the brand has a strong retail network with 70 percent of its dealers having Mitsubishi-exclusive dealerships. Stand-alone dealerships are always considered a huge plus for carmakers as the dealers live and die by that one brand, and thus focus their attention on it.

Further, despite the parent's woes, Mitsubishi in Japan remains the world's 12th largest corporation, they note.

Never mind that rumors persist that Mitsubishi will be the next brand to go the way of Oldsmobile and DeSoto. The Wall Street Journal reported earlier this year that Mitsubishi was quietly looking for a buyer for its U.S. manufacturing operation in Normal, Illinois, where the last of the Chrysler models recently rolled off the line. Mitsubishi denied any intentions of exiting the U.S. and any pursuit of such a sale.

Never mind that Mitsubishi sells only about half the vehicles it once did in the U.S. At its peak, it sold more than 300,000 vehicles a year; last year, it sold 161,609, and about 30 percent of those were to rental and company fleets, which don't generate as much income as retail sales and damage residual values and image.

Never mind that scandals in Japan and unusual, if not scandalous, business practices still being uncovered in the U.S. continue to plague the company. Never mind that executives continue to depart the company. As Gilligan and Schembri were spreading the gospel at the New York auto show in March, for instance, two more company officials left.

Indeed, turnarounds happen. Look at Chrysler, Nissan and Volkswagen, the Mitsubishi folks point out.

In any event, you have to admire this new team; their exuberance is almost contagious. But didn't Finbarr O'Neill have the same disease only months ago?


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Mr.MR

Nice find! I really hope that these new exec's can pull the company out of the red. America has been waiting for a replacement for the pony car wars since the F-Bodies went away. Now we get a great new rivalry going with the STi and Evo, and it might be ending soon. I personally don't think the government will let anything happen since so many American jobs depend on Mitsu. I think my MR is a remarkable car, a little crude interior wise, but purpose built. I am looking forward to the IV hitting the streets and hope we make it to see the X also!

MTMS4

Sounds like the Evo X is possibly only 18 months away......Fall-time 2006 ?

MEVO

I have faith in Mitsu products and it's a shame that Mits management and some dealers have misaligned Mits reputation. My 03 Evo has 15k on it without any problems what so ever. I could not say that about the Toyota I traded for the Evo.

Just yesterday I traded my wife's Montero in for a 2005 Montero, This is our 3rd Monte in 12 years and the dependibility of this truck is a proven fact to me based on experience. The 2001 we just traded in only needed brake pads, tires and fluids and had 90k trouble free miles on it. I think the distinction needs to be made though that I would only purchase a Japanese mfg Mitsu (Monte, Evo) and I would steer clear of a US built product. Sorry, patriots, it's my hard earned dough.

Mr.MR

That sucks that you don't believe in American built cars. I actually work for Ford and can testify that we build some very dependable vehicles. Unfortunately, upper management makes poor decisions on suppliers to save money and we get recalls. Just like Mitsu's bad rap, we get the same thing from things like the Firestone tire fiasco. I have had many American cars that were great, trouble free, reliable transportation. Now if they could build fun cars like our Evo's, they might get my business back. I still own my Trans Am though and it's been a reliable 400+ hp car for a long time. Just thought I would share my opinion, you have every right to buy what you like.

kansai22

Mitsubishi is one of the most reliable brands in the industry I think this should be their selling point. This is the only reason people buy Toyotas, or Hondas they are much uninspired design wise. The new Galant is the most reliable car in its class.

Evodreamer

iTrader: (3)

Has anyone ever seen an American car that didn't leak oil right away? I have no good personal experiences with American cars. On the other hand my galant, 3000gt, oz rally, and evo have been great.

EVOL EDO

iTrader: (1)

my mustang didnt leak oil for 80,000 miles but i didnt blow a tranny at 67,000 but unlike mitsu they stood behind the extended warranty and i paid 100 bucks for a new tranny, even though there was only 5,000 miles left on the warranty this was after i was on record for breaking the tranny pan gasket twice for my car being too low cuz i had them fix it, wen the tranny went the tranny pan gasket blew and all the fluid leaked out, they looked for every reason to cover it instead of a reason not to. mustang now has 120,000 miles on it

Mr.MR

Yep, I have had:
99' Ford Explorer=no oil leaks, no major problems.
99' Pontiac TA=6 years so far with only a headlight malfunction and over 500 passes at the dragstrip with no oil leaks and no drivetrain failure with lots of mods!
90' Mustang LX 5.0 with tons of abuse and some mods, no oil leaks, no broken parts.
94' Mustang GT 5.0 with a couple mods, no oil leaks, no drivetrain issues.

I could list the others, but you get the picture. Now, I'm not saying all American cars are trouble free, I might of just been really lucky. I know a couple guys who had f-bodies that were all fudged up except the engines were fine. I also no guys who run low 11's all day long after years and have no major issues with thier f-bodies. My point is don't go by what you have been told. American cars are pretty well built for the most part, at least in my experience.

MEVO

Sorry, I'd been away. I think you misunderstood what I meant, I would not buy a Mitsubishi that was manufactured in the US. The thread was whether Mits would survive and I think dependability builds customer sat and brand loyalty. Chrysler came back from bankruptcy and I hope Mits. survives in the US. I think Mits pushes the styling limits and others follow.

I'm glad that you have had good luck with your domestic rides. I like Fords, too. I just saw an 05 Black GT Convertible that looked awesome. I think any car can be dependable or it can be a $hitbox, it's kinda just luck.

Mr.MR

I guess I just assumed you were just stereotyping American cars. I feel like there are so many bad reports about American cars without justification. I see that you just meant Mitsubishi's American built cars were not good products. Once again, I shouldn't of assumed you were bashing our cars. I agree that it's just luck if you get a lemon or not. I also agree that the new Mustang looks great on the outside. Oh well, better stop jacking this thread.

Knyght

iTrader: (1)

Well I cant really contribute to this argument as I must always get the bad/lemon cars..

I bought my 99 T/A used with 400 miles on it. At 24,000 miles they had to replace the tranny, two weeks later, rod failure and a new engine. Keep in mind they did replace everything under warranty, but still a hassle.

Bought my 99 Corvette a few years after. I did a few mods, intake, exhaust, and at about 32,000 miles developed some leaks in the valve stem seals.. Cold start = oil smoke everywhere

I also had a 2004 Mustang GT 5spd I got brand new off showroom. After about 10k miles it developed suspension problems, and it was hard to keep the alignment for some reason. It also had "quirks" It would shut itself off sometimes. ??? So then I traded it for my RS

I did own a 92 pontiac firebird 3.1L which lasted me for 6 years no problems. So..

Then on the other hand I buy this 1990 eclipse GST. Which had ring failure, and I had to pop for a new motor myself. Lifter ticking. Constant sensor problems, pretty much had to replace everything new.

I go stupid and buy another DSM. 1992 TSi AWD this time, I put the new motor from the eclipse in there and had no real problems with that car aside from burnt valve stem seals. Then sold it for the corvette

Then I buy yet another 92 TSI AWD. This time I made it my project drag car. Still in the process of being built.

My opinion, sometimes some cars are built on friday, sometimes on monday, sometimes during the middle of the week. I trully believe this. I here lots of DSM's are dependable, and so are lots of LS1 powered GM cars. Even with tons of mods those two groups are dependable. So you cant look at only a few instances. Shrug it off, go with what you like. If it has problems chalk it up to a bad egg, but dont blame the entire car line.

GOKOU

iTrader: (2)

Nice article but sorry to say that if continues with customer satisfaction and warranty then they are heading toward . Who cares if they advertise 10y 100 mileage warranty. they can't honor and make the customer It would be hard to gain loyalty to .


Other company's warranty are less yet their sales are better . It doesn't take a genius to know why

Knyght

iTrader: (1)

Well look at it this way. Blockbuster boosted sales by offering a 'no late fees' policy, yet behind the scene you still have to pay. Mitsu is doing the same thing, offering a 10y 100k warranty but behind the scene they'll find a way for you to still pay.

Here is something interesting. Mitsu will only warranty a car with proof of vehicle service maintenance at a certified Mitsu dealer. Therefore you pay premium price on a service every 5k miles. This to me seems like they are making you pay for your warranty. A $30 DIY oil change is now exchanged for a BS $250-$500 on average service every 5k miles from Mitsu where they claim to do all this "stuff." Now tell me if the warranty is so great and they are the best backed cars in America, then why cant we perform our own maintenance?

$250(average)x12 service trips (60,000 miles) = $3,000

$3,000 is more than enough to rebuild your own motor, or tranny, or differential and do your own maintenance.

You ask me, Mitsu is just using 10y100k as a marketing scam, just like Blockbuster. The only difference? Nobody will take on Mitsu to correct it. Blockbuster is small compared to Mitsu, and therefore is more open to lawsuits and class actions.

Just my $.02.

I still love Mitsu though because they gave me my DSM's and Evo. It's the service, management, and administration of Mitsu I dont like.

wingnut

Magnusson-Moss act. Mitsubishi cannot force you to change your oil at thier dealerships. Just to play it safe I've been saving any and all receipts for my oil changes and other maintenance. I've got them in a nice big binder in case there are ever any questions.

As for American cars, like anything else they're hit or miss. Some are solid and some aren't either due to suppliers, manufacturing, or poor design. This definately isn't unique to American cars, it isn't even unique to cars. It goes for any complex machines. My parents have driven American cars for decades and with good care and no abuse they run like a top for hundreds of thousands of miles. My sister on the other hand hasn't been as lucky. She bought a Taurus and it's been a nightmare. Wander over to the Taurus forums if you're bored. The problems/maintenance section seems 10x's larger than the other areas.