Goods news for Mitsubishi...?
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Goods news for Mitsubishi...?
Auto Industry News
Sputtering Mitsubishi facing a long, hard road to recovery
Chicago Tribune
August 10, 2004
It's a David and Goliath struggle, and this time Goliath is winning.
Facing declining sales and profits, Mitsubishi last month said it will fire 1,200 workers at its assembly plant in Normal and cut production to one shift.
There is disagreement over whether this is the end for the Japanese carmaker in the U.S. But with seven automakers accounting for basically 90 percent of industry sales, what's a small manufacturer, especially a financially troubled one like Mitsubishi, to do to stay alive in the U.S. market?
"It's like being 150 pounds on a football field where everyone else is 300 pounds," said David Cole, chairman of the Center for Auto Research. "If you're not very big or very rich, you're going to have very tough going."
"The first thing we need to address is that while people are aware of our products, we haven't developed a demand for our products by giving consumers reasons to buy them," said Finbarr O'Neill, chairman and chief executive of Mitsubishi Motors of North America.
"Our No. 1 challenge is to give them reasons to buy and build a foundation premised on product because we aren't using zero percent interest anymore to get people into our showrooms."
Mitsubishi plans to carve a sporty vehicle niche. Products in the works include a pickup derived from the Dodge Dakota for the 2005 model year. After that, Mitsubishi plans to redesign the Eclipse coupe and convertible and the Lancer. A new sport wagon is on tap for the 2007 model year. But the automaker also will drop the Diamante sedan and Montero Sport SUV.
O'Neill was head of Hyundai in the U.S. before leaving to take over Mitsubishi from Pierre Gagnon in 2003 after the automaker got caught up in the industrywide zero-percent financing frenzy.
"They came out with zero down, zero interest and then ran into zero payments from their customers, which wasn't part of the plan," said Rebecca Lindland, senior market analyst for Global Insight.
At-risk consumers unable to make payments defaulted on loans and led the company to take a $300 million charge.
"Giving cars away compounded all the other errors it made," said Joe Phillippi, a veteran industry analyst who now runs his own consulting firm.
"Zero percent financing got us in trouble and distracted the company. Zero percent was a travesty because it trained our dealers to sell the deal and what people were willing to pay rather than focus on the product. If you simply sell the deal and discount the heck out of your products, you aren't doing your job. This isn't rocket science, it's the basics, block and tackling," O'Neill said.
Mitsubishi is neither big, as evidenced by sales of 256,810 units in the U.S. last year, ranking it 21st among 42 brands and eight spots lower than in 2002.
Nor is it rich. Its parent, Mitsubishi Motors in Japan, lost $1.9 billion in the fiscal year that ended March 31, and afterreporting a $492 million loss in its first quarter ended June 30 expects a $1.1 billion operating loss for the year.
Niche sales
BMW and Porsche are smaller in terms of sales than Mitsubishi, but they have thrived in the U.S. because both are considered blue-chip brands with solid reputations and noteworthy products.
And though Mitsubishi's sales numbers put it in the league with such niche companies, its products--a mainstream line of cars and sport-utility vehicles--pit it against the Japanese Big Three of Toyota, Honda and Nissan, as well as the domestic heavy hitters, General Motors, Ford and Chrysler Group.
Getting consumers to buy a Galant rather than a Toyota Camry or Honda Accord is a challenge.
"More than 400,000 consumers buy a Camry or Accord each year because, like vanilla ice cream, it's a safe choice," O'Neill said. "We have to show them our cars are as good or better and give them a reason to buy other than just price, because selling on price is too close to selling the deal rather than the product.
"We have to address the reasons people don't consider our cars. Some say our cars aren't as reliable, but we offer the best warranty in the industry. We put our money where our mouth is and stand behind our product. In the future we'll do even more. We have to be different to tell people, `Don't worry, we're here to stay,' so our strength is offering the best-backed cars."
The Mitsubishi warranty is five years or 60,000 miles bumper to bumper and 10 years or 100,000 miles on the powertrain. Through August, it also offers free scheduled maintenance.
"When you aren't a key player and recognize you aren't going to sell 5 million vehicles a year, you have to figure out the right approach to take," said Jim Hossack, an analyst with industry forecaster AutoPacific.
Porsche does it by focusing on high-priced, high-performance sports cars. Hyundai and Kia offer low prices but the features and amenities of much higher priced models. For example, they have loaded up the $25,000 Hyundai XG350 and Kia Amanti with equipment you'd find in $35,000 to $40,000 luxury sedans, and added a long warranty to suggest quality.
Subaru produces all-wheel-drive vehicles that cater to those living in foul-weather states or outdoors types. And it is supplying partner General Motors with all-wheel-drive vehicles, the first of which is being sold by Saab.
"We didn't have the clout to compete against the mainstream marketers. If we tried to go head-to-head on price, we're going to lose that battle every time. We can't take on the 800-pound gorilla," said Fred Adcock, executive vice president of Subaru.
Under Gagnon, Mitsubishi tried to gain market share, like all automakers at the time, by counting largely on sales to fleets. But, as other carmakers have found, discounts to fleets played havoc with profits.
"We added volume by selling more than 100,000 vehicles to fleets in both '01 and '02, but it had a negative impact on residual values and we're cutting fleet sales by 42 percent this year and will be down to about 10 percent by the end of next year," O'Neill said.
Mitsubishi also suffered from a scandal over product-defect coverups, huge debt and plant closings in Japan and cutbacks now in the U.S.
"I can't deal with what happens in Japan," O'Neill said. "No car talked about [in the defect coverups] in Japan was sold here."
O'Neill orchestrated the turnaround and growth of Hyundai in the U.S. and is expected to work the same magic on Mitsubishi.
Back from the brink
Hyundai is an example of a small company that came back from the brink to compete in the big leagues. The South Korean manufacturer went from selling purely on low prices to positioning its vehicles as good values and smart purchases.
Plagued by low quality and poor dealer service, Hyundai's sales bottomed out at 90,000 in 1998 before O'Neill took over.
One of O'Neill's first steps to build confidence in Hyundai was a longer warranty that covered major components for 10 years or 100,000 miles to imply quality.
Then he convinced the parent company to actually improve quality, which paid off in this year's J.D. Power and Associates initial-quality survey, in which Hyundai ranked seventh among brands, ahead of Toyota and Mercedes-Benz.
By 2003 Hyundai sold 400,000 vehicles in the U.S. and ranked 11th among brands--and O'Neill left to lead the turnaround at Mitsubishi.
But, O'Neill warns, "You don't do it with pixie dust. It will take a couple of years of hard work and tough decisions to get back to health. We have products coming in the future so we can succeed and be profitable, but we're taking small steps, not giant leaps. First you reverse what happened in the past so you can focus on the future. This is a year of retrenchment."
Another challenge for small automakers is having to fund product development and offer incentives to sell their products at the same time, or what Phillippi calls "the ultimate conundrum."
The solution may lie in the successful strategy of finding a partner, like Subaru did with GM; Jaguar, Aston Martin, Land Rover and Mazda did with Ford; and as Mitsubishi did with DaimlerChrysler.
"We still have a partnership with DaimlerChrysler, which still owns almost a 25 percent interest in us, so they still have a stake in Mitsubishi and still have a dog in the hunt," O'Neill said. "We'll continue to look at projects mutually beneficial to both of us and the truck we're bringing out next year is from DaimlerChrysler [the Dakota derivative]."
But rather than focus on DaimlerChrysler not investing more money in Mitsubishi, O'Neill said, he prefers to savor the fact that Mitsubishi-related companies and outside investors came up with $4.3 billion to bail the company out of debt and fund its recovery.
"I tell our people to look at the $4.3 billion as a vote of confidence, because when independent investors such as J.P. Morgan put up $1 billion, they don't do it out of charity but because they see we have a future and can recover for the long term," he said.
Sputtering Mitsubishi facing a long, hard road to recovery
Chicago Tribune
August 10, 2004
It's a David and Goliath struggle, and this time Goliath is winning.
Facing declining sales and profits, Mitsubishi last month said it will fire 1,200 workers at its assembly plant in Normal and cut production to one shift.
There is disagreement over whether this is the end for the Japanese carmaker in the U.S. But with seven automakers accounting for basically 90 percent of industry sales, what's a small manufacturer, especially a financially troubled one like Mitsubishi, to do to stay alive in the U.S. market?
"It's like being 150 pounds on a football field where everyone else is 300 pounds," said David Cole, chairman of the Center for Auto Research. "If you're not very big or very rich, you're going to have very tough going."
"The first thing we need to address is that while people are aware of our products, we haven't developed a demand for our products by giving consumers reasons to buy them," said Finbarr O'Neill, chairman and chief executive of Mitsubishi Motors of North America.
"Our No. 1 challenge is to give them reasons to buy and build a foundation premised on product because we aren't using zero percent interest anymore to get people into our showrooms."
Mitsubishi plans to carve a sporty vehicle niche. Products in the works include a pickup derived from the Dodge Dakota for the 2005 model year. After that, Mitsubishi plans to redesign the Eclipse coupe and convertible and the Lancer. A new sport wagon is on tap for the 2007 model year. But the automaker also will drop the Diamante sedan and Montero Sport SUV.
O'Neill was head of Hyundai in the U.S. before leaving to take over Mitsubishi from Pierre Gagnon in 2003 after the automaker got caught up in the industrywide zero-percent financing frenzy.
"They came out with zero down, zero interest and then ran into zero payments from their customers, which wasn't part of the plan," said Rebecca Lindland, senior market analyst for Global Insight.
At-risk consumers unable to make payments defaulted on loans and led the company to take a $300 million charge.
"Giving cars away compounded all the other errors it made," said Joe Phillippi, a veteran industry analyst who now runs his own consulting firm.
"Zero percent financing got us in trouble and distracted the company. Zero percent was a travesty because it trained our dealers to sell the deal and what people were willing to pay rather than focus on the product. If you simply sell the deal and discount the heck out of your products, you aren't doing your job. This isn't rocket science, it's the basics, block and tackling," O'Neill said.
Mitsubishi is neither big, as evidenced by sales of 256,810 units in the U.S. last year, ranking it 21st among 42 brands and eight spots lower than in 2002.
Nor is it rich. Its parent, Mitsubishi Motors in Japan, lost $1.9 billion in the fiscal year that ended March 31, and afterreporting a $492 million loss in its first quarter ended June 30 expects a $1.1 billion operating loss for the year.
Niche sales
BMW and Porsche are smaller in terms of sales than Mitsubishi, but they have thrived in the U.S. because both are considered blue-chip brands with solid reputations and noteworthy products.
And though Mitsubishi's sales numbers put it in the league with such niche companies, its products--a mainstream line of cars and sport-utility vehicles--pit it against the Japanese Big Three of Toyota, Honda and Nissan, as well as the domestic heavy hitters, General Motors, Ford and Chrysler Group.
Getting consumers to buy a Galant rather than a Toyota Camry or Honda Accord is a challenge.
"More than 400,000 consumers buy a Camry or Accord each year because, like vanilla ice cream, it's a safe choice," O'Neill said. "We have to show them our cars are as good or better and give them a reason to buy other than just price, because selling on price is too close to selling the deal rather than the product.
"We have to address the reasons people don't consider our cars. Some say our cars aren't as reliable, but we offer the best warranty in the industry. We put our money where our mouth is and stand behind our product. In the future we'll do even more. We have to be different to tell people, `Don't worry, we're here to stay,' so our strength is offering the best-backed cars."
The Mitsubishi warranty is five years or 60,000 miles bumper to bumper and 10 years or 100,000 miles on the powertrain. Through August, it also offers free scheduled maintenance.
"When you aren't a key player and recognize you aren't going to sell 5 million vehicles a year, you have to figure out the right approach to take," said Jim Hossack, an analyst with industry forecaster AutoPacific.
Porsche does it by focusing on high-priced, high-performance sports cars. Hyundai and Kia offer low prices but the features and amenities of much higher priced models. For example, they have loaded up the $25,000 Hyundai XG350 and Kia Amanti with equipment you'd find in $35,000 to $40,000 luxury sedans, and added a long warranty to suggest quality.
Subaru produces all-wheel-drive vehicles that cater to those living in foul-weather states or outdoors types. And it is supplying partner General Motors with all-wheel-drive vehicles, the first of which is being sold by Saab.
"We didn't have the clout to compete against the mainstream marketers. If we tried to go head-to-head on price, we're going to lose that battle every time. We can't take on the 800-pound gorilla," said Fred Adcock, executive vice president of Subaru.
Under Gagnon, Mitsubishi tried to gain market share, like all automakers at the time, by counting largely on sales to fleets. But, as other carmakers have found, discounts to fleets played havoc with profits.
"We added volume by selling more than 100,000 vehicles to fleets in both '01 and '02, but it had a negative impact on residual values and we're cutting fleet sales by 42 percent this year and will be down to about 10 percent by the end of next year," O'Neill said.
Mitsubishi also suffered from a scandal over product-defect coverups, huge debt and plant closings in Japan and cutbacks now in the U.S.
"I can't deal with what happens in Japan," O'Neill said. "No car talked about [in the defect coverups] in Japan was sold here."
O'Neill orchestrated the turnaround and growth of Hyundai in the U.S. and is expected to work the same magic on Mitsubishi.
Back from the brink
Hyundai is an example of a small company that came back from the brink to compete in the big leagues. The South Korean manufacturer went from selling purely on low prices to positioning its vehicles as good values and smart purchases.
Plagued by low quality and poor dealer service, Hyundai's sales bottomed out at 90,000 in 1998 before O'Neill took over.
One of O'Neill's first steps to build confidence in Hyundai was a longer warranty that covered major components for 10 years or 100,000 miles to imply quality.
Then he convinced the parent company to actually improve quality, which paid off in this year's J.D. Power and Associates initial-quality survey, in which Hyundai ranked seventh among brands, ahead of Toyota and Mercedes-Benz.
By 2003 Hyundai sold 400,000 vehicles in the U.S. and ranked 11th among brands--and O'Neill left to lead the turnaround at Mitsubishi.
But, O'Neill warns, "You don't do it with pixie dust. It will take a couple of years of hard work and tough decisions to get back to health. We have products coming in the future so we can succeed and be profitable, but we're taking small steps, not giant leaps. First you reverse what happened in the past so you can focus on the future. This is a year of retrenchment."
Another challenge for small automakers is having to fund product development and offer incentives to sell their products at the same time, or what Phillippi calls "the ultimate conundrum."
The solution may lie in the successful strategy of finding a partner, like Subaru did with GM; Jaguar, Aston Martin, Land Rover and Mazda did with Ford; and as Mitsubishi did with DaimlerChrysler.
"We still have a partnership with DaimlerChrysler, which still owns almost a 25 percent interest in us, so they still have a stake in Mitsubishi and still have a dog in the hunt," O'Neill said. "We'll continue to look at projects mutually beneficial to both of us and the truck we're bringing out next year is from DaimlerChrysler [the Dakota derivative]."
But rather than focus on DaimlerChrysler not investing more money in Mitsubishi, O'Neill said, he prefers to savor the fact that Mitsubishi-related companies and outside investors came up with $4.3 billion to bail the company out of debt and fund its recovery.
"I tell our people to look at the $4.3 billion as a vote of confidence, because when independent investors such as J.P. Morgan put up $1 billion, they don't do it out of charity but because they see we have a future and can recover for the long term," he said.
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Then he (O'Neill) convinced the parent company to actually improve quality, which paid off in this year's J.D. Power and Associates initial-quality survey, in which Hyundai ranked seventh among brands, ahead of Toyota and Mercedes-Benz.
what clutch issues???? i have 12k miles on my Evo without a single clutch problem.... includes some road course driving, drag strip fun and a few street launches.... I didn't even install a SS line either. 
Originally Posted by purecoda
Hopefully this means the Evo clutch issues and such are behinds us...
hopefully o'neil could do something about it. I sorta don't want them to make any Evo's anymore, for all the selfish reasons, but as long as Ford or Toyota don't buy Mitsu out, I'm game.
mitsubishi isn't going anywhere. they have a good line of cars. the lancer is a popular car. the outlander is a good answer to the forester. and i see a lot of 3rd gen eclipse's too.
i have 15k on my evo clutch and its like new. some evo owners may want to trade in for an automatic Evo GTA, others may want to beat the hell out of the dealer lot boy who did numerous 7k clutch drops in their new car before delivery. just today i saw a lot boy do a rolling 9k clutch drop in a new acura rsx. dealerships beating the sit out of new cars is pandemic.
i have 15k on my evo clutch and its like new. some evo owners may want to trade in for an automatic Evo GTA, others may want to beat the hell out of the dealer lot boy who did numerous 7k clutch drops in their new car before delivery. just today i saw a lot boy do a rolling 9k clutch drop in a new acura rsx. dealerships beating the sit out of new cars is pandemic.
man, this is kind of exciting to see what happens!
it's like a soap opera... i hope they won't screw with the evo too much.........
and get us back in the game in WRC, for god's sake!
it's like a soap opera... i hope they won't screw with the evo too much.........
and get us back in the game in WRC, for god's sake!
Originally Posted by MaxR
mitsubishi isn't going anywhere. they have a good line of cars. the lancer is a popular car. the outlander is a good answer to the forester. and i see a lot of 3rd gen eclipse's too.
i have 15k on my evo clutch and its like new. some evo owners may want to trade in for an automatic Evo GTA, others may want to beat the hell out of the dealer lot boy who did numerous 7k clutch drops in their new car before delivery. just today i saw a lot boy do a rolling 9k clutch drop in a new acura rsx. dealerships beating the sit out of new cars is pandemic.
i have 15k on my evo clutch and its like new. some evo owners may want to trade in for an automatic Evo GTA, others may want to beat the hell out of the dealer lot boy who did numerous 7k clutch drops in their new car before delivery. just today i saw a lot boy do a rolling 9k clutch drop in a new acura rsx. dealerships beating the sit out of new cars is pandemic.
How do you come to the conclusion that the Lancer is a "popular" car? Based on what sales figures? Mitsubishi is a company that is in horrible fiscal shape, and outside of the Evo, makes nothing that is noteworthy, in either a practical or romantic sense. They are going to have a to make a radical shift in both quality and marketing perspective to pull themselves out of a hole, and they do not have unlimited time to do it, nor can they continue to speak out of both sides of their mouths. They say they want to be more focused on sporty vehicles. Well, then do not alienate Evo owners by summarily denying warranties because you PARTICIPATED in a racing event. the Evo is the only car that keeps Mitsubishi from being a complete joke, even though it is not a sales leader. It will be interesting to See if O'Niel can turn it around. I have my strong doubts. I'll definitely never buy another Mitsubishi until they approach the quality of Nissan at least. Although I do love the Evo, and will never part with it.
Percy
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**** on Mitsu
I went to chat with them about getting rid of my evo. They say the trade in value is 21k due to bad "un warranted" press. He made reference to the C&D article.
The market is soft so he said. I told the sales manager that lagging quality, poor service, and broken promisses earned the press. I'm in the hole for about 26 on it now, which is in line with wholesale, but they won't touch it. I hope they fold up I think we have enough bad business in this country, we don't need to import it too.
I got rid of a nissan 350z on a whim with promisses of better product support. I sure fuct that up
The market is soft so he said. I told the sales manager that lagging quality, poor service, and broken promisses earned the press. I'm in the hole for about 26 on it now, which is in line with wholesale, but they won't touch it. I hope they fold up I think we have enough bad business in this country, we don't need to import it too.
I got rid of a nissan 350z on a whim with promisses of better product support. I sure fuct that up