Afterthoughts: The Mitsubishi/Nissan U.S. Conundrum

The past month at Mitsubishi Motors has been tumultuous with the announcement that they had manipulated fuel economy numbers on a number of small city cars sold by them and Nissan. It would come to light that this manipulation had been going since 1991 on a number of models sold in Japan. Shares in the company dropped like a rock and there were concerns that Mitsubishi Motors would have to borrow money from other companies in the Mitsubishi conglomerate. But soon a white knight would appear, Nissan. The company that first discovered and reported it to Mitsubishi would buy a 34 percent share into the automaker, making it the largest shareholder. Thus, an alliance between the two was created.

The two automakers are currently still in the beginning stages of their alliance, but certain things have been made clear of what the two hope to accomplish. The biggest one is to improve the reputation of Mitsubishi Motors in Japan. There is also talk about two working together on electric vehicles and possibly sharing a platform for their next-generation pickups.

One of the questions still up in the air is what will the alliance bring to the U.S.? That’s probably way down on the priority list for both companies. But it is something that will have to be discussed sooner or later.

At the moment, there seem to be two camps of thought. The first is that Mitsubishi should make an exit out of the U.S. Sales are on the rise for the Japanese automaker, but they pale in comparison with other competitors. Also, Mitsubishi doesn’t have the presence as other automakers when it comes to getting the message out. The second is that Mitsubishi should stay, which for the most part is followed by ‘bring back the Lancer Evolution!’. I hate to be the evil person here, but it isn’t coming back. Stop asking for it.

Recently I was going back through some old Autocar magazines and came across an editorial talking about Nissan’s change in strategy for the U.K. and how they are currently reaping the benefits.

“I remember when Nissan said it was giving up the ‘boring’ car market and dealing only in what were, at the time, niches. Quirky tall things. Things that didn’t sell in large volumes. That funny Qashqai thing: not quite a car, not quite a 4x4 either.

We weren’t long out of the 1990s, a decade in which the list of the top 10 best-selling cars in the UK went something like this: Ford's Fiesta, Focus, Mondeo, Vauxhall's Vectra, Astra, Corsa, Peugeot 306, Volkswagen Golf, Rovers 200, 400. Family cars all. Straight family cars. Not always a Nissan among them, although the Micra dabbled inside the top 10, because it was, then, a cute supermini. So Nissan got into what were seen as niches. Ballsy move. And it has stayed there.”

It was quite the gamble when Nissan made this call in the 2000’s to drop out of some very popular segments at the time to focus on some odd vehicles. But it has paid off as Nissan has become one of the popular brands in the U.K. and two of their vehicles - the Qashqai and Juke - are in the top ten of the best-selling vehicles.

This got me thinking, what if Mitsubishi and Nissan were to apply this same strategy for the U.S.? You might think I’m being somewhat crazy with this idea, but what does Mitsubishi have to lose?

What could this strategy possibly look like? I think we need to go back to 2015 and look at comments made by Mitsubishi Motors CEO Osamu Masuko for a possible starting point.

"We are strong in SUVs and four-wheel drives. And that is what we would like to focus on as core models in the U.S. market. We have changed direction. We are going to allocate more resources to the areas where we are strong in the U.S.”

In 2015, more than 58 percent of Mitsubishi’s U.S. sales were crossovers. That trend is continuing in 2016 as 54 percent of sales through April are crossovers. We know that later this year, Mitsubishi will finally launch the long-delayed Outlander PHEV in the U.S. There is also talk of a small crossover and next-generation Montero/Pajero coming in the next few years. I know crossovers and SUVs aren’t really considered a niche anymore as every automaker has one. But this is an area that Mitsubishi that is quite strong.

So what could Nissan bring to the table with crossovers/SUVs? A key item would be electrification. Yes, Mitsubishi does have a fair amount of experience here. But as I mentioned, one of the key things the two automakers are planning to work on together on electric vehicles. They could make some big inroads with building an electric crossover with decent range (200 or more miles). Considering the huge craving for crossovers by consumers, the two could strike something big here. The other item Nissan could bring is new a new platform and/or engines for the next-generation Outlander/Outlander Sport. One complaint about both crossovers are the four-cylinder engines as they don’t have enough power to get either model moving at a decent clip. There’s also the issue of Outlander Sport having a very jarring ride due to the suspension tuning.

But this is one part of the Mitsubishi conundrum. The other deals with their other best-selling passenger car, the Mirage. Aside from being the current whipping boy of the automotive press, the Mirage makes up about 38.3 percent of Mitsubishi’s 2016 sales through April. A lot this is due to the low price of the model ($12,995). To capitalize on this success, Mitsubishi will be launching a Mirage sedan later this year.

To go back to the comments made by Masuko, “We are strong in SUVs and four-wheel drives. And that is what we would like to focus on as core models in the U.S. Market.” But the Mirage is proving to be a strong model and one that should be considered a core model. It would be mad for Mitsubishi to drop it. One thing that the Mirage does need is a new engine. The 1.2L three-cylinder does deliver excellent fuel economy figures (37 City/43 Highway), but it is slow. Snails could outrun this vehicle. This is where Nissan could come in by giving the Mirage an engine transplant. The 1.6L four-cylinder from the Versa/Versa Note with 109 horsepower would provide a needed boost in power and wouldn’t affect fuel economy numbers much.

Now that I have outlined some key issues and comments, let’s dive into what a smaller lineup for Mitsubishi could possibly look like with some help from Nissan.

Mirage/Mirage G4: New engine from Nissan and possibly an improved interior.
Lancer: Rebadged version of Sentra and Pulsar Hatchback, or Nissan helps with speeding up development of the next-gen model.
Outlander Sport: Electric model possibly joins range.
Outlander: Plug-in hybrid model sticks around.
Pajero/Montero: All Mitsubishi here. Gas and plug-in hybrid powertrains on offer. Five and seven-seat configurations on offer.
Triton/L200: Next-Generation model using Nissan Navara platform. Mitsubishi works on everything else from engines and four-wheel drive system. This is way out as both companies have introduced their latest trucks.

Would Nissan be willing to help Mitsubishi with this? That is tough to say at this time since we’re still in the honeymoon period between the two automakers and there are more pressing things to address. There is also the consideration of why Nissan would help a competitor in the market. But Mitsubishi is a small bit player in the U.S. Last year, Mitsubishi only sold 95,342 vehicles. This pales in comparison with the 1,484,918 vehicles sold by Nissan last year. This could help Mitsubishi out with making a case for this idea.

The U.S. is way down on the priority list between Mitsubishi and Nissan. But I’m sure the U.S. offices are thinking about what will happen. There are two real choices that are on the table, either leave the U.S. market or take a gamble and change up your lineup somewhat drastically. If I was Mitsubishi, I would push for the latter option by using the niche plan.