Mitsubishi has plan to end the skid

[NINETY EIGHT REGENCY]

Mitsubishi has plan to end the skid

Hans Greimel

Automotive News -- July 12, 2010 - 12:01 am ET

TOKYO -- Struggling to revive his dwindling U.S. business, Mitsubishi Motors President Osamu Masuko has outlined a two-pronged plan that hinges on introducing new products and building a new vehicle at an underused Illinois assembly plant.

Mitsubishi's sales have fallen off sharply since 2007, when the brand staged a one-year sales revival after four years of precipitous decline. But in an interview with Automotive News, Masuko gave no hint that he's ready to give up on the United States, even as the company focuses more on developing markets.

So far this year Mitsubishi has missed out on the overall U.S. industry's 17 percent sales increase. Mitsubishi's sales were flat at 26,490 units through June, and its market share shrank to 0.5 percent, from 0.6 percent. But Masuko said annual sales will end higher because of the launch this fall of the Outlander Sport.

"This is an important year," Masuko said. "We have strong expectations for the U.S. market."

Meanwhile, the company will decide by year end what model to add to its sole North American manufacturing outpost in Normal, Ill., Masuko said.

That factory had annual capacity for 240,000 vehicles when it was operated jointly by Mitsubishi and Chrysler. But Chrysler long ago pulled out, and the Japanese carmaker churned out just 18,501 vehicles there in 2009. It is on pace for 27,000 vehicles so far this year.

Masuko said trimming costs, partly through job cuts, brought the plant's breakeven point down to around 70,000 units a year, from 100,000. But it's still not close and needs more volume.

"It has been downsized to a certain extent," Masuko said.

"By the end of this year we would like to determine what vehicle we should produce that would come close to 100,000 units."

Mitsubishi has long struggled with an aging U.S. lineup of mid-sized and large vehicles.

The Illinois plant makes the Eclipse coupe, Eclipse Spyder, Galant sedan and Endeavor SUV. But its best-selling models, the Lancer sedan and Outlander SUV, are imported from Japan.

The top-selling model, the Lancer, had sales of only 10,387 units through June.

Such small volume makes it costly to retool to add another model, Masuko said.

Mitsubishi's dealer body has suffered greatly during a disastrous decade in the United States during which sales fell from a peak of 345,111 in 2002 to 53,986 in 2009.

The brand had 397 dealerships at the end of June 2010, down from 405 at the end of March 2010 and 420 at the end of March 2009

"Some dealers have left, but others have joined," Masuko said.

"The dealer organization has been revitalized."

Mitsubishi plans to unveil a global midterm business plan this year. Its last blueprint, dubbed Step-Up 2010, was unveiled in 2008 -- and was derailed by the global financial crisis.

Global growth

Under the new plan, Mitsubishi aims to boost global sales 54 percent to 1.5 million vehicles in the fiscal year ending March 31, 2013.

For the fiscal year that ends March 31, 2011, Mitsubishi wants U.S. sales of 68,000 units, up from 54,000 last year.

The Outlander Sport small SUV that arrives this fall will help lift sales, Masuko said.

Mitsubishi expects to sell 7,000 Outlander Sports in North America between the fall launch and next March 31.

After that, it is counting on average annual volume of 17,000 units.

Also bound for U.S. showrooms are the i-MiEV electric vehicle, in November or December 2011, and Mitsubishi's new global small car. The latter arrives stateside by the end of 2012.

Masuko declined to give a U.S. volume target for the yet-to-be-named global small car. But he wants to sell 400,000 to 500,000 units a year globally, primarily in emerging markets.

"Americans like big vehicles," Masuko said. "But it is not always that case that big is good."

The global small car will get a three-cylinder, 1.0- to 1.2-liter engine.

The target price is around ¥1 million (about $11,300 at current exchange rates).

Mitsubishi plans to start building the car at a new factory in Thailand next year. Masuko is considering additional plants in China, India and Brazil.

The focus on developing countries underlines changing realities at Mitsubishi.

Long oriented toward SUVs and large sedans, the company now wants to shrink with smaller, fuel-efficient cars.

Instead of toiling on cars specially designed for developed markets, such as the Eclipse, it is pursuing world cars that have more universal appeal. Sales trends support the new priorities.

North America is by far the smallest market for Mitsubishi.

The region accounted for just 9 percent of the company's global unit sales in the fiscal year that ended March 31.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100712/RETAIL03/307129945/1117#ixzz0tUmwq3ll

[Intrepidation]

Don't know how they expect to really compete with no midsize crossover, no larger people mover, no pickup truck, and worst of all, no new midsize car.

[balthazar]

Don't forget: no aspirational product and a torpedo'd reputation for quality & corporate cover-ups about such.