Join Date: Jun 2001
Location: Catonsville, Md.
Mitsu - Bad stuff happens
EDWARD LAPHAM COMMENTARY 4/12/04: Imagine, for a moment, you're Finbarr
Automotive News / May 12, 2004
Bad stuff happens. It has been rolling downhill on Mitsubishi since before April 22, when DaimlerChrysler decided to pull the plug on its financial support of Mitsubishi Motors Corp.
How bad is it?
Things are so bad that ...
In Germany, a poll of Mitsubishi dealers by Automobile Consulting International found that 45 percent of them are pessimistic about the future of the brand in that country. And Automotive News' sister publication, Automobilwoche, says just 12 percent believe that they have a future with the Mitsubishi brand.
Mitsubishi's U.S. sales tanked in April, tumbling 34.3 percent from the same time last year, which was off 17.5 percent from the year before.
Some Mitsubishi dealers in the United States already are reminiscing wistfully about the good old days under Pierre Gagnon.
The reasoning goes like this:
Sure, there were problems under Gagnon. There were the swollen inventories when truckload after truckload arrived from the factory, forcing some dealerships to shut off their own floorplans. And, yes, there was the negative equity problem created by overly aggressive incentives that lured young buyers to Mitsubishi. Those young buyers bought devalued cars and trucks with insufficient or nonexistent down payments.
But, hey, at least there was floor traffic, as some dealers will tell you.
Now imagine for a minute that you're Finbarr O'Neill, CEO of Mitsubishi Motors North America.
You're busy trying to rebuild the Mitsubishi brand. Mitsubishi never was more than a second or third tier player in Japan, Germany or the United States, but the wild incentives, sinking residual values and surging loan default rate pushed the brand to new lows before you got there.
Mitsubishi hired you to fix it.
So you've whacked the overly aggressive incentives, improved the advertising and adjusted the marketing. Things are beginning to look as if they just might fall into place as soon as there is some new product in the pipeline.
When all of sudden, out of the sky like a lightening bolt comes the stunning news from Stuttgart!
Right away, weak-kneed dealers start whining. They want to go back on the dope.
Meanwhile, in one of the industry's most wicked twists, things couldn't be going better for Hyundai, which you left last September.
Hyundai scores unbelievably well in the J.D. Power and Associates Initial Quality Study, a performance you choreographed before you left.
And just as Mitsubishi execs in Japan are trying to figure out how to fund new products without a handout from Stuttgart, Hyundai execs in Korea crow that they're considering many new products, including a full-sized pickup and a luxury line.
But here's the topper.
Some analysts suggest that Hyundai may buy DaimlerChrysler's 37.3 percent stake in Mitsubishi Motors. That way, Mitsubishi might be able to solve its new product dilemma by borrowing Hyundai platforms in much the way that Hyundai once depended on hand-me-down Mitsubishi platforms.