Mitsubishi moves to stem sales drop

Automaker projects 3% downturn in U.S.

TOKYO - Mitsubishi Motors Corp. expects to limit the drop in its U.S. sales this year because of fallout from the war on terrorism to as little as 3 percent, COO Rolf Eckrodt said last week.

Speaking at the launch of the eK-Wagon minivehicle, a new model for Mitsubishi, Eckrodt said consumer nervousness in the wake of U.S. attacks on Afghanistan could reduce the company's U.S. sales this year by 6 percent from an original forecast of around 320,000 units.

But Mitsubishi aims to limit that drop through measures that will include incentives, although they will not be used aggressively, he said. The company has other measures up its sleeve, Eckrodt said, declining to elaborate.

Like most other automakers, Mitsubishi is offering U.S. shoppers 0 percent financing. But it also has a $0 down, 0 payments for one year and 0 percent interest program in place until Oct. 31.

Mitsubishi's U.S. sales were off 9.2 percent in September, in line with the market's overall decline. A 3 percent decline from the company's target would put Mitsubishi's full-year sales just under last year's 314,000 units.

Eckrodt also said Mitsubishi is on track to achieve its target of breaking even this fiscal year ending next March 31. Although unit sales and revenues may come in below target, the carmaker is "overachieving on measures related to output capacity, headcount and outsourcing," he said.

In other news, Eckrodt said Mitsubishi will not push its gasoline direct injection engine throughout its product lineup after all.

Gasoline direct injection "will be further developed," Eckrodt said, especially in ways that combine it with other technologies that improve fuel economy or reduce emissions.

But will Mitsubishi use it in all pricing categories and all cars? "I don't think so," he said. "It depends on the car."

After Mitsubishi commercialized its gasoline direct injection technology in the mid-1990s, it went on a campaign to promote its engines as differentiators in the market.

In 1997, Mitsubishi said all its cars would be powered by gasoline direct injection engines, with the possible exception of its minicars, which, by Japanese law, have engines smaller than 660cc.

But the technology has an Achilles' heel. It cannot use gasoline that has more than a tiny amount of sulfur. That has ruled out its use in California, for example.

Mitsubishi is aiming for sales of 10,000 eK-Wagons a month, which would make it the company's leading minicar. The company concedes the new model could slash sales of its Toppo BJ minicar in half, but that still would leave Mitsubishi with a net gain of 5,000 sales a month.

Based on that assumption, Mitsubishi expects to raise its market share of the minicar and minitruck segment to 18 percent from 13 percent.

The eK-Wagon is the second of Mitsubishi's two all-new models this calendar year and is one of the first of several new minicars due to be launched in Japan. It is priced between $7,500 and $9,150 at current exchange rates.

You can reach James B. Treece at jtreece@crain.com

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