Mitsubishi dealer spokesman: Contracts should be renegotiated as new registrations drop

Bonn, Germany. Germany's 700 Mitsubishi dealers reported a drop in new registrations of up to 15 percent since DaimlerChrysler scaled back its involvement in the Japanese automaker. Now they want to negotiate an adjustment of annual sales target figures and standards with their importer.

Automobilwoche's Bettina John spoke with Ernst-Willi Busenius, 47, who has been chairman of the Mitsubishi dealer association and managing director at WigeM, a purchasing cooperative for Mitsubishi partners, since 1996.

Mr. Busenius, how many of your colleagues are facing bankruptcy?

We do not have an overall picture, so I cannot give you definite figures. Mitsubishi already suffered a massive slump in 2000. The target for 2004 was 20 to 30 percent growth, which would have been possible with the model offensive. This was supposed to be the beginning of a new era of growth. Then came the news that DaimlerChrysler cancelled its planned capital increase and that it would withdraw from the operational side of the business. This did not go down well at all with the dealers. The expected sales increase will certainly not happen for the time being.

And then there were the recalls in Japan.

This is a special subject as the recall campaigns in Japan to a large extent had nothing to do with the vehicles in Europe and Germany. Apparently there were more than 400,000 recalls, but only 4,500 of those were in Germany. The quality of the vehicles is really very good. That is why the German dealers and customers are so loyal to the brand.

Is taking on a second brand an alternative?

Every dealer has to decide this for himself. There is no general rule about that. Each dealer has his own individual area. And if the other brands are already well-positioned in this area then it is difficult to get a second brand. Or if a dealer is not in a good financial position with his first brand it will be a problem investing in a new one.

What advice do you give your colleagues as the association's president?

There is definitely no general advice. We suggest dealers focus on their strengths and the used-car business. There they are independent. Second, they should focus on the service side of the business. They should expand it, be open to multi-brand service and workshop systems. And third: the purchasing system is their blessing. The commercial organization WigeM can use its members' joint purchasing power, which allows each individual increased solvency.

And what does the importer do?

The importer has taken a few measures. But they are not sufficient. The period allowed for payment for cars in stock for example was increased to 180 days. This does give us more leeway but it does not really make a big difference.

What is your precise demand?

We want to have a debate about whether the new dealer contracts, standards and margins are still acceptable under the new circumstances. If the planned 20 to 30 percent growth does not happen, individual dealers' annual targets also have to be lowered. Another critical point regarding the margin is "mystery shopping," (testing by Mitsubishi of the sales experience, which can result in a bonus for the dealer) which represents up to 1.5 percent of the margin. When these things were originally negotiated the background was a completely different one.

What was the background?

DaimlerChrysler's joining, the announcement of a major model offensive, the brand's disproportionate growth. The medium-term growth target was originally 80,000 units. Now it is less than 40,000. At the beginning of the year the plan was to sell 50,000 units in 2004. We have to assume that our expectations have to be lowered. That is why we demand to revise down the individual annual targets. We cannot wait until things are looking up again for the corporation.