Mitsubishi's U.S. rebound plan: Boost lineup, add output
AUTOMOTIVE NEWS: How many Mirages can you sell in the United States?
OSAMU MASUKO: It’s a small car, but it gets very good fuel efficiency. I don’t know how well it will be accepted. But we’d like to target 600 units a month. This is for [Mitsubishi Motors North America] to decide, but maybe they can limit sales of the car to certain regions.
Photo credit: BLOOMBERG
TOKYO -- Mitsubishi Motors Corp. President Osamu Masuko has a big fix-it list. Mitsubishi's U.S. lineup has shrunk to four models, sales were down 29 percent through October, market share has dwindled and the i electric vehicle is a flop.
Masuko, 63, says things have bottomed out.
U.S. sales should reach 55,000 units in the current fiscal year ending March 31, 2013. He's targeting an increase to 80,000 the following year. To get there, he plans to bolster the lineup with new vehicles, including the Mirage small car.
Masuko also plans to ramp up production at Mitsubishi's Normal, Ill., plant to 70,000 Outlander Sport small crossovers, from just 50,000 now.
Masuko spoke through an interpreter with Asia Editor Hans Greimel on Nov. 6 about his strategy for the United States and other topics.
Q: Mitsubishi's U.S. sales dropped dramatically this year. What do you expect next year?
A: This year we ceased production of the Galant, Spyder, Endeavor and Eclipse. So total volume has been reduced. We stopped production because these models are old and it was very difficult for them to keep their competitive edge.
That's why we have started to produce the Outlander Sport there [in the United States] in July. It's a new model. We can't sell those only in the U.S. market because the volume wouldn't pay off. So we are going to be exporting this to Russia as well as the Middle East and Latin America. We're going to have an export base in the United States.
What will you do to improve U.S. sales?
We expect volume to grow dramatically next year. For starters, the Outlander Sport will be sold on a full-year basis.
On top of that, we will be introducing the redesigned Outlander in July of next year. And in September, we're going to be introducing the Mirage in the United States. So there is going to be a fuller, more extensive lineup of vehicles.
When will the Outlander plug-in hybrid go on sale?
In January of next year, it will go on sale in Japan.
And in the United States?
In January 2014.
Why the long delay?
There are a lot of regulations and testing that must be met in the United States. This is a world's first of its kind vehicle, being a plug-in SUV. It's a new technology, so it will take some time to win understanding.
You recently appointed a new North American chairman. What is his role?
Gayu Uesugi is going to be the full-time chairman of Mitsubishi Motors North America. That is a sign that we will be rebuilding our MMNA operations, as well as coming up with a growth strategy for the United States.
What is his mandate?
We have a midterm plan that ends in 2013. And we are thinking we'd like to provide a dividend.
For a long time, North America has not been contributing profit to the company. And volume was too low.
But we've started producing the Outlander Sport, and we are going to be exporting it. So there is going to be an increase of volume there. For the first time, the Bloomington-Normal plant will be making its own way.
He is well-versed in everything automotive. We've chosen the right person to rebuild the American market.
We have board members dedicated to each of three difficult regions: North America, Japan and China. We're positioning these board members to implement reform and growth strategies in the respective countries. One of the big responsibilities is to be able to provide a dividend in 2013.
What U.S. sales target do you have for next year?
For this fiscal year [ending March 31, 2013], we expect 86,000 units in North America.
We will have introduced a new model, so we would like to target a 50 percent increase. So for next year, we'd like 120,000.
For the United States alone, we're expecting 55,000 this fiscal year. So an increase of 50 percent would deliver around 80,000.
Do you have a midterm U.S. sales target?
I think it's important that we next target 100,000. We'd like to reach that as soon as possible.
We've sold 100,000 in the United States, but that was far in the past. But this fiscal year, Thailand is actually expected to hit 150,000, compared with 74,000 last fiscal year. Russia is about 86,000 this year. Indonesia is about 90,000.
Next year, these countries will be hitting 100,000 units. Russia is going to make it; Brazil is going to make it. That's why we'd like to do it in the United States, too.
How many years will it take to get there?
If we can't reach 100,000 next year, then at least maybe 2014 or 2015. We believe that if the plug-in hybrid is well accepted in the United States, there is a high possibility for the unit sales to increase quite quickly.
What is your production plan for the Normal, Ill., plant?
In 2013, we'll hit way above 70,000 units in output. Exports will increase.
Why did you waver on bringing the Mirage small car to the United States?
There are a lot of back orders for the Mirage, and we can't produce enough of them right now. That was the issue.
We have a new plant in Thailand that is producing the Mirage. But that is operating at full capacity of 150,000 units. And even at that level, it's not keeping up with orders. So in the middle of next year, we are going to increase the capacity of the Thailand plant from 150,000 vehicles to 200,000 units. The timing of the U.S. launch was chosen for that reason.
Sales of your i-MiEV electric vehicle are disappointing. What else do you envision in the way of EVs?
We have a plan for an EV version of the Mirage.
Will that come to the United States?
The Mirage would be quite small and not have a very large running distance, and it also may be expensive because of the appreciation of the yen.
So we're not really sure if it would be accepted in the United States. But if we launch a plug-in electric vehicle based on the Outlander, it's big, it's an SUV, it's environmentally friendly, and it has a good running range. I think this is a better fit for the U.S. market.
Rather than EVs, we have greater expectations for plug-ins in the United States.
How will you strengthen your U.S. retail network?
What we have to do is to provide these dealers with attractive products. If you don't provide dealers attractive products, they are not going to invest in their dealerships.
Up until now, we had a lot of old models. So dealers might not have been satisfied. So soon we will have the Outlander Sport, Mirage, Outlander and Outlander plug-in. So I think their motivation will improve.
Suzuki is pulling out of the U.S. auto market. You are the next-smallest Japanese automaker there. How committed are you?
There are two pillars that we have to tackle: emerging markets and environmentally friendly technologies. In emerging markets, we are having great success.
The other pillar is environmentally friendly technology, and that is geared toward developed economies.
As for EVs, it's true, not everything went according to plan. But that's not to say that EV technology was rejected. This technology is a must and indispensible for developed economies.
We have no intention whatsoever of withdrawing from the U.S. market. We are producing the Outlander Sport there now, but in years to come, we would like to produce other models there, too.
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