Tough times at Mitsubishi; Outlander, small car will help
Dealer since: 1999
Dealership: Bell Mitsubishi, Rahway, N.J.
Average monthly sales in 2012: 30 new, 35 used
Quote: "I believe what was done had to be done to stay viable in the U.S. market, even though the cost was high. It's not something that I liked to see, but in my heart of hearts, I think it's something that they thought was necessary."
Last year was tough for Mitsubishi dealers.
Mitsubishi sales fell 27 percent to 57,790 vehicles in a market that grew 13 percent. Its lineup shrunk considerably from the cancellation of the Galant sedan, Endeavor crossover, Eclipse coupe and Spyder convertible. The company spent little on marketing and advertising last year, and the i-MiEV electric small car was a flop.
But 2013 holds promise. A new Outlander crossover arrives this summer, followed by Mitsubishi's still unnamed small car late in the year. Company executives have pledged to increase available marketing funds, and the arrival of Gayu Uesugi, an executive vice president and board member of Mitsubishi Motors who took over as chairman of Mitsubishi Motors North America last fall, has instilled confidence in Mitsubishi dealer Jim Haskell.
Haskell, owner of Bell Mitsubishi in Rahway, N.J., is the new chairman of the Mitsubishi National Advisory Board. He spoke with Staff Reporter Ryan Beene about what Mitsubishi dealers will face in 2013.
How was 2012 for dealers?
I believe we have bottomed out and started our rebound in volume and profitability.
Are dealers satisfied with Mitsubishi?
I guess that would depend on which dealer you asked. When you look at the dealer body, there are dealers that sell 800 cars a year, there are dealers that sell 400 cars per year, and there's a dealer or two that probably sells in the single digits. The Mitsubishi brand is a great opportunity for a young person who wants to become a new-car dealer, does not have the means financially to pay demands of an A-manufacturer for blue sky, and somebody who is not afraid of hard work and will be committed to his dealership and his people.
So I think the brand has given a lot of people opportunities that they might not have had with other brands.
What about a Mitsubishi dealer, such as yourself, who has been with the brand for a long time? Is it a different story?
I've been with Mitsubishi as a general manager, a junior partner and an owner since 1990. I've seen some slow times and I've seen some very good times. My personal feeling is that with the commitment I feel that Mitsubishi has made to this market, I feel we're going to go back to the good times.
What will get Mitsubishi dealers back to the good times?
Product, marketing and better communication with the manufacturer.
If you had to evaluate each of those things, what would you say? Let's start with product.
I think Mitsubishi has made a commitment to its U.S. dealers with the retooling of the plant in Normal, Ill., assuring those jobs will stay in the United States and showing us that we can increase our volumes with a product that customers want and being able to advertise it so that customers know about it. With the Outlander Sport, that car's volume went up about 10 percent from calendar year 2011 to 2012. Mitsubishi's total volume went down 20-something percent. With a fresh product that's being advertised to show an increase of 10 percent while total volume is down is one step forward in the right direction.
Now we have another new product coming out with the Outlander. Mitsubishi management invited a group of dealers from around the country to come out to California to evaluate and drive the car. I think it's going to be a home run in the market. As long as we can take the marketing budget and get it increased on that product without losing steam on the Outlander Sport, then we have a new product with new awareness. That's another step in the right direction.
We'll also have what appears to be a class-leading new entry in the subcompact segment with the global small car, which we also got to drive recently out in California. It appears that it will have best-in-class fuel economy for a nonhybrid gasoline-powered vehicle. That's exciting. If we can have 40-plus miles per gallon -- average, combined -- and a 10-year, 100,000-mile warranty, and marketing to let consumers know we have it, at a very competitive price, that might be our leap. As our product line gets fresh, and they drop the product that was basically growing old in the tooth and not being refreshed, with better marketing, a commitment from Mitsubishi executives for higher marketing budgets, and three new products in the next year, that's exiting.
The fact that they brought a top Mitsubishi executive into the spot of chairman for this market, to me, shows commitment to this market.
What's your overall impression of the global small car? It's smaller than a subcompact.
I would say it's an A-segment car. After driving it, I was very impressed with the power. When you look at power-to-weight ratio, it was better than the Chevy Spark.
Will it have a three-cylinder or a four-cylinder engine in the United States?
I believe it will have a three-cylinder.
Masatoshi Hasegawa, Mitsubishi's executive vice president of sales, has said he wanted to at least double Mitsubishi's marketing budget in 2013, which according to sources was just $85 million last year. What do you know about Mitsubishi's marketing plans for next year?
I don't know what the total budget is for 2013. I know that it has increased, and if you look at the budget opposed to the volume, there is a cost per unit. If that cost per unit is spent properly, and the message is put in front of the people that will be the intenders we'll be able to increase volume, as we -- Mitsubishi and dealers -- did with the Outlander Sport.
One of the important things that I'm going to push hard for is getting our councils back, one being the Retail Marketing Council. Years back, we had a group of dealers from across the country that would meet with the agency and top Mitsubishi executives to discuss creative, brainstorm ideas, and some of those meetings would go thoroughly into the early hours of the morning. Everybody had a commitment to get everything right. I'm having a dialogue to get these committees reinstated.
What are the other councils you'd like reinstated this year?
The product planning council. We need product and marketing.
How long have Mitsubishi dealers lacked these product and marketing councils?
I believe the retail marketing council has not been active I'm going to say for approximately five years -- possibly longer.
What needs to happen to bring them back?
The factory is going to need to approve it, but I have a feeling from the last meeting out in California, when I and the other dealers had the opportunity to drive the new Outlander and the global small car, I think that's probably one of the steps they want to take to improve communications and look at new product. When I was out there, our new chairman was at the meeting. We spoke about getting these councils back to being active and we're in discussions about re-forming them right now.
When you look back at the last few years as Mitsubishi's sales have declined while the market grew, how do you summarize what has happened to Mitsubishi in the United States? Did the company take its eye of the ball?
I think their volume shrunk because of a lack of marketing and product.
If you look at a manufacturer as a very large dealership, and the zones as smaller dealerships and so on, taking that model, you have what you're going to sell, what's your breakeven, what's your advertising cost per unit, how many employees you're going to have. If they've penned a model where they could be profitable, and it got them through those tough times, and now that the market is growing and they're bringing more product in and spending more on marketing, I think they're ready to grow. I believe what was done had to be done to stay viable in the U.S. market, even though the cost was high. It's not something that I liked to see, but in my heart of hearts, I think it's something that they thought was necessary.
You could even bring in other manufacturers that have huge volumes that were bleeding millions of dollars and had to restructure their businesses to remain a viable manufacturer. I don't want to bring the domestics into this, but that's reality.
So things are turning a corner?
I think so. The new chairman, he's a product guy.
What has the new chairman, Gayu Uesugi, said to you about his plans for the U.S. market?
Further expand with product that will be viable in the U.S.
Did Mitsubishi lack that ability prior to his arrival?
I can't say they lacked the ability, but it did feel like there were a lot of levels of management that would have to approve things. In President Yokozawa-san's last visit to New Jersey, he visited with a number of dealers in the Tri-State area, and had the same message that we did, that we needed a strong lease on Outlander Sport to keep the volume going. Three days later it was announced.
I don't think that would have happened two years ago. I think there would be more executive boards that would have had to weigh in on that decision.
Have dealers not had a voice in the company's decisions for the last five years?
I think there was a voice, but the level of communication and the ability to get involved with the planning of product and the ability to get involved with the marketing direction, it wasn't there. I strongly feel that it's going to be back this year.
Why has the Mitsubishi i-MiEV sold so poorly?
Probably for the same reasons that the Leaf has not performed as well as Nissan expected and even some of the crossover-type electric vehicles like the Chevrolet Volt.
I don't know if the American public was ready for that kind of an electric vehicle that was controlled by range. I think as the technology improves it will be better accepted.
What's missing from the lineup?
We'd love to see a mid-sized sedan. I think the global small car is going to be best in its class. The Outlander Sport is a great product. We posted a 10 percent sales increase on that vehicle from 2011 to 2012. It's been an IIHS Top Safety Pick for two years in a row. That's a good product. The new Outlander is a fantastic product.
We don't have a mid-sized sedan and would love to see a new-generation Montero come back to United States.
Are Mitsubishi dealers profitable?
I don't have the breakout of single point Mitsubishi dealer profitability. I would say that is one of the concerns of the dealer body.
What needs to be addressed to fix profitability?
Selling cars solves a lot of problems. There are not as many units in operation of older cars, so our fixed operations are down.
There are not as many newer cars on the road. There is too much competition from older cars that are staying on the road from aftermarket shops.
Are dealers making money on new-car sales?
In general, it's a challenge. There are dealers who are very profitable. If you're selling 30 cars a month and you only have 60 cars on the ground, and you can turn your inventory and get your floor credits, earn your marketing dollars, control your expenses and fully utilize your co-op, you can make it work. It's a brand that if you use all the resources that are available to you, and you use all their programs, and you hit the programs, it can be profitable, even with the low volumes. As the volumes increase and we get more product, I personally look forward to a much more profitable 2013 than 2012.