ANALYSIS

Mitsubishi, in naming Aikawa as next president, declares its independence

Aikawa, an engineer, has been with the company for 35 years.

Photo credit: BLOOMBERG
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TOKYO -- The naming of Tetsuro Aikawa as Mitsubishi Motors Corp.'s next president marks a key step toward independence for the carmaker. It may finally be getting out from under the thumbs of its largest shareholders.

Aikawa, who will take over in June after getting shareholder approval -- a virtual certainty -- has deep roots in the Mitsubishi conglomerate. His father was president of Mitsubishi Heavy Industries, the former parent company that spun off the automaker in 1970.

But crucially, Aikawa will be the first president in more than a decade to have spent his entire career at the carmaker.

For almost 15 years, the automaker's controlling shareholders, from erstwhile German parent DaimlerChrysler AG to the Mitsubishi Group companies, have installed bosses of their choice.

'Milestone'

Aikawa is also a "car guy." Although he has spent some time in manufacturing and Japan sales, his career has been mainly in product development.

"This is a real milestone for the company after the investment by Daimler," said Jochen Legewie, Japan head of the consultancy CNC. He should know: He was Mitsubishi's top PR guy during the DaimlerChrysler-Mitsubishi era. "He is putting pride back into the company."

Consider Mitsubishi's tumultuous journey this century.

In 2000, Daimler took a controlling stake in Mitsubishi Motors, but the tie-up imploded in a clash of cultures. The Germans exited in 2004, leaving the Japanese company with huge gaps in its future-product pipeline. Suddenly, vehicles that were supposed to have been developed jointly disappeared from the plans.

Soon afterward, Mitsubishi's reputation at home was severely damaged by a scandal of its own making. Over several decades, the carmaker had been systematically covering up defects it should have notified the government about. Sales and its stock price nose dived.

Overseers

Since then, three core Mitsubishi group companies -- trading house Mitsubishi Corp., Mitsubishi Tokyo Financial Group Inc. and Mitsubishi Heavy, a maker of heavy equipment and some auto parts -- have been overseers of their troubled automaker sibling, pumping in cash and executive talent.

Insiders complain the lifelines from Mitsubishi Group companies often come with strings attached. The automaker is expected to do business with, source parts from or place orders with group companies -- even when cheaper or better alternatives exist.

Getting out from under the thumb of the group could give the automaker more latitude to pursue its own strategy and even make it easier to entertain capital tie-ups with other automakers.

Some of the company's woes predate Daimler. From 1989 to 2004, Mitsubishi endured a revolving door of eight presidents. Osamu Masuko, the current president, was parachuted in from Mitsubishi Corp. in 2004. He brought to the company stability, focus and, eventually, profits -- even record profits.

Record net

Last fiscal year, Mitsubishi achieved record net income. In the current fiscal year ending March 31, the company predicts net income will more than double to an all-time high of 100 billion yen, or $950.4 million. Operating profit is on course to set a record in the current fiscal year, too.

Last November, Masuko outlined a three-year business strategy to refocus on SUVs, electric vehicles and emerging markets.

He also aims to restore Mitsubishi's status as a "normal company." The plan: Raise money through selling new shares to buy back the preferred shares owned by the Mitsubishi Group companies in an attempt to regularize its shareholder structure.

Masuko, 64, said he handpicked Aikawa without consulting group companies. When he introduced Aikawa to the press on Thursday, Feb. 6, he said, "Finally we are standing at the start line for a fresh competition."

Investing in product

Aikawa has promised a smooth transition from Masuko's tenure, pledging to fully implement the new business plan.

But he also brings a sharp automotive perspective to the executive suite at a time when Mitsubishi finally has the money to invest in competitive product.

Aikawa, 59, aims to develop new product, improve quality and introduce technology.

Mitsubishi had its r&d ranks hollowed out after the breakup with DaimlerChrysler, Aikawa said. That, combined with the defects scandal, led more than 10 percent of the company's engineers to leave within the span of half a year, hobbling future product plans, he said.

Of his 36 years at Mitsubishi, Aikawa said, "That was the toughest period."

He also wants a rebirth in design, an area where Mitsubishi has languished of late. Said Aikawa: "Through technology and design, I want to reconstruct the Mitsubishi brand."

His selection to lead Mitsubishi may represent the first step of that reconstruction.

You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on Twitter


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