Michio Yamashita took the reins of Mitsubishi Motors Corp.'s U.S. operations last Friday, June 27, replacing the heads of both Mitsubishi Motor Manufacturing America Inc., the production arm in Normal, Ill., and Mitsubishi Motor Sales of America Inc. in Cypress, Calif. His appointment marks the first time the Japanese parent has put one executive in charge of both manufacturing and sales in America.
Yamashita, 63, has been managing director for North American operations at the parent company. Like Takemune Kimura, who became president of the parent company last year, he has a strong manufacturing background, mainly at Mitsubishi's Oye plant near Nagoya in central Japan.
In his spare time, Yamashita likes to grow vegetables and listen to music, particularly Argentine tangos and Dixieland jazz. His favorite sports are swimming and basketball. 'I am looking forward to watching the Chicago Bulls,' he said.
Citing a busy schedule, Yamashita said he was unable to sit for a face-to-face interview. However, he agreed to respond in writing to questions from Automotive News Asia Editor James B. Treece. Following are edited excerpts.
Which of Mitsubishi's two U.S. operations do you think needs the most attention at this time?
Production relies on sales and, in that sense, I suppose I should devote more time to the sales arm, MMSA. However, both MMMA and MMSA are young companies, and there is much to do at both.
Production and sales go together like the wheels on a car. By working toward a unified management, we will be able to raise management efficiency and realize an all-round improvement in business results. It is not simply a question of giving more attention to one company than to the other.
What are your top priorities for manufacturing?
Our priority at MMMA is to get the company onto a profitable footing by improving product quality and reducing costs.
On the quality front, the 1997 J.D. Power and Associates Initial Quality Study unfortunately places Mitsubishi cars in the lowest group. Our score is a large improvement over last year, but our competitors have also improved their scores. So MMMA's relative placing has not moved up.
Quality evaluation has a major influence on sales and prices in America. For that reason, MMMA, our sales company and the Japanese parent will work together to produce quality that exceeds the industry standard.
Unfortunately, MMMA has been unprofitable for several years. However, the situation has been improving since 1995, and plans call for it to produce a profit this year. Since production has remained the same at approximately 200,000 units, you can see the degree to which cost reduction has contributed to the turnaround.
MMMA will start producing the next generation of the current models in 1998, and we expect profits to expand as the changeover proceeds. To make sure those profits increase, we will continue to forcefully push forward efforts to improve product quality, to rationalize design and, working together with our suppliers, to reduce costs.
Do you think it is possible to raise the utilization rate at MMMA with the current models built there, or must Mitsubishi add another model to use that plant fully?
Plans for 1997 call for a production volume of approximately 200,000 units, which is a little over 80 percent of the facility's 240,000-unit capacity. Plans for 1998 call for a similar volume. We do not necessarily believe the capacity utilization rate to be too low, but we would like to raise that figure in the near future by boosting MMSA's selling power.
It is important that we replace current models with products suited to the American market and nurture them. We are not considering the addition of any new models.
What are your top priorities for the sales arm, MMSA?
Building up and establishing brand loyalty. Mitsubishi Motors was subject to volume restrictions on vehicles supplied from Japan during the sales boom enjoyed by our Japanese competitors in the 1980s. Consequently, we were unable to increase sales sufficiently and were unable to foster the scale of ownership that forms the fountainhead of sales. That historical factor is the underlying cause of our present brand loyalty troubles.
Our Core Model and Top Market strategies introduced over the last few years are now starting to produce results, albeit gradually. To make further progress, the most important thing we have to do is make sure the American consumer gets a clear-cut answer to the question, 'What is Mitsubishi?'
How do you plan to reduce your reliance on lease programs?
All car manufacturers face the same problem: The leasing business is expensive and risky to run. Naturally, we would like to reduce our dependence on the leasing business. At the moment, we are dealing with the situation by introducing stricter criteria for qualifying customers. However, we have to take into consideration the way that can affect sales volume, so there is no easy answer to this problem.
During the last two years, Mitsubishi Motors Corp. has taken two charges against earnings so MMSA and MMMA can start fresh. How do you plan to make sure those two operations do not return to the red?
We injected $540 million in new capital into MMMA last August and $350 million into MMSA in March of this year. Those steps have solved the insolvency problems at both companies, so this year marks 'year one' in their reorganization. But structural measures are required to ensure that neither company slips back into the red.
At MMMA, that means reducing the break-even point by making the manufacturing cost improvements I mentioned earlier and by acquiring a stable volume.
At MMSA, that involves achieving a stronger Mitsubishi brand loyalty, reducing sales expenses and securing a larger sales volume by expanding our dealership base.
The reduction in borrowing costs following the capital increases will also be a major prop in improving the companies' fixed liability situation. We intend to work hard in building up an organization that will resolutely put these programs into effect and so prevent any further losses.