LOS ANGELES - The sales and credit arms of Mitsubishi Motor Sales of America Inc. likely will post a pretax profit for calendar 1998, the first time the company has finished in the black since 1987.
Although 'a lot can happen in 20 days,' Mitsubishi's U.S. sales and credit arms look very sure of finishing in the black, said Pierre Gagnon, executive vice president of Mitsubishi Motor Sales of America.
The news comes just three months after Gagnon sent a scathing memo to Mitsubishi's U.S. employees, scolding them for not meeting targets in profitability, sales, quality and customer satisfaction.
Gagnon said the memo was necessary to shake up the troops after 15 years of the more paternalistic leadership style of former boss Richard Recchia.
'I'm a results-oriented guy. If you perform, I love you. And we have a lot of heroes popping up around the company,' Gagnon said.
Despite flat sales, Mitsubishi will make a 1998 profit by cutting costs, eliminating jobs, reducing the complexity of the vehicle lineup and negotiating better margins with the parent company.
Also important was changing the incentive spending structure, Gagnon said. Mitsubishi no longer pays retroactive stair-step volume bonuses, which tended to result in big payouts based on panic selling at quarter-end and year-end periods.
Under the old regime, dealers would blow out vehicles at months' end to make their next volume step, which would earn a higher per-unit rebate from the factory. But that hurt brand equity and residual values.
Incentives now are done on an individual per-unit basis, Gagnon said.
Last month the parent announced companywide layoffs, including 350 job cuts out of 1,150 employees of the U.S. sales and credit arms during the next two years. Gagnon said most cuts will come through attrition. However, in the first round of cuts that eliminated 65 positions, about 22 people were terminated.