LOS ANGELES - It's an old axiom: If an automaker has good product at a fair price, people will flock to dealerships. But sometimes it is a little more complicated than that.
Consider the situation at Mitsubishi Motor Sales of America Inc.
Two cars, the Galant sedan and Eclipse sport coupe, account for most of its U.S. volume at about 50,000 units apiece. The Japan-built Montero Sport sport-utility and Mirage subcompact add another 35,000 units each.
All are well-designed, good-looking and attractively priced. But sales are stalled because cash-poor Mitsubishi has not had the marketing funds needed to create high brand awareness.
Mitsubishi wants to add another volume product to help drive the company's total sales closer to the 300,000 range from its current stagnation level of under 200,000 units.
That is where the problems start, the things that make product planners yank their hair in frustration.
1 PLATFORM, MANY CARS
The Galant and Eclipse are built at Mitsubishi's factory in Illinois, using the same basic platform but many different components. From the same factory, DaimlerChrysler Corp. gets its Chrysler Sebring and Dodge Avenger coupes, using the same Mitsubishi platform but with many different parts and subassemblies.
Even with those four vehicles running down the lines, the plant has 70,000 units of capacity to spare.
The fix sounds easy: Insert a fourth Mitsubishi volume product, bring the plant closer to capacity, and come closer to your hoped-for 300,000 American units.
But the Illinois plant already is overburdened with the complexities of so many different products, says Hiroshi Yajima, president of Mitsubishi Motor Sales of America. Adding another vehicle would involve a tremendous risk in capital and manufacturing efficiency.
Debt-laden Mitsubishi does not have the capital to tackle that situation, which would seem to rule out an oft-rumored pickup or a co-venture with Volvo.
Then there's option 1A, which would entail building a new product off the Galant platform. It sounds like a good idea, since sharing a platform lowers costs by spreading overhead over more units of production.
Pierre Gagnon, Mitsubishi executive vice president, said the company is studying a hybrid sport-utility similar to the Lexus RX 300. Indeed, a wacky concept version, called the SSU (for Super Sport-Utility), will be shown at the Detroit auto show next month.
The problem is that such a vehicle would be a direct competitor to the existing Montero Sport, already one of Mitsubishi's strongest products. So perhaps a Galant-based minivan would be the answer.
But either new-product solution spawns its own big problem: Would you rather build your volume with an all-new vehicle, which thins the marketing budget for the rest of the line, or do you increase your volume by making the existing products better and spending more on marketing them?
WHICH WAY TO GO?
Do you spend a few hundred million dollars engineering the Galant platform to build a new minivan or a competitor to the Montero Sport? Or do you spend one-tenth the money to add, say, $500 a unit in content and quality, making the existing Montero Sport so good that people are unloading their Explorers and 4Runners?
That done, do you add another $100 million to the marketing budget to tell people how great the products are?
At a cash-poor company, the latter two options seem to make more sense. Spend a lot less money, and have the Montero Sport sell 60,000 units instead of 35,000 units. At the same time, Mitsubishi could boost ad spending to try to increase Galant and Eclipse volumes. But there are inherent problems there as well.
Although the redesigned Galant is doing well since its fall launch, it must do so against giants Honda Accord and Toyota Camry. Mitsubishi had its biggest marketing launch ever for Galant - using nearly half the year's ad budget - and nudged sales from last year's 42,607 units to about 50,000 units this year.
As for the Eclipse, although a redesign is coming next fall, the sport coupe segment is all but dead.
So taking either vehicle to the next level by basically doubling volume would be an expensive marketing proposition.
All the above situations also ignore a problem dealers have complained about for years: The current marketing setup has too little money left over also to advertise lower-volume products such as the Mirage, Diamante, 3000GT and Montero.
And that resurrects the problem Mitsubishi has faced all this decade: It has as many products as a first-tier automaker but the sales and commensurate budgets of a second-tier company. Which raises the question: Would the cash-poor Japanese parent be willing to loosen the purse strings if yet another volume product were added to the vehicle line?