Takashi Sonobe, who became president of Mitsubishi Motors Corp. Nov. 1, previously restructured the automaker's U.S. operation, turning the chronically unprofitable unit into a marginal moneymaker. Now, he has to work a similar turnaround for the entire company, which is forecasting a loss for the current fiscal year of at least $1.3 billion.
He will be assisted in the restructuring by DaimlerChrysler AG transferee Rolf Eckrodt, who will join Mitsubishi as COO in January. DaimlerChrysler paid $1.9 billion for a controlling 34 percent stake in Mitsubishi in October.
Because Eckrodt's title and the circumstances of his job are the same as Carlos Ghosn's when the Renault executive took the reins at Nissan Motor Co., comparisons between the two men and their roles are inevitable. But the similarities end at the job title, Sonobe says.
At Mitsubishi, Sonobe says, I'm the boss. Eckrodt will report to me.
Sonobe met in Tokyo last week with Asia Editor James B. Treece and Staff Reporter Yuzo Yamaguchi.
What are your targets as president? For profits? For debt reduction?
There will be a very large loss this year (ending March 31, 2001). We have to achieve breakeven in the next fiscal year and promote more restructuring to achieve our profit target of ¥100 billion for the following year. I don't plan to change the debt-reduction target. I'd like to keep it at ¥1.3 trillion by 2003.
How do you expect to split the duties of running Mitsubishi with Mr. Eckrodt?
Good question. Long-term corporate strategy, management planning, human resources, labor union relations, finance and accounting and long-range marketing strategy will report directly to the CEO - me. Within that framework, the short-term operations, let's say for half a year to one year, will be put in place by the COO, Mr. Eckrodt. And the COO reports to me. So we will have a very clear management structure.
Do you expect him to focus more on Japan-market issues?
I don't think so. He will be responsible for supervising daily and short-term operations worldwide.
What is the cutoff date for Mitsubishi products in development to get the green light without having to be approved by the DaimlerChrysler board?
It's impossible to change new models that were under development before Oct. 18, the date our venture with DaimlerChrysler started. All decisions after that date are joint ones, and they have a 34 percent weight in the decision. So of course we need their approval; nothing can be done without their approval.
Mazda-Ford and Nissan-Renault offer two models in product planning. Ford and Mazda coordinated their future product cycles, while Renault and Nissan are moving to platform sharing. Which model will Mitsubishi-DaimlerChrysler be?
For the 2003 Montero Sport, platform or engine sharing would be difficult. But at the next step, which might take place around 2005 or 2006, it is probable that we could think of sharing engines. In 2004, the successor to the Galant is planned. We could think of sharing the platform by then. But for the domestic market, there are not many items that can be shared when you're considering the concept of the car. So it's difficult to think of sharing platforms in the near future for the domestic models, but we can think of sharing engines.
The U.S. market has been very strong. How much longer do you think it can continue at this pace?
The American market has been showing some deterioration, which causes me some concern. But looking at the data, I believe it will be possible to achieve a level of 16 million units next year. But I don't know what the influence of the American presidential elections may be. Anyway, we are still targeting sales of 400,000 in the U.S. market by 2005, and I believe we'll achieve 300,000 this year.
Does the increase in incentives in the sport-utility segment concern you? After all, can a small-volume player such as Mitsubishi compete against the big spending of a Ford?
The Montero Sport is one of our core models. If Ford starts to provide more incentives on its sport-utility vehicles, the competition between the Explorer and the Montero Sport might become more severe. But I'm not pessimistic about our expectations of achieving sales of 300,000 units by December of this year.
Do you hope to rebadge any DaimlerChrysler vehicles as Mitsubishis in North America?
Our intention is not to share models by rebadging. We want to maintain the Mitsubishi brand as the Mitsubishi brand. However, we'd like to share platforms as soon as possible or engines and transmission components.
I was thinking specifically about a full-sized pickup, which is difficult to bring into the United States.
I don't know if this is the right term, but the issue is differentiation. If it is possible to supply a pickup truck through the Mitsubishi channel without damaging the Chrysler brand identity, then we could think of a way to realize that.
What is the future of the Illinois factory? Does the alliance with DaimlerChrysler mean that the plant will continue to produce both Mitsubishi and Chrysler models?
The current contract calls for the plant to build the Chrysler Sebring and Stratus coupes until 2005. That's the end of the current contract. But under the alliance, as long as there's a market for two-door cars, I believe the successor models will continue to be manufactured at the Illinois factory. And from 2003, the Montero Sport will start to be manufactured there. The present capacity of 240,000 is not sufficient, so we're thinking of increasing the capacity to 300,000.
You have said that you expect to make a decision on the future of the Australian plant by the end of the year. Do you think DaimlerChrysler would be interested in using it?
We took over that Australian operation from Chrysler. Are they still expecting any deal with us? (laughs) I don't think so.
The problem is the feasibility of maintaining a plant in Australia. What is the level of quality from a global standard? How is the level of productivity? Is it competitive on a global basis? We have no intent of withdrawing from the sales channel, but the headache is how the plant should be maintained.
When I was there about two years ago, they said that the quality of the Diamante shipped from Australia was the highest of any Mitsubishi model sold in the United States.
No, it's not really satisfactory.
What needs to be done to turn around your European operations?
It's a difficult problem for us. One factor is that the euro is weak. This has affected profitability. To overcome that, we need to reduce the cost of cars we ship to Europe from Japan or manufacture in Europe and export. We have joint-venture plants with NedCar and Pininfarina, so one idea would be to export cars from those plants to other countries, including Japan and other Asian countries.
Distribution costs in Europe also are very high, but we can't reduce them by ourselves. So we have to cooperate with DaimlerChrysler and share back-office expenses, parts and service and logistical costs.