When Mitsubishi Motors Corp. announced in February that it was killing its Proudia and Dignity luxury models after less than 18 months of sales, a Japanese reporter thought he smelled a conspiracy.
If a Mitsubishi customer wanted a luxury car, he asked, was he supposed to buy a Mercedes?
His implication was clear. DaimlerChrysler AG owned a controlling 34 percent of the Japanese carmaker. Perhaps headquarters in Stuttgart, Germany, had ordered Mitsubishi to get out of the luxury-car business.
Not so, says Mitsubishi President Takashi Sonobe: 'I made that decision.' The models were losing money. 'Mitsubishi does not sell cars at a loss,' he said - at least, not anymore.
Sonobe's blunt statement sent two messages. First, Mitsubishi has a newfound concern for profits. Second, Sonobe is making the tough decisions at Mitsubishi.
Sonobe may not fade away after all. And that implies the Mitsubishi Group will support the carmaker's turnaround, after years of resisting serious reforms.
Speculation has been rife that Mitsubishi's chief executive would fade to a supporting role as new Chief Operating Officer Rolf Eckrodt - DaimlerChrysler's emissary - took charge. That, after all, was the pattern at Nissan Motor Co., where Yoshikazu Hanawa eventually yielded the president's title to his charismatic second-in-command, Carlos Ghosn.
But as Sonobe and Eckrodt announced Mitsubishi's Turnaround Plan, Sonobe remained a forceful presence. When asked who bears responsibility for making the turnaround work, Sonobe is clear. 'Ultimately, the responsibility falls on my shoulders,' he says
Eckrodt agrees: 'The president would have the final influence.'
Clearly aware of the speculation, the two sought to present a unified front. Both had set up their own teams to form a turnaround plan, but Sonobe insisted, 'We are now one team.'
To be sure, there could be clashes. But there are major differences between the Mitsubishi and Nissan cases:
Experience. Hanawa spent nearly a year looking for a company buyer before selling to Renault. At Mitsubishi, former president Katsuhiko Kawasoe played that role before he resigned. Sonobe never was a seller. And both he and Eckrodt have led turnarounds.
Ownership. In theory, both Daimler-Chrysler and Renault hold veto power over the decisions of their partners, Mitsubishi and Nissan. But the reality is the German carmaker faces a constraint. Under Japanese law, both the Mitsubushi Group and DaimlerChrysler hold veto power over board-level decisions at Mitsubishi Motors.
By contrast, DaimlerChrysler purchased all of Chrysler Corp. and could do what it wanted, says Christopher Richter, an auto analyst for HSBC Securities Japan Ltd. 'I don't think they have the freedom to act here as they did at Chrysler,' he says.
Style. Here, the differences would seem to favor a reduced role for Sonobe. Renault Chairman Louis Schweitzer is clever at using existing human management resources as much as possible, says Kazuhiko Shiohara, auto analyst at Goldman Sachs (Japan) Ltd. But DaimlerChrysler Chairman Juergen Schrempp is another story. 'The DaimlerChrysler style is to try to control from top to bottom,' Shiohara says.
On the other hand, Sonobe has a more assertive personality than Hanawa. As Richter sums up his impression of Sonobe's future: 'It doesn't seem like he's going to just go quietly off into the night.'
That is critical, said JPMorgan Securities analyst Stephen Usher. 'As long as Sonobe has himself up in the front, this is a Mitsubishi deal; this is a Japanese deal.'
A turnaround will do more than save face for the Group. It would serve the Group's economic self-interest as well.
The most important thing to know is this: 'The Mitsubishi Group would love to have the Mitsubishi Motors' headache behind them,' says Usher. They will want to see it succeed even more if their own man is in the driver's seat.
James B. Treece is a staff reporter for Automotive News International. E-mail him at [email protected]