LOS ANGELES - The resignation of Kevin Mayer last week shocked many employees at Mitsubishi Motors North America Inc.
As advertising director, Mayer was responsible for the launch this month of the redesigned Eclipse coupe. Nervous employees were expecting the car to bring better times to the troubled automaker.
"No vehicle in our lineup has been as successful" as the Eclipse, CEO Rich Gilligan said at a recent press event.
But now it is turmoil, rather than teamwork, that prevails at company headquarters as the critical sporty coupe heads to the marketplace.
Not only is Mayer gone, but so is the director of strategic planning, John Jullens, and the director of brand marketing, Bob Martin. Jullens also left last week; Martin departed in March.
Dave Schembri, executive vice president of sales and marketing, has been on board only since February. Mitsubishi's ad agency, BBDO Worldwide of New York, was hired in March.
"This is the blind leading the blind," said one person in the marketing department. "This company is held together with spit and gum with no one to control the stage."
The bad mood at the Cypress, Calif., headquarters is compounded by plunging sales. Mitsubishi sales fell 43.3 percent in April compared with the year-ago month and 40.2 percent for the first four months of the year.
A key problem continues to be the continuing exodus of executives.
Mayer, in his position only since January, was the No. 2 executive in the marketing department. His most recent predecessors, Diane Hong and Paul Mareski, each served less than six months in that position.
Ian Beavis, former vice president of marketing, left in November after only a year on the job.
At the top, Rich Gilligan was promoted to CEO from a manufacturing job after Finbarr O'Neill left in January for the top position at software supplier Reynolds and Reynolds Co.
Who's to blame?
Some sources blame Japanese executives from Mitsubishi. The sources say the executives are micromanaging operations in North America.
Some say Schembri butted heads with the marketing department over how the Eclipse should be marketed. They say market studies showed the car should be aimed at men ages 25 to 40. But Schembri argued for courting baby boomers, too, they say.
But the most difficult problem for the marketing executives, sources say, was the Eclipse's advertising budget: a paltry $25 million.
That's when Mayer walked.
"Kevin went through torture fighting for the budget," one source says. "A $25 million budget won't launch that car."
By comparison, other automakers often launch important new and redesigned vehicles with $100 million budgets.
One source says Mitsubishi's overall ad budget for this year is $120 million. "The real root cause is the Japanese," the source said. "Their whole game plan is to preserve cash."
An executive at one supplier to the company agrees: "I think they have a core of product to make it, but all I keep hearing is cut, cut, cut. I think they should beg, borrow and steal money from other areas to put into marketing."
Parent company Mitsubishi Motors Corp. posted an operating loss for the nine months ended Dec. 31 of $956.7 million.
Mitsubishi North America spokeswoman Dotty Diemer says the company would not comment on employee complaints.
More power, better looking
The 2006 Eclipse has a sleek new exterior and interior and a more powerful engine. The ad campaign kicks off June 12. During a March interview with Automotive News, Schembri said the new ads will feature the Mitsubishi brand as well as various nameplates. He said the ads will focus on product attributes.
Schembri would not discuss the ad budget except to say it was sufficient: "We don't lack financial resources. It's how efficiently you use them."
The company would use a combination of traditional media, such as TV, and nontraditional marketing to showcase Mitsubishi vehicles this year, Schembri said.
For example, in April the company completed two months of ride-and-drive events at several shopping malls throughout the United States. The goal was 25,000 test drives, and more than 30,000 people drove vehicles, he said. More such events will follow, he said.
The company also has reinstated the dealer advertising associations, which could add several million dollars to advertising coffers.
"We need to identify our target audience and expose our cars to that audience," Schembri said.
Some employees say that although Mitsubishi has good products, an inadequate ad budget will prevent sufficient exposure.
Gordon Wangers, CEO of Automotive Marketing Consultants Inc. in Marina Del Rey, Calif., says Mitsubishi will be hard-pressed to tell its product story without marketing muscle.
"I think awareness of Outlander is near zero because they don't have enough money to create awareness for an all-new nameplate," he says. "They have the product. Now they need the marketing dollars to support it."