TOKYO - For more than two years, plummeting sales have buffeted Mitsubishi dealers in the United States. Many have been in survival mode, depending on used-car sales to keep their businesses open. Others have closed their doors.
Now it's time to stop treading water, says Mitsubishi Motors Corp. President Osamu Masuko. He is calling on dealers to invest in their stores.
The success of the redesigned Mitsubishi Eclipse coupe and the coming Raider pickup will encourage Mitsubishi dealers to invest in their operations, Masuko predicts. Better dealerships will boost sales of other models in the pipeline, he says, creating a "virtuous circle" of increased sales and higher profits.
Masuko admits, though, that persuading dealers to spend money on the troubled franchise will be a challenge. Before dealers invest, he says, "they have to be confident that there will be a profit in the future."
Profits have been problematic at Mitsubishi stores lately. Mitsubishi's U.S. sales have plunged in the past two years. And 71 stores closed in 2004.
Given that history, dealers could be expected to be skeptical of Masuko's call to arms. But Joe Mitchell, owner of Biggers Mitsubishi in Elgin, Ill., agrees that it is time to look forward, not back.
"I think that Mitsubishi dealers need to step up," Mitchell says. "And I think they will be willing to invest as long as they continue to send us good product." Mitchell is on the national retail marketing committee.
Masuko says rising U.S. sales will build on what already is an improving Mitsubishi. Preliminary figures for the April-June quarter, he says, show that compared with the company's restructuring-plan targets, "we have overachieved in the domestic market as well as the overseas markets."
Masuko strongly refutes lingering rumors that the Japanese carmaker might pull out of the U.S. market.
"North America is the most important market in the Mitsubishi Revitalization Plan," the official name of the company's restructuring effort, he says.
Masuko praises the redesigned Eclipse's strong launch, waving aside the impact of two early recalls. He also says that the company's highest priority in North America is boosting sales enough to ensure that the Mitsubishi plant in Normal, Ill., reaches annual production of 120,000 vehicles. That is the factory's breakeven point, he says.
According to the Automotive News Data Center, Normal is producing vehicles at an annual rate of about 87,000. The plant produces the Eclipse coupe, Galant and Endeavor. It is scheduled to add the Eclipse Spyder sporty car in January 2006.
Mitsubishi bases its output on sales, and not the other way around. So raising Normal's production will require a sales increase, Masuko says. That will take efforts by the carmaker and its dealers.
"The dealers will have to invest in order to create an environment to increase sales," Masuko says. That includes spending on the sales force as well as service technicians.
"We have to strengthen our good dealers, so they could further increase their business," he says. "As for the so-called weak dealers, we have to strengthen their sales performance, too, in terms of how they actually handle the customers. We have many things to work on. And it's easier said than done."
Products are the key to persuading dealers to invest and improve their operations, Masuko says.
"By the end of 2007, we will introduce six" new or redesigned models in North America, he says. Besides the Eclipse, Raider and Eclipse Spyder, that includes a redesigned Outlander SUV that will expand from five seats now to seven seats. The Outlander is due in the second half of 2006. It effectively will replace the aged Montero.
That new-product pipeline, Masuko says, shows "the commitment of Mitsubishi Motors to the North American market."
Kathy Jackson contributed to this report