Last year was a challenging year for Mitsubishi dealers, to put it mildly.
The breakup of the automaker's future product plans with DaimlerChrysler AG left the franchise's long-range vehicle lineup in question, and there was widespread speculation that Mitsubishi would leave the United States. That didn't happen, and dealers now are largely reassured of Mitsubishi Motor Corp.'s commitment, says Ted Terp, chairman of the Mitsubishi National Dealer Advisory Board. Terp, 57, owns Metro Mitsubishi in Bloomington, Minn.
He spoke with Staff Reporter Lindsay Chappell.
Mitsubishi Motors North America changed its management structure in December and created two CEOs. The company added Hiroshi Haru-nari as co-president and co-CEO with Rich Gilligan. How did you interpret that move?
It was a positive step. One of the things dealers will get with this individual is a more direct dialogue. It's a way for Japan to listen to us directly. It will no longer be a matter of our dealer body having a conversation with California, and then California taking the conversation to Mitsubishi in Japan. Hopefully we can address some issues that we need to going forward.
What issues do you want addressed?
Uppermost for Mitsubishi right now is generating traffic into the dealerships. And in order to generate traffic, you have to get a share of voice out there. The problem is that the dollars need to be increased on national advertising. In order for us to be up there with the Nissans and Mazdas and Volkswagens, we have to spend on the same level. And we're just not doing that.
Is Mitsubishi receptive to what you're saying?
Yes, they've been very good at listening, at communicating with us. Our message is loud and clear. And I think now, with the new co-CEO structure, the Japanese will hear it better. The consensus of the dealers I've talked to is that the Japanese have the money, and they're sending somebody over who has access to the purse strings so that we can convince them of what we need to do in this market. My concern is just that we have to be consistent with our advertising dollars and spend at a level to be competitive.
How does this affect you?
Well, for example, I just got off the phone with another dealer. He has both Mitsubishi and Mazda, and his Mazda line is outselling his Mitsubishi by two or three to one. He told me that customers come in looking for the Mazda Tribute. The salespeople mention the Mitsubishi Endeavor, which has a better warranty, and they say, nope - we want the Tribute.
My feeling is that what drives that attitude from the customer is marketing and advertising. Those customers had a preconceived idea of what they wanted before they walked in the door. We need to have customers lathered up before they come into the dealership, and you do that with a good presence.
Mitsubishi has been through a tumultuous year. What has that been like for dealers?
We saw management change. We had DaimlerChrysler pull out of our product plans at the 12th hour. But then we had the infusion of $2.5 billion.
Actually, I've been a Mitsubishi dealer for 11 years, and I've been through good times and bad times with the Mitsubishi-DaimlerChrysler relationship. So when Daimler pulled out and the Japanese took over and gathered the funds, I looked at that as a positive. I believe most of our dealers did. Having the Japanese back in control meant that they had just one concern, and that was Mitsubishi.
We also had change in California. (CEO) Finbarr O'Neill left and (former head of manufacturing) Rich Gilligan came in. A lot of dealers only knew Rich through the factory. The concern we had as dealers was, although Rich did a great job of turning around the factory and making it profitable, this is a completely different ballgame.
Much to his credit, he went out there and hired some good people.
I imagine there was a fair amount of worry among the dealers.
Not so much for the last five or six months. There was when Daimler pulled out and there was all that talk that Mitsubishi would pull out of North America. But once the Japanese put the cash into the company, we knew they weren't going to walk away from North America.
What product encourages you most?
The best kept secret is the Endeavor. The Galant is great, the Lancer is great, the new Raider truck is going to take awhile because it's kind of a convoluted segment right now. There is nothing in the market that compares to the new Eclipse. As far as the product line and what we have coming down the pipe, we're set.
Where does the franchise go from here?
The dealer body is probably going to shrink. Three years ago, when things were looking good, they went out there and put too many dealers in. It's about 575 now. I think it's got to get under 500. I think the number has got to be around 450.
How are profit levels holding up?
I would say there's a lot of concern out there about dealers losing money. Many of the dealers who are single-point Mitsubishi are having a tough go of it. If you recall what happened with Hyundai, maybe eight years ago when they hit rock bottom, a lot of Hyundai dealerships ended up in duals with other franchises. And that's how the Hyundai franchise survived. That's what's happening with Mitsubishi now.