When Mitsubishi Motors North America COO Don Swearingen took questions from the press at a media event Thursday evening ahead of the Detroit auto show, he was peppered with queries about what’s next following Nissan Motor Co.’s takeover of Mitsubishi in Japan.
In October, Nissan took a controlling 33.4 percent stake in Mitsubishi, giving Nissan the same power over Mitsubishi that Ford once held over Mazda. Knowing that Nissan CEO Carlos Ghosn -- who is now also Mitsubishi’s chairman -- is not a hands-off executive, reporters surmised that much will change. But what? How?
So the press, pressed. Will the two companies share parts? Vehicles? Will Mitsubishi move its California offices to Nissan North America HQ in Tennessee? What else is in the works?
No to a move, Swearingen said. And he insisted that the two brands’ designs will remain distinct. On all else, though, his response was the same: Everything is being reviewed in a search for cost cuts or growth opportunities.
But what, the reporters kept asking, does it mean?
I’m not inside either company, but I’ve watched them both since 1981, including 18 years while in Tokyo. Here are my answers to that and other questions about this new alliance.
Q. Will they share parts?
A. Yes. That’s been a big source of cost savings in the Nissan-Renault Alliance. Ghosn will want to see that here, too.
Q. Will they rebadge Nissan vehicles as Mitsubishis or vice versa?
A. No. Check out the track record of Nissan-Renault, and you won’t find lookalike cars. Their designs are distinct. Rebadging experiments have been few and far between. That’s not something Ghosn endorses.
Q. Which company’s alternative powertrain ideology will prevail: Nissan’s EV-angelists or Mitsubishi’s plug-in hybrid advocates?
A. Having options is good.
Q. Will Mitsubishi survive as a brand in the U.S.?
A. Probably. Mitsubishi sales have risen for four straight years, to 96,267 in 2016. More of its 360 dealers are profitable now than at any time since 2002.
As long as Ghosn sees value in having a separate brand here, he’ll keep it. Remember, he brought back the Datsun name a few years ago as a separate brand for emerging markets so those vehicles would be seen as distinct from Nissan nameplates. Having a unique identity can be useful.
Q. So Mitsubishi’s on a roll. Will it continue?
A. Maybe. They’ve cleansed their lineup of most sedans, which Americans don’t want anyway, in favor of crossovers. Two crossovers accounted for 65 percent of their 2016 sales, and a third is on the way. That’s the good news.
The bad news: They’re about to add a sedan version of the small, inexpensive Mirage. That Thailand-built car has been a pleasant new-car option for some shoppers planning to buy used, but it’s unclear whether the market is clamoring for another Mirage in a different body style.
Mitsubishi’s crossovers are proof that you can have the vehicles the market wants, without necessarily knowing what vehicles the market wants. Over the decades, Mitsubishi’s consumer-market research has been abysmal -- and I’m being kind. They built vehicles, and hoped the results would turn out to be what shoppers were looking for.
One of the biggest benefits Mitsubishi could get from Nissan is a tutorial on how to anticipate real consumer sentiment. Nissan isn’t perfect at it, but it’s a damn sight better than Mitsubishi.
Q. So will Nissan plow lots of money into Mitsubishi’s future-product pipeline?
A. Don’t get carried away. Remember the history.
In 2001, Mitsubishi’s U.S. sales, which had languished around 200,000 previously, rose for the third straight year to 327,393. Giddy execs targeted 500,000. But they were practically giving them away, with a “zero-zero-zero” incentive campaign: zero down, zero payments and zero accumulated interest for a year. That came back to bite the brand on the butt. Smart consumers drove new Mitsubishis for a year, and then shrugged and turned the cars back in without making a single payment.
Mitsubishi execs today know that being realistic, rather than overambitious, is a good thing.
I’m sure Nissan will better fund Mitsubishi’s plans. That might even mean more than one new vehicle every two years. But the money will come only if and as Mitsubishi proves it can use the cash wisely.
Q. OK, so back to the bottom line. What does this alliance mean for Mitsubishi and Nissan in the U.S.?
A. Not much.
The part that most Americans don’t get is that the U.S. just is not that important for Mitsubishi.
For more than a decade, Mitsubishi’s main strategic goals have been to build on a strong base in Southeast Asia, grow in China, and stop floundering in Japan. Turning a profit in the U.S. (and Europe) and then stabilizing in those markets would be a happy bonus, but neither the U.S. nor Europe was a growth market -- or the central focus -- for the three-diamonds brand.
I assume Ghosn agrees with those goals. He’s probably salivating over the chance to tap into Mitsubishi’s business in Thailand and adjoining markets. But I doubt he’s spending a lot of time thinking about Mitsubishi North America.
Oh, sure, a Mitsubishi or Nissan exec who comes up with ways to make the alliance pay off will get a hearing, and maybe a promotion. But that’s not core to this takeover.
Sorry, America, but sometimes you’re not the center of the galaxy.
News Editor James B. Treece oversees auto retailing coverage at Automotive News. He was previously Asia Editor, based in Tokyo.