Mann plots a U.S. revival for Mitsubishi

TOKYO -- Six months after taking operating control of Mitsubishi Motors Corp., Trevor Mann has put the carmaker back onto a profit trajectory.

Mann may also consider using Nissan Motor Co.'s products and North American factory capacity to revive Mitsu-bishi's U.S. fortunes.

Mitsubishi was bracing for its first operating loss in more than a decade when Mann became COO in November. But within three months, he cut purchasing costs and ramped up savings by combining efforts with Nissan.

Mitsubishi instead now expects to show a full-year profit for the fiscal year that ended March 31, Mann says.

The British-born Mann stepped into Mitsubishi's beleaguered operations last year at the direction of Nissan's then-CEO Carlos Ghosn after Nissan acquired a controlling 34 percent interest.

In an interview, Mann said that specific plans for Mitsubishi's future are being worked out. But he said the United States, China and Southeast Asia would be the main drivers of its recovery.

The Nissan partnership gives Mitsubishi new latitude to undertake plans that would have been impossible for the cash-strapped automaker acting alone. Mann said Mitsubishi may examine new vehicles such as a sedan or pickup for the U.S. The carmaker may also re-establish a factory footprint in North America, after pulling the plug on its only U.S. assembly plant last year.

Mann also wants to expand Mitsubishi's U.S. dealer network to stoke sales. The brand has 362 U.S. franchises.

"We need to start to grow. We need to start to improve our network," he said, adding that Mitsubishi will consider a range of possibilities. "We can reopen many things."

Known inside Nissan as a production and cost-control guru, Mann is directing a contingent of Nissan executives dispatched by Ghosn to turn Mitsubishi around. Ghosn is now chairman of Nissan and Mitsubishi.

Mann said Mitsubishi will unveil its blueprint for rebuilding in September or October, coinciding with the release of midterm business plans by alliance partners Nissan and Renault SA.

The strategy is not in concrete, but Mann forecasts a 20 percent increase in U.S. sales for the fiscal year ending March 31, 2018. That would bring Mitsubishi to about 120,000 vehicles. The U.S. was Mitsubishi's single biggest market last year.

Sales will get a lift from some new products, including the arrival this year of the Outlander PHEV plug-in hybrid crossover and the Eclipse Cross compact crossover.

But Mitsubishi will be thin on other fresh offerings for the near term, Mann warned.

The key to pushing U.S. sales higher, he said, will be taking advantage of Mitsubishi's lineup of crossovers and all-wheel-drive products amid booming demand for the segment.

"The answer to your prayers is not just adding nameplates," Mann, 56, said by phone from Bekasi, Indonesia, where he was opening a Mitsubishi plant that had been planned before the merger with Nissan. "You've got to make sure the nameplates you've got are working for you. And we've got scope for improvement."

Further ahead in the U.S., Mitsubishi could tap Nissan or Renault for help covering the sedan segment, Mann said. Mitsubishi may also consider a pickup, possibly on a Nissan platform.

"It's something that we should look at," he said. "As we go forward and start to have common platforms, an alliance pickup platform would be quite an appropriate thing for us to do."

Mitsubishi may also consider North American manufacturing again, possibly through a Nissan plant. "One of the things that we have to start looking at is perhaps further industrialization," he said. "We don't have a plant in the U.S. anymore. Maybe using Nissan's capacity."

Mitsubishi shuttered its only North American assembly plant last year in Normal, Ill., making the Japanese automaker purely an import player and more exposed to currency swings.

Mitsubishi took a tumble last year after admitting it cheated on fuel-economy ratings for several nameplates sold in Japan. The scandal opened the door for Nissan to step in.

Mann's fixes are coming straight out of Ghosn's playbook.

As Ghosn did when he arrived from Renault to revive Nissan in 1999, Mann is rolling out dramatic cost cuts and seeking savings with the bigger partner. The rapid action put Mitsubishi on the path toward a slim ¥1 billion ($9.1 million) operating profit in the fiscal year ended March 31.

Whether Mann made it will be known when Mitsubishi releases earnings on May 9.

"We were quite successful," Mann said. "The direction was not to make a loss. If you look at Mitsubishi, we've never made a loss for more than 10 years. I thought it would be a damn shame if we made a loss. I haven't left many stones unturned in managing cost appropriately."

The plan to begin sharing costs with Nissan was pulled ahead of schedule. The two automakers had envisioned their cost sharing starting during the new fiscal year, running from April 1, 2017, to March 31, 2018, with projected synergies of up to $226.4 million. But Mann pulled forward $27.2 million to the year just ended.

Savings came from a spectrum of actions, such as sharing the cost of transporting Nissan and Mitsubishi vehicles from plants in Southeast Asia, using shared aftermarket parts warehousing, and from joint sales financing in some markets. Mitsubishi also renegotiated the procurement of some parts by offering a larger scale that included Nissan, Mann said.

Mann says his reboot will also hinge on five challenges on the soft side:

1. Motivating Mitsubishi workers to hang tough and work hard.

2. Giving the company direction and a goal to achieve.

3. Keeping the company focused on taking baby steps of progress.

4. Aligning all parts of the company to communicate better.

5. Instilling good discipline to keep the plan humming.

"We've got to motivate each other," he said. "Without motivation, we don't have anything."

In many ways, Mann was groomed for the Mitsubishi assignment.

As Nissan's chief performance officer until this post, Mann's task has been to lead Ghosn's global drive to improve Nissan's profit margin and plant productivity.

Mann helped Nissan get within striking range of Ghosn's goals before being dispatched to Mitsubishi, where he reports to longtime CEO Osamu Masuko who has stayed on.

"Sometimes, when you've got your head down, you understand the direction but don't necessarily believe you can achieve the end point," Mann said. "So what I'm trying to do is put an element of focus in there, in terms of one quarter at a time."