TOKYO — The threat of U.S. tariffs couldn't come at a worse time for Mitsubishi, a struggling brand that has just begun a long-awaited recovery in the U.S.
But COO Trevor Mann insists Mitsubishi is well placed to weather a trade storm.
"In the short term," he says, "I would see it as a bump in the road."
U.S. growth plays a key role in Mitsubishi Motors Corp.'s plans, even though the company shuttered its only U.S. auto plant in 2016. Now, as a pure import player, the Japanese carmaker is more exposed than ever to a tariff broadside.
So why the optimism, with the auto industry fretting the possibility of a 25 percent duty? Mitsubishi has several things going for it, Mann said. It starts with a new wave of product due around 2020.
The improvements will include the next generation of the top-selling Outlander crossover and other vehicles that incorporate platforms and engines from Mitsubishi's alliance partners Renault and Nissan. Mann said the redesigns will boost brand appeal and help shield sales from tariffs.
After 2020, Mann added, Mitsubishi may also start thinking about localizing U.S. production again. A U.S. manufacturing footprint would help insulate the brand from long-term tariff damage.
Until then, a short-term tariff impact should be mitigated by the fact that the U.S. contributes only 10 percent of Mitsubishi's worldwide sales — and even less to profits.
"It's not going to be a corporate disaster for us," Mann said of tariffs. "The impact on us would be less than on many other brands. It's a bump in the road that we're going to have to repair."
Mitsubishi was working to fix its U.S. business long before the talk of tariffs, Mann said.
Despite the small U.S. presence, Mitsubishi has prioritized North America as a "focus" market in its midterm business plan.
Mitsubishi hopes to lift North American sales 23 percent to 190,000 vehicles in the fiscal year ending March 31, 2020. That outpaces the global target of 18 percent growth to 1.3 million.
The U.S. recovery is off to a good start. Sales surged 23 percent to 77,277 vehicles through July.
"Mitsubishi was a bit of a sleeping giant. As a brand, we have great potential," said Mann, who was dispatched to Mitsubishi from Nissan after Nissan's 2016 acquisition of a controlling stake. "I think we're demonstrating that we're waking up."
Mann has concentrated on strengthening Mitsubishi's U.S. retail network. The first step was listening to dealers' suggestions and identifying fixes.
There were plenty.
A major request has been to increase the supply of a centralized inventory. Dealers said they were spending too much time having to swap vehicles among themselves when supply ran short.
Mitsubishi also has been working with dealers and its U.S. sales financing partner Ally to streamline the loan process. Also underway is a review of the automaker's incentive program, Mann said.
"We were not communicating properly with them," he said of U.S. dealers. "We started to re-engage. If you can't talk with people, you can't find out what the issues are. If you can't find out what the issues are, you can't fix them."
Mitsubishi had 353 U.S. outlets at the end of June and wants 10 more by the end of next March.