What's the first new product to arrive?
It'll be a completely new Outlander. Although that is a model we currently have, this new generation is the first of the vehicles to be built as a joint alliance vehicle. It's a completely new architecture, with shared technologies from all of the sister companies.
That's the one based on the Nissan Rogue?
Yes. So, it'll grow in size vs. what we currently have, which is exciting for us. This has always represented a three-row vehicle, but consumers are always looking for more room. I think it's going to be a home run.
Has there been any change in facility upgrade demands by Mitsubishi?
Yeah, we have rolled out a brand-new, global visual identity program (which was announced in 2018). It's an all-new design, with a real upscale feel. We're trying to create this retail environment that's more open and inviting. It's gorgeous.
Is Mitsubishi flexible, at all, in its requirements?
To their credit, Mitsubishi has worked with the dealers. They have this ground-up design for completely new facilities, but they also have a lot of options for remodels, to bring them more current without having to build a new facility. We already have 90 or 100 dealers enrolled in the new facility upgrade. It is a requirement of new dealers, new points. Buy-sells of existing points are also to be brought into the new-generation visual identity program.
How does it work, and does Mitsubishi help with the expense? For example, step one is often a survey of the existing store, and the factory often pays for that, is that about right?
That's exactly the process. For dealers who want to update, they put a deposit up, and there is a survey done, with recommendations on design elements to be incorporated. There are options within the identity program that are more or less money, so you can pick and choose in some respects to have some cost containment. They also offer an attractive ability to finance the upgrade if the dealer wants.
Is that financing through a captive finance company?
The facilities program is facilitated through the sign company, AGI. The current captive is not a captive in the classic sense, but it's Ally Bank on the retail and wholesale side. We're free to use anybody we want, but I am an Ally dealer and I've been really happy with them. As I say they're not a true captive per se, but they are all-encompassing, whether it's retail, real estate, wholesale.
Do they do leasing?
They do. If I have one criticism, it would be that they're not a true captive, so the incentive to buy as absolutely as deep as possible maybe isn't there, where a manufacturer, a true manufacturer-owned finance company, there is pressure to get as many cars on the road as you can, and buy as deep as you can.
To be fair, a captive has the manufacturer to carry the risk, and cost, of doing that, right?
Well, that's true.
Is it a new thing, for Mitsubishi to make facility demands?
Prior to this, there was not a lot of synergy. We had some dealers with maybe a couple of different generations of signage up. Again, they are wanting to elevate the experience for the customer, but also creating that upscale brand image is critical to our future.
What are the physical characteristics of the new setup, does a particular feature that stand out?
There are a couple of required components. We incorporate, they call it the "dynamic slope." It's a black, screen-like material that lets light through, but it looks almost solid black from the road. The front of the building is squared off, and a triangular slope covers the corner of the building. Along with that is a prominent portal, I believe they call it, it's basically a black archway. It's inviting, it's easily recognizable as the main entrance, people aren't wandering around, wondering which way they should go. Inside is a reception desk, people are greeted properly. And it's relatively inexpensive, compared to some of the other manufacturers I've seen. They recognize the size of the dealership and are trying to do as much as they can for the investment.
What is Mitsubishi doing to direct dealers on the digital retailing front? Are there specific guidelines? What kind of help do dealers want from the automakers in this area?
If I had to pick one thing, that's one area where they are really aggressively engaging as the factory. They're rolling out a program for the dealers called MiDigitalSolutions. Basically, it's an all-encompassing digital solution.
You can pick from five different digital vendors. They're pre-screened, and the best in the industry. Not only have they done all this homework upfront, but it is a digital solution in a box. And not only have they vetted these people, but they've made it 100 percent reimbursable, provided of course you choose from one of their approved vendors. There's a working dashboard to hold the dealers accountable.
It's a really cutting-edge program in my opinion. I'm excited, especially for the smaller guys who maybe weren't as digital savvy, this is a way you can pick from the best in the industry so there's no bad choice.
How are co-op advertising programs between the dealers and automakers changing in the digital marketing era? Are dealers increasingly open to giving up co-op money to go with a vendor different than that prescribed by the automaker?
Our co-op advertising program is very strong. We obviously generate some of our advertising based on our vehicle purchases, and some is generated off our sales. Mitsubishi recognizes we are a smaller player, and as a result they need to recognize the dealers need to maintain their advertising spend to build the awareness in their market, so they've consistently been strong.
Is it a typical setup where the factory contributes half, provided you follow the approved template, that sort of thing?
Yeah, what they typically pay is half, but with MiDigitalSolutions, to engage the dealer body, to get them in the digital system, they offer 100 percent, so it's a huge subsidy.
What qualifies, websites, banner advertising, social media, etc.?
That's correct. The only caveat is, you have to pick one of their endorsed companies for the spend. It's got to be a well-vetted company that handles it, because after all, you want to have legitimate offers with customers, and with the appropriate transparency.
How important are online reviews to dealers? Has Mitsubishi changed attitudes or requirements regarding online reviews and how they factor into dealership success?
It's part of the digital solutions, managing the online reviews. It's critical, absolutely. If there's one takeaway, it's Mitsubishi's emphasis on upping their digital game.
How are dealers managing affordability concerns on the new-car side? Have affordability concerns affected performance in the F&I office?
Our F&I numbers year-over-year are up. We do see a trend increasing for longer-term loans. But having said that, we really — in every segment we compete in — we are probably the biggest value statement in each category, so from an affordability standpoint, we're less affected than a lot of manufacturers.
Are you getting ready for electric vehicles? Is the factory helping dealers out with that, and how's customer demand for electric vehicles?
We were one of the first to bring electric vehicles (Mitsubishi Motors dropped the tiny, battery powered Mitsubishi i-MiEV for the 2018 model year), and also one of the first to bring a plug-in hybrid to market. We have offered the plug-in hybrid Outlander, which has won a lot of awards. It's not a volume seller. I think a lot of it is a function of gas prices, currently. When we see a spike in gas, we see an uptick on people gravitating to those models. Some of it is education with that vehicle, differentiating a plug-in hybrid from a conventional hybrid. But it's a great vehicle, sort of a showcase for Mitsubishi technology. I'd say we average one or two of those a month.
Are you missing anything in your lineup — like a pickup?
We still consistently have asked — dealers like myself are always asking — for a pickup. We just have to be careful what we ask for. If we get a pickup, then it becomes, what sort of a pickup do you want? The full-size pickup market is incredibly competitive, and if you want to go there you need to bring your "A" game. So, if not a full-size then something less than full-size? There's been a lot more entrants in the segment, too, as you're aware. I think it's something they're looking at, but no decisions.
