Mitsubishi Motors North America Inc., despite a slim model lineup, is out to prove all the doubting Thomases wrong.
The Cypress-based automaker, once believed to be on track to follow Suzuki Motor Corp.’s exit from the U.S. market, has “achieved and exceeded” sales goals set for 2014 by its overseas parent, Mitsubishi Motors Corp., company officials said.
“Japanese hierarchy is paying really close attention to what is happening here,” said Alex Fedorak, the company’s public relations manager.
“They are committed to the U.S. market, and they’re saying, ‘OK, you guys can make it happen.’ And they know probably the biggest constraint we have is model lineup. Well, that’s coming, but that’s going to take a little while, so what we do in the interim … is critical—building a solid foundation of impassioned dealers, impassioned employees, and we are starting to get noticed again in the industry.”
Mitsubishi has been slowly recovering from an extended sales slump over the past couple of years that it attributed to the discontinuation of several models, including the Galant, the Eclipse and the Endeavor.
A recent seven-month streak of year-over-year sales increases is being fueled by the addition of the Mirage and by updating the Outlander, according to the company’s president and chief executive, Ryujiro Kobashi, who Mitsubishi brought on in March to lead the turnaround.
“I’m very happy with our sales progress,” he said. “The future is a bright one for Mitsubishi.”
Vehicles Sold
The automaker sold 58,365 vehicles in the first nine months of this year, a 29.8% increase over the same period last year. The new Outlander Sport model has accounted for 39% of vehicles sold to date, while the Mirage compact, Lancer sedan and Outlander crossover accounted for the rest of the sales.
Its September sales totaled 5,558 vehicles, a 38.9% increase over September 2013.
“There are a lot of things to be positive about at the company,” said Director of Marketing Francine Harsini. “There is a sense—you know, we are back.”
She attributed the steady sales growth to “us listening to dealers, listening to consumers,” as well as “getting back to basics,” such as investing in marketing and bringing in industry veterans, such as Kobashi, to spearhead the turnaround plan.
Harsini’s “listening to the dealers” remarks can be taken quite literally—Mitsubishi brought back its Retail Marketing Council, which is comprised of “feet-on-the-ground” dealer representatives who provide feedback on the automaker’s marketing campaigns and strategies.
“They have a voice, and instead of us telling them, ‘Here, make this work,’ they’re saying, ‘This is not working. You need to fix this,’ ” Fedorak said. “They are engaged in the making of the campaign, so they want to make it a success on their end. It took time to build that relationship. [Before], they’ve been getting into these conversations and nothing happens, but now they see that it’s working, that they are listened to.”
Kobashi played an “extremely important role” in this relationship-building process, he said.
“He’s got the passion, and dealers pick up on it. He’s a product guy at heart, and they like that. They feel like they are connecting not only to us here in Cypress, but that they are being heard in Tokyo.”
Dealers
Dealers, about 380 of them, are key to Mitsubishi’s progress.
“We need them to represent the brand in their local markets and to tell us what’s working and what’s not so we can adjust our strategies,” said Kobashi, who arrived in Cypress from a post as corporate general manager of the North America Office at Mitsubishi’s headquarters in Japan, where he coordinated operations for the U.S., Canada and Mexico markets.
His strategy for the Cypress office, which handles sales and marketing in the U.S., included creating “consistency in management philosophy by not making any radical changes, and by allowing the U.S. leadership team the opportunity to execute [its] sales and promotional plans,” he said.
Harsini said part of that process was a “brand audit,” or market study, that Mitsubishi completed two years ago that revealed the automaker had “some good awareness” in the marketplace but that the same could not be said for its vehicle models.
“We determined that we really need to stay focused on continuing to push the brand, plus the model,” she said. “In our communications, it’s important to say Mitsubishi Outlander, Mitsubishi Outlander Sport.”
‘Find Your Own Lane’
The audit also revealed that consumers who gravitate to the brand “are people who actually want to drive something a little bit different; they don’t want to drive vanilla,” Harsini said. “And that resonates in the brand positioning that we’ve aligned with, and our theme of ‘Find Your Own Lane.’ Consumers also recalled communications we did in the past, such as ‘spirited cars for spirited people.’ … So in the current Outlander Sport work, there is high energy, there is a sense of adventure, fun to drive, cars get you where you need to go, kind of wrapped up in that energetic feel with the music throughout the spot.”
She was referring to a new TV commercial created by Mitsubishi’s advertising agency of record, 180LA, that features a professional mountain biker executing a flip and was filmed through an Outlander Sport’s panoramic roof. The marketing strategy seems to be working—the model’s year-over-year sales are up 25% for a total of 23,152 vehicles sold during the first nine months of the year.
The company also relaunched its Mirage subcompact in October 2013, and the vehicle has more than doubled initial sales expectations of 600 units per month—it sold 1,340 vehicles in September for a year-to-date total of about 13,000.
“We are outselling Toyota Yaris, Scion, the top-selling vehicle in that segment,” Harsini said. “The three main selling points for that vehicle [are] the miles per gallon—which is 44 highway, 40 combined—as well as it has the [10-year/100,000-mile] warranty, and it’s priced to start under $13,000.”
The vehicle’s marketing push featured “a small car for a big life” slogan, she said.
It targeted two groups of consumers: “youthful buyers” at the entry level of the car-purchasing cycle who can later graduate into bigger Mitsubishi models as their life stages change; and “empty nesters” who are downsizing.
Mitsubishi increased its marketing spending from 2012 to 2013, according to Harsini.
New York-based Kantar Media estimates the automaker spent $42.2 million and $77.9 million those years on media buys, respectively.
The overall budget remained the same for this year, Harsini said.
A bigger advertising push appears to be paying dividends. Mirage and Outlander are bringing in sales, but the rest of the vehicle lineup is not holding up its end of the load.
Electric Vehicle, Lancer
The automaker sold 149 i-MiEVs—its subcompact electric vehicle—in the first nine months of the year, compared to 978 vehicles sold during the same time period last year. The 2014 model recently debuted at a price tag $6,000 less than the previous model, for a starting price of $22,995.
Mitsubishi’s Lancer sedan is lagging 22% behind its last year’s total of 15,420 vehicles. The high-performance version, EVO, will exit the market in December and reappear next summer in a five-speed, limited-edition run.
The company also aims to bolster its lineup with alternative-fuel vehicles.
“If we are going to do performance, we are committed to electric vehicles, and EVO in many ways represents older technology,” Fedorak said, citing stringent emission and safety regulations. “So rather than [continuing to invest] in the [EVO] model, Lancer is going to change eventually into something else.”
