Three years ago, Mitsubishi dealers had few options but to sit tight until Cypress-based Mitsubishi Motors North America Inc. sorted out its financial woes.
The wait is over.
The automaker, part of Japan’s Mitsubishi Motors Corp., has stemmed its slide and is growing again.
U.S. sales through November were up 13.3% from a year earlier to 123,089 vehicles, surpassing the company’s 118,558 autos sold here in all of 2006.
Something else that hasn’t happened in a while: Mitsubishi’s autos are creating a buzz.
At last month’s Los Angeles Auto Show, there were a lot of oohs and ahs for Mitsubishi’s 2008 Lancer Evolution due to hit dealerships at the start of next year.
Credit for the resurgence can be spread around.
Newer executives have put a renewed focus on dealers. And Mitsubishi has come out with autos that match the market. The automaker also is offering competitive,but not unsound,financing. It’s also gone after older, more financially secure drivers with sedans and sport utility vehicles.
Mitsubishi got hammered by bad auto loans a few years ago by offering easy credit to younger buyers, some of them not entirely creditworthy.
Today, Merrill Lynch & Co. and CenterOne Financial Services LLC take care of financing and paperwork for Mitsubishi Motors Credit of America Inc., the automaker’s loan arm.
The Cypress operation handles sales and marketing, financing, design and Western region parts and distribution. Mitsubishi employs about 550 workers locally.
The fourth largest Japanese automaker, Mitsubishi has improved its overall finances.
For the first half of the automaker’s fiscal year that began April 1, Mitsubishi reported $11.4 billion in sales, up 30% from a year earlier. It narrowed its loss to $49 million from about $140 million a year earlier.
“They’ve certainly stabilized themselves,” said Jack Nerad, industry analyst for auto industry tracker Kelley Blue Book in Irvine.
Keeping up the momentum is the challenge, Nerad said.
“It’s all about the current lineup and what’s coming,” he said. “It’s such a tough market.”
Mitsubishi got a boost when Hiroshi Harunari took over in early 2006 after the departure of Rick Gilligan. Harunari was co-chief executive with Gilligan, until Gilligan retired in mid-2006.
Gilligan had replaced the short-lived Finbarr O’Neill, who had worked miracles at Fountain Valley-based Hyundai Motor America Inc. and was enlisted to do the same at then-slumping Mitsubishi.
(O’Neill left Mitsubishi in early 2005 to join Ohio’s Reynolds and Reynolds Co., where he left as vice chairman in October, a year after the company’s acquisition by Houston-based Universal Computer Systems Inc., which kept the Reynolds and Reynolds name.)
Harunari, who started at Mitsubishi in Japan in 2000 and headed overseas operations before coming to Cypress, quickly made it his business to start listening and reassuring dealers. He visited nearly half of Mitsubishi’s 490-some dealers in two years.
Kuhnert’s Lineage
Harunari worked closely with Dan Kuhnert, then senior vice president of sales. Harunari promoted Kuhnert to executive vice president of sales and marketing this past summer. Their offices are across the hall from each other.
Kuhnert said he regards Harunari as a mentor.
Surely, Harunari also has learned from Kuhnert, a car guy down to his place of birth,Michigan,where the bulk of jobs for college graduates are in the auto business.
Kuhnert sums up the changes at Mitsubishi this way: “The dealer is our customer. Nothing happens for us until a dealer sells a car.”
It’s not rhetoric for Kuhnert. After spending four years at Ford Motor Co. and nine years at Volkswagen AG’s U.S. arm, Kuhnert scraped up enough money to buy a Mitsubishi dealership in Carlsbad.
After 10 years, he sold the dealership because he got an offer he said he couldn’t refuse.
“It rounded out my career,” he said. “You get an empathy for people selling your products.”
Kuhnert keeps in touch with dealers with monthly calls. He speaks to about 300 dealers who listen on the other end. He’ll start with a bit of humor and then gives them the lowdown, such as the plans for the next month and the previous month’s sales.
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Designer O’Connell with clay model: “Small is the new cool” |
Twice a year, he meets with dealers one on one.
That Kuhnert sold cars himself earned him credibility with dealers such as Rasool Rastgoo, chief executive of California Auto Dealer Corp., which owns two Mitsubishi dealers, one in Anaheim and the other in Puente Hills.
“He has a serious dealer background,” Rastgoo said. “He knows what the dealer wants.”
Rastgoo also met with Harunari on his first day on the job.
Mitsubishi has listened to ideas that he’s put forth, Rastgoo said. He successfully pitched the idea of getting advertising money for putting up photos of the autos on the windows of his dealership. That wouldn’t have happened before, he said.
Rastgoo said he’s optimistic about Mitsubishi, which earlier this decade faced doubts about if it would survive in the U.S.
New Cars
Hitting showrooms this month: The 2008 Outlander, a smaller SUV with four cylinders for better gas mileage.
The Outlander originally came out as a six cylinder and has been the biggest seller for Mitsubishi. Through November, sales were up 136% from a year earlier.
The 2008 Lancer sedan also is due out soon. Its sales through November were up 61%.
Together, the Lancer and the Outlander have been Mitsubishi’s best selling autos.
Early next year, the 2008 Lancer Evolution is due.
The Evolution is a fast performance car with “twin clutch” technology. The driver still can shift but there is no clutch pedal, which makes it good in heavy traffic.
People are calling and asking about the Evolution, Rastgoo said. He’ll get five to sell to start, he said.
But the Evolution won’t sell in droves. Its bulked up performance and engineering aren’t really important to the ordinary auto buyer.
The Evolution is what’s called the “halo” car, a magnet that lures people to the Mitsubishi brand, Kuhnert said.
This year, Mitsubishi has outpaced the lackluster auto market, in part because of its bounce from its dark days.
But next year, sales are expected to fall in line (read: flat) with the slowing economy and still sluggish auto market.
Mitsubishi has several new auto ideas in the works. As consumers have become more demanding, a constant flow of new autos has become the lifeblood of the industry. Mitsubishi has some catching up to do, particularly in the small car segment.
It’s exploring the small car, or “B segment” auto, something similar to the Toyota Yaris or the Honda Fit. A D segment auto would rival the Toyota Camry. An A segment would be a Smart Car.
It’s also exploring cars that run on flexible fuels, such as ethanol, clean diesel and electric. In a studio in Cypress sits a CT concept car with an electric motor in the wheels, technology that has yet to be proven.
Kuhnert said interest in the environment isn’t just a fad.
“People in general have to be more environmentally conscious,” he said.
A clean diesel auto, which puts out less smog, is launching first in Europe in 2009. The engine, which has been outsourced in the past, will be a Mitsubishi-made engine.
Design Studio
In the design studio, Dave O’Connell, chief U.S. designer overseeing a crew of 25, tests production cars,those expected to be sold in the U.S.,and new concepts (ideas that might become a production car). He and his team also modify autos sold elsewhere, say Japan, for possible sales in the U.S.
The studio competes for design jobs with Mitsubishi’s handful of other studios in Japan and Germany. The Galant, a midsize car, and the sporty Eclipse both were designed at the local studio. The Galant is exported to seven countries and is big in Russia. The Eclipse is just for the U.S. market.
The studio designs vehicles using computers and by making life-size clay sculptures.
Concept autos no longer are lofty creations at Mitsubishi, O’Connell said. The concepts have to be closer to reality because production times are shorter, he said.
In the design studio’s courtyard, there are a number of autos to study. All are brought to the courtyard so they can be viewed in the sunlight, O’Connell said. He’ll also test drive them down Pacific Coast Highway.
There is a small electric car, sold in Japan, which has an engine in the middle of the car, and a Colt, similar in size to a Yaris, which is sold in Japan and Germany. The concept cX is being studied to be the U.S. version of the Colt, O’Connell said.
“Small is the new cool,” he said.
BMW’s Mini Cooper proved that a car could be small and stylish and profitable, according to O’Connell.
The studio also is designing a Hot Wheels toy car that Mattel Inc. will make.
