OC-based automakers Mitsubishi Motors Sales of America and Hyundai Motors America are posting strong sales years and profits, completing turnarounds from money-losing years in 1997 and 1998.
Cypress-based Mitsubishi Motors Sales of America has sold 263,690 vehicles so far this year, up 28.1%, compared with the first 10 months in 1999. And though its October sales dropped 3.7% year-to-year, the October 1999 figure was a 36.6% improvement over 1998.
Among the top 10 automakers in sales, which had about 5% aggregate growth, Mitsubishi is No. 8 and ranks as the fastest-growing.
Last year, Mitsubishi sold 261,000 vehicles and set a goal to increase that to 300,000 auto sales this year. With two months left before the year ends, Mitsubishi is 37,000 cars away from the goal. In the last two months of 1999, Mitsubishi sold about 50,000 cars.
The company’s growth is credited to aggressive incentive programs, new advertising campaigns and a revamped distribution system.
The company is selling cars for no money down, 0% interest and delayed payments. The company consolidated its advertising into one account under Deutsch, which developed the “Wake Up and Drive” campaign for the automaker. And Mitsubishi streamlined its port-to-dealer distribution system, reducing the average time its cars sit on the docks from 161 days to 31 days.
The company also benefited from some reorganization by Pierre Gagnon, the two-year head of operations in the U.S. Gagnon has cut Mitsubishi’s workforce by 300 people, to 1,100, by consolidating and shutting down offices.
Mitsubishi’s growing sales are due to good products, good press and very aggressive incentives, said George Peterson, of the Auto Pacific Inc., a Santa Ana-based auto research firm.
In the past three years, the company has erased 1997’s $350 million in losses at the U.S. unit and replaced it with a $50 million profit last year.
But the company, along with almost all other automakers, also is being forced by the government into producing costly electric or hybrid vehicles. Under a mandate that was reaffirmed by the California Air Resources Board in September, 10% of Mitsubishi’s production vehicles for California must be hybrid or electric vehicles. Mitsubishi is in the second tier of manufacturers that has to comply with the regulation by 2003. The larger car companies face more stringent demands.
Meanwhile, Fountain Valley-based Hyundai Motors America is also on its way to strong year-end sales. The company has sold 50% more cars through October,209,012,than in 1999.
The sales increases at Hyundai and Mitsubishi are far above the industry average, which was 8.5% according to the monthly report by Rubin Postaer and Associates, but they have slowed somewhat in the past few months as the market has slowed down.
Hyundai attributes the growth to better-quality cars and its 10-year, 100,000-mile power-train warranty.
“When we have the warranty and the good cars, we start to get more things happening and that allows us to move cars,” said Mike Anson, a Hyundai spokesperson.
“There was a time when not all Hyundai dealers were profitable,” Anson said, noting that in 1998 only about 40% of Hyundai dealerships were profitable. With the new cars and sales package, 90% of Hyundai dealerships are profitable, Anson said.
Hyundai also entered the hot sport utility market with the introduction of the Santa Fe in the spring. It sold 2,849 of the sport utility vehicles through October.
Hyundai also just announced that it will be marketing a zero-emission version of the Santa Fe and selling it for fleet use in Hawaii. The company entered into an agreement with the state and Enova Systems, a Torrance-based designer and developer of electric, hybrid and fuel-cell propulsion systems, to put zero-emission vehicles in Hawaii. Enova supplied propulsion systems for Ford Motor Co.’s TH!NK city vehicle and is developing an all-electric tram system for the U.S. Department of Transportation for use at Honolulu International Airport. n
