Mitsubishi pegs renewed U.S. hopes on hot CUV market
Despite shuttering its sole U.S. assembly plant, Mitsubishi Motors Corp. expects to continue growing domestic sales this year to more than 100,000 vehicles for the first time since 2007.
The Japanese automaker plans to do so by concentrating on crossover utility vehicles — the hottest segment in the U.S. — and vehicle electrification, according to Ken Konieczka, Mitsubishi Motors North America vice president of sales.
“The plan is simple: It’s all about product,” he said during a media event Thursday night in Detroit. “That’s what’s going to get us to the next levels in the U.S. market.”
Mitsubishi, which is not participating in next week’s 2016 North American International Auto Show, plans to launch five new or significantly redesigned vehicles through 2020: A MirageG4 sedan in early-summer 2016, followed by a redesigned Outlander PHEV shortly after; a new CUV in early-2018 based off last year’s eX concept; a bigger, new version of its Outlander in 2019; and a smaller Outlander Sport — it’s top-selling vehicle — in 2020.
“We’ve got a laser-like focus on CUVs right now, and we’re certainly committed to this direction,” he told The Detroit News after the presentation, declining to predict sales for 2020.
Mitsubishi, like all major automakers in the U.S., has benefited in recent years from a recovering auto industry driven by pent-up demand, low interest rates and positive economic factors. The company has recorded 22 consecutive months of year-over-year sales and expects to report its second-straight fiscal year profit for its North American operations later this year.
However, Mitsubishi isn’t where many thought it would be a little more than a decade ago, when the company represented 2 percent of the U.S. market and was selling more vehicles than South Korean automaker Kia Motors Corp. and Japanese counterpart Subaru — each represented about 3.5 percent of U.S. sales in 2015.
“They just haven’t progressed as quickly as most of their other competitors,” Kelley Blue Book senior analyst Akshay Anand said. “It was once a brand that had meaning behind it and there was passion behind their cars. And now, a couple of the segments they’ve tried haven’t been the biggest hits for them.”
After record sales in 2002, Mitsubishi experienced four years of heavy sales declines in the U.S. from which it is yet to recover.
The company’s largest sales drop was from 2002-05, when it experienced annual declines between 23 percent and 37 percent. Sales went from a record of more than 345,000 and 2 percent market share to less than 124,000 and 0.7 percent market share in 2005.
Edmunds.com senior analyst Jeremy Acevedo said Mitsubishi essentially lost its way after an alliance with DaimlerChrysler AG in 2000 before disbanding about six years later.
“They stated pumping out some really abysmal vehicles,” he said. “Reliability and everything went down the drain … it was a cost-cutting measure for Mitsubishi. After that, it’s just been a steep and very precipitous decline.
“I think every analyst you talk to thought they would have been out of the U.S. market years ago.”
Konieczka admits the company made “a lot of mistakes” in the 2000s, but feels the company is now on the right track.
“We were spread too thin,” he said. “We had too many models, we couldn’t align our resources properly … and frankly we kind of got a feeling we could become a bigger company. We learned a lot from that experience.”
While its North American operations were profitable in 2015, the company announced it would end North American production operations and shutter its only U.S. plant in Normal, Illinois, in November.
About 250 workers are continuing to work at the site making parts and supplies. Those operations are scheduled to cease by May.
Mitsubishi had worked for months with the United Auto Workers union to find an automotive company to buy the 2.4 million-square-foot plant. But they were unsuccessful — leaving its 1,230 employees, including 900 UAW members, without future work.
“We have given up looking for an automaker to buy the plant, but we are looking for possible buyers from other industries,” said Alex Fedorak, Mitsubishi Motors North America public relations manager.
The UAW did bargain a new contract last year with Mitsubishi that included an “exit plan until all production stopped” and full pensions for a majority of members, according to union officials.
“Prior to the bargaining we went through, only 8 percent could retire with full pensions. After we negotiated the severance package, 60 percent of our members can now retire with full pensions,” UAW Local 2488 Bargaining Chairman Roger Goodwin recently told the union’s Solidarity Magazine. “That’s a pretty big deal.”
Each UAW member also is entitled to a lump sum based on age and years of service. The average age in the plant is about 54 and 90 percent of them have been there between 26 to 28 years, according to the union.
The UAW International confirmed the benefits, and said officials are continuing to pursue other manufacturers to take over the plant.
Konieczka said he doesn’t believe closing the plant will affect the automaker’s U.S. plans or sales.
“We’ve really tried to do our best to support the community, support the dealer body and we’re still watching it very closely,” he said. "I don’t see that impacting our sales volume, and it certainly hasn’t at this point.”