LexFather

http://www.bloomberg.com/apps/news?p...d=a0E3j.8n71UQ

Suzuki, Mitsubishi Urged to ‘Forget America’ as Sales Slump
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By Kiyori Ueno and Alan Ohnsman

July 10 (Bloomberg) -- Suzuki Motor Corp. and Mitsubishi Motors Corp., suffering from plunging U.S. sales and excess North American plant capacity, may have to quit the market after a quarter century.

Suzuki, Japan’s fourth-largest carmaker, reported a 78 percent drop in unit sales in June, pushing its first-half decline to 60 percent, the market’s worst. Mitsubishi is down 51 percent this year, and is stuck in a slump that began in 2003.

Both carmakers “should withdraw from the U.S.,” said Yuuki Sakurai, chief executive of Tokyo-based Fukoku Capital Management Inc., which oversees about $10 billion in Tokyo. “It’s time for them to decide whether they pay a high price to continue business there or stop the bleeding.”

Recession, joblessness and weak consumer confidence pushed U.S. auto sales to the lowest since 1976, bringing bankruptcies for General Motors Corp. and Chrysler LLC and a record loss at Toyota Motor Corp. Truckmaker Isuzu Motors Ltd., which halted U.S. consumer sales in January, is the only Japanese brand less familiar to carbuyers than Suzuki or Mitsubishi, according to industry analyst Alexander Edwards.

“Both are struggling with getting customers to initially even consider them,” said Edwards, head of auto research for San Diego-based Strategic Vision Inc.

Currently, they rank in the “bottom five” of 35 brands Strategic Vision tracks, he said. To reverse that, both need to boost their U.S. marketing budgets, Edwards said.

“We’re not talking about a one-time investment, but a consistent, sustained effort,” he said. “If they’re looking for a quick fix, continuing in the market will be tough.”

‘Never Give Up’

“We will never give up the U.S. market,” Mitsubishi Motors President Osamu Masuko said on July 9 in Tokyo. “The U.S. will return to being the world’s biggest market.”

Masuko also said the company isn’t pursuing alliances with other carmakers in the U.S. or planning to use its Illinois factory to supply vehicles to other brands.

Mitsubishi Motors had a 23.6 billion yen fiscal loss in North America last year, equal to 43 percent of its global loss of 54.9 billion yen. Suzuki had a 24.1 billion yen ($258 million) loss in North America in the fiscal year that ended in March, the only unprofitable region for the Hamamatsu Japan- based company, which earned 27.4 billion yen worldwide.

Suzuki sold 84,865 vehicles in the U.S. last year, a 17 percent drop. Mitsubishi sold 97,257 vehicles, down 25 percent.




Plunging Production

Production at Mitsubishi’s Normal, Illinois, plant, has plunged 83 percent so far this year, according to Automotive News data.

Tokyo-based Mitsubishi is now using just 10 percent of the plant’s capacity and may shut it down this year, said CSM Worldwide analyst Masatoshi Nishimoto.

Mitsubishi “doesn’t make cars that are hot-sellers in the U.S.,” said Nishimoto, who is based in Tokyo.

Fumio Nishizaki, a Tokyo-based spokesman for Mitsubishi Motors, said the company isn’t planning to close the Illinois plant. Mitsubishi hasn’t announced replacements or additions to its current lineup of midsize and compact cars and SUVs in more than a year. The company hopes to sell the i-MiEV electric car in the U.S. by 2010, after introducing the model in Japan this month.

The car travels 160 kilometers (100 miles) when its lithium-ion batteries are fully charged, and is priced at 4.6 million yen, or about $49,000.

CSM forecasts global demand for electric cars won’t exceed 100,000 units until 2014, suggesting U.S. sales of a limited range mini-vehicle such as i-MiEV may be small.

Design Studio

Mitsubishi in March shut its U.S. design studio to cut costs. In January, the company said the poor-selling Raider pickup truck, supplied by Chrysler, would be discontinued.

Suzuki, Japan’s second-largest minicar makers, said in March 2008 it would add a mid-size sedan designed for the U.S. by 2010, aiming to expand sales of more lucrative models. The car would compete with Toyota’s Camry and Honda’s Accord, the segment’s usual top-sellers.

The so-called Kizashi model is still in development, said Hideki Taguchi, a company spokesman. “Because of the current market situation, we’re reviewing the plan as to where and when to sell,” he said.

Adding such a model in the U.S. is a challenge, given Suzuki’s specialty in smaller vehicles, said Yasuaki Iwamoto, an auto analyst at Okasan Securities Co. in Tokyo.

“It makes more sense for Suzuki to put its limited resources into small cars,” said Iwamoto. “Forget about America.”

LexFather

Well MMarshall and I called this one a long time ago....its sad but their sales have been horrid for years now

MPLexus301

iTrader: (3)

Agree. Time to go...years of offering sub-par cars will catch up with you at some point. The Evo is the only decent thing in either of their lineups, otherwise it's garbage.

mmarshall

Well, in Mitsubishi's case, so are a number of their vehicles. I wasn't very impressed with my recent Eclipse and Outlander reviews, and I know you weren't with your Gallant review either (the Lancer Ralliart, admittedly, was a little more impressive, but still cheap inside). The Evo, of course, is a niche-product cult-car, but its small but dedicated core group of supporters isn't going to support the entire corporation here in America. Its main purpose, of course, is competition for the Subaru STI (as the Ralliart is for the Subaru WRX). That competition, of course, will be gone, here in America, if Mitsu packs up and leaves.


Suzuki, in general, does a better job (especially with the SX-4, which I rated highly), although most of the rest of their passenger-car designs are actually done on Korean Daewoo platforms. Suzuki's main problem, though, it that it simply has no DEALERS left. They have some decent vehicles, but almost no place to sell them, even in my dealer-rich area here in Northern Virginia/ D.C. suburbs; the country's second-largest new-car market.

I8ABMR

No more evos ???? That would be horrible.

Vladi

Mitsu will not withdraw from US but they need to shut down its US plant and operation since Mitsu US products suck! Lancer and Outlander which are bread and butter for the company both come from Japan.

LexFather

^^ Yeah but they simply do not sell here and I don't see volume rising significantly unless they can come with class leading products and vehicles that actually beat Honda in the ugly category.

Both are gone. Its a shame but they cannot just come here only to continue to post losses for both companies.

IS-SV

I like most astute buyers had already forgotten these 2 brands. This economy should just finish them off.

nikko2jzge

Bring back the Diamante and 3000GT!

Lexmex

I watched Mitsubishi and Suzuki enter the Mexican market during my time there. Suzuki also suffered from the same problem as enumerated above by mmarshall, they had virtually no dealers, though I heard they have been improving on this, but with a sagging economy, tough to get your name in the picture.

Mitsubishi fared better and on some of their vehicles they get right in the mix in terms of price, but as more and more people learn about quality with regard to Japanese entrants, I feel they will be left behind as well.

LexFather

Bump for MM....

mmarshall

Thanks.


The Kizashi, though, still looks promising. I'm still going to review it if I get a chance. However, so did the SX-4, and Suzuki hasn't done much better since it came out. The number of dealerships in the D.C. area now, however, seems to be a little better than a year ago. One, fortunately, is now right on a subway line.

GS69

Mitsubishi has Plan to End the Skid

TOKYO -- Struggling to revive his dwindling U.S. business, Mitsubishi Motors President Osamu Masuko has outlined a two-pronged plan that hinges on introducing new products and building a new vehicle at an underused Illinois assembly plant.

Mitsubishi's sales have fallen off sharply since 2007, when the brand staged a one-year sales revival after four years of precipitous decline. But in an interview with Automotive News, Masuko gave no hint that he's ready to give up on the United States, even as the company focuses more on developing markets.

So far this year Mitsubishi has missed out on the overall U.S. industry's 17 percent sales increase. Mitsubishi's sales were flat at 26,490 units through June, and its market share shrank to 0.5 percent, from 0.6 percent. But Masuko said annual sales will end higher because of the launch this fall of the Outlander Sport.

"This is an important year," Masuko said. "We have strong expectations for the U.S. market."

Meanwhile, the company will decide by year end what model to add to its sole North American manufacturing outpost in Normal, Ill., Masuko said.

That factory had annual capacity for 240,000 vehicles when it was operated jointly by Mitsubishi and Chrysler. But Chrysler long ago pulled out, and the Japanese carmaker churned out just 18,501 vehicles there in 2009. It is on pace for 27,000 vehicles so far this year.

Masuko said trimming costs, partly through job cuts, brought the plant's breakeven point down to around 70,000 units a year, from 100,000. But it's still not close and needs more volume.

"It has been downsized to a certain extent," Masuko said.

"By the end of this year we would like to determine what vehicle we should produce that would come close to 100,000 units."

Mitsubishi has long struggled with an aging U.S. lineup of mid-sized and large vehicles.

The Illinois plant makes the Eclipse coupe, Eclipse Spyder, Galant sedan and Endeavor SUV. But its best-selling models, the Lancer sedan and Outlander SUV, are imported from Japan.

The top-selling model, the Lancer, had sales of only 10,387 units through June.

Such small volume makes it costly to retool to add another model, Masuko said.

Mitsubishi's dealer body has suffered greatly during a disastrous decade in the United States during which sales fell from a peak of 345,111 in 2002 to 53,986 in 2009.

The brand had 397 dealerships at the end of June 2010, down from 405 at the end of March 2010 and 420 at the end of March 2009

"Some dealers have left, but others have joined," Masuko said.

"The dealer organization has been revitalized."

Mitsubishi plans to unveil a global midterm business plan this year. Its last blueprint, dubbed Step-Up 2010, was unveiled in 2008 -- and was derailed by the global financial crisis.

Global Growth

Under the new plan, Mitsubishi aims to boost global sales 54 percent to 1.5 million vehicles in the fiscal year ending March 31, 2013.

For the fiscal year that ends March 31, 2011, Mitsubishi wants U.S. sales of 68,000 units, up from 54,000 last year.

The Outlander Sport small SUV that arrives this fall will help lift sales, Masuko said.

Mitsubishi expects to sell 7,000 Outlander Sports in North America between the fall launch and next March 31.

After that, it is counting on average annual volume of 17,000 units.

Also bound for U.S. showrooms are the i-MiEV electric vehicle, in November or December 2011, and Mitsubishi's new global small car. The latter arrives stateside by the end of 2012.

Masuko declined to give a U.S. volume target for the yet-to-be-named global small car. But he wants to sell 400,000 to 500,000 units a year globally, primarily in emerging markets.

"Americans like big vehicles," Masuko said. "But it is not always that case that big is good."

The global small car will get a three-cylinder, 1.0- to 1.2-liter engine.

The target price is around ¥1 million (about $11,300 at current exchange rates).

Mitsubishi plans to start building the car at a new factory in Thailand next year. Masuko is considering additional plants in China, India and Brazil.

The focus on developing countries underlines changing realities at Mitsubishi.

Long oriented toward SUVs and large sedans, the company now wants to shrink with smaller, fuel-efficient cars.

Instead of toiling on cars specially designed for developed markets, such as the Eclipse, it is pursuing world cars that have more universal appeal. Sales trends support the new priorities.

North America is by far the smallest market for Mitsubishi.

The region accounted for just 9 percent of the company's global unit sales in the fiscal year that ended March 31.

You can reach Hans Greimel at hgreimel@crain.com.

mmarshall

Automakers need to sell cars to stay in buisness. Laid-off autoworkers usually cannot afford to buy new cars, even at employee-discount prices. This is a issue that many automakers just can't seem to understand, as they lay people off like flies.

Automakers seem to want to have their cake and eat it, too. They want to cut costs by laying people off AND also see increased auto sales. Things, unfortunately, usually don't work out that way......what are these laid-off people going to use for money? You can't just wave a magic wand with layoffs.

mmarshall

Let the customers, and the free market, decide what is good and what isn't. What he is saying, under the rug (but won't admit it) is that he thinks that Americans are spoiled.

And Americans, to some extent, ARE turning to smaller and more fuel-efficient models. Mitsubuishi just doesn't have that many here in the U.S. (they do overseas)....nor do they sell any hybrids here in the U.S. either.

Mitsubishi, IMO, could also increase sales here in America if they started putting better materials and fit/finish into their cars. The last several Mitsubiushi products I've reviewed have showed some rather cheap materials, sloppy assembly, and so-so fit/finish. Nor were the road manners terribly good. The Evo, of course, one of the exceptions, is a blast to drive on smooth roads (with the ultra-stiff underpinnings, I do mean SMOOTH roads), and, of course, gives the Subaru STi some competition, but the company can't exist just on the appeal of one car....or the slightly detuned Lancer Ralliart.