Moving In on Mazda : Auto industry: Mitsubishi's U.S. car sales exceeded Mazda's for the first time in January. Now the company is planning to introduce a 296-horsepower sports car next fall as part of a determined drive to hold on to its place among the top four Japanese auto importers.


Richard Recchia isn't brash enough to vow that it will occur every month, but the chief operating officer of Mitsubishi Motor Sales of America is determined to repeat January's sales triumph as often as possible.

That's when Mitsubishi's car sales in the United States surpassed Mazda's for the first time, propelling the U.S. automotive unit of the giant Mitsubishi conglomerate into fourth place among all Japanese car importers here.

To achieve his goal of establishing a permanent spot in the top four, Recchia, the company's top U.S. official, must make Mitsubishi--a name best known in the United States for televisions and stereos--into a nationally recognized automobile nameplate.

To do that, Mitsubishi must penetrate a thicket of competing domestic and foreign brands--more than 40 makes and nearly 300 models of cars and trucks are marketed in the United States--in a year that most industry experts expect to be a disappointing one for car sales.

Recchia is confident that a revitalized Mitsubishi can buck the trend.

And industry observers say that the company, a bit player for most of its seven years in the United States, is now well positioned for a major breakthrough. They say all the elements have finally come together and, for the first time, Mitsubishi Motor Sales has:

* A stable of hot models that have won numerous design and performance awards;

* Several potential bestsellers about to be introduced; * An expanding dealer network;

* A growing import allotment;

* A supply of U.S.-built cars;

* A beefed-up advertising budget that enables the company to conduct a national network television campaign.

Mitsubishi's new lineup is its strongest selling point.

The company is part of a conglomerate that includes several of Japan's largest aerospace and electronics firms. And drawing on that expertise, Mitsubishi Motor Corp.--the Japanese manufacturer that shares ownership of Mitsubishi Motor Sales with two other Mitsubishi companies--has developed some of the most technologically advanced, affordable production cars on the road today.

In the United States, Mitsubishi offers buyers of its top-of-the-line models features such as all-wheel drive and four-wheel steering; automatically adjusting suspension systems that the driver can set for different levels of stiffness, and turbocharged, high-performance engines.

Later this year, Mitsubishi will introduce the 3000-GT, its image flagship.

The low-slung sports coupe, with seating for two adults in the front and limited seating and storage space in the back, will offer--at the top of the line--a twin-turbocharged, 24-valve, V-6 engine that develops 296 horsepower and pushes the car to a topspeed of 160 m.p.h.

It will come with four-wheel steering, electronically controlled suspension, all-wheel drive, anti-lock brakes and a speed-sensitive aerodynamics package that automatically adjusts the front air dam and rear spoiler to increase high-speed stability.

And it will do all that for a price several thousand dollars less than the closest competition--Nissan's 300-ZX Turbo.

"Mitsubishi is taking off partly because it uses technology pretty well and provides a lot of value for the price," said George Peterson, president of AutoPacific Group, a Santa Ana-based automotive product-consulting firm.

Mitsubishi offers the value it does because of the Japanese philosophy of managing for market share rather than short-term profit, said John McElroy, editor of Automotive Industries magazine in Detroit.

"They are packing in more technology for the buck than their competition. I'd almost give them the nod for best engine technology anywhere," he and. "And it is working. You don't see a company chalking up the kind of sales increase Mitsubishi has had in the U.S. year after year without a strong word of mouth among buyers that it has something special."

Even without the 3000-GT, "Mitsubishi has come out with some awfully sweet automobiles in the last year," said Detroit-based analyst Arvid Jouppi of Keane Securities Co. in New York.

The lineup includes the Galant, a compact sports sedan that not only won Import Car of the Year honors from Motor Trend magazine in 1989 but was Car of the Year in Japan in 1988.

Mitsubishi's best-selling model last year was the Eclipse, built in Illinois at Diamond-Star Motors, a high-tech auto factory designed and equipped by Mitsubishi Motor Corp. and jointly owned with Chrysler Corp.

Chrysler gets half the cars produced by Diamond-Star--its share was 32,000 in 1989--and sells them as the Plymouth Laser and, through its Jeep-Eagle unit, as the high-end Eagle Talon.

Ironically, Mitsubishi, with 416 dealers, sold 32,018 Eclipses in 1989. Plymouth, with 3,068 dealers, sold 21,098 Lasers and Eagles and, with 1,524 dealers, sold 7,145 Talons for total Chrysler Corp. sales of 28,243 units, or less than one per dealer. Eagle didn't start selling the cars until the middle of the year, when the high-end turbocharged and all-wheel drive models started coming off the assembly line.

Chrysler enraged Mitsubishi officials in December by instituting and heavily advertising a $1,000 rebate on both the Laser and the Talon, which is available only in the two most expensive versions.

It was the first time that Mitsubishi had ever offered a rebate on a passenger car, he said, and the company stopped the rebate at the end of January--replacing it with a dealer incentive program that enables Mitsubishi dealers to continue matching Plymouth and Eagle dealers' prices but does not send out a signal to buyers that the maker is desperate to move its Eclipses.

For its part, Chrysler is still offering manufacturer's rebates on Lasers and Talons but has cut the amount to $750.

During January, with the rebate program in full swing, Plymouth's dealers sold 2,841 Lasers, and Eagle's sold 1,363 Talons--an average of less than one sale per dealer. Mitsubishi's 416 dealers sold 1,306 Eclipses, or about three per dealer.

The imbalance has help fueled a new ad campaign by Chrysler Corp. Chairman Lee A. Iacocca, who complains that Americans have an inferiority complex regarding Japanese autos.

But Mitsubishi claims that the stronger demand for Eclipses is a direct result of advertising campaigns sponsored by its national corporate and regional dealer association.

Chrysler also is cutting back its importing of Mitsubishi-made cars and trucks and the upshot is that Mitsubishi Motor Sales is getting a bigger slice of the passenger car import allocation and of the Diamond-Star production.

At full capacity, the highly automated Diamond-Star plant will churn out 240,000 cars a year. It will begin producing two-door Galants for Mitsubishi later this year and is capable of handling three different models at the same time, Recchia said.

The increased supply enabled the Mitsubishi company to meet an increased demand for its products last year by boosting sales to 150,476 cars and trucks, up 32.6% from 113,491 units in 1988.

That gain--largest of the year for any full-line auto company and bested only by Range Rover, which sold a total of 4,822 trucks all year for a 40.7% increase--came in a year when total auto sales in the United States fell by 5.9%.

And all of Mitsubishi's gain came from passenger car sales--its truck sales actually declined 11% to 38,707 units from 43,516 in 1988.

Including its Diamond-Star Eclipses and 15,000 Precis imported from South Korea's Hyundai Motors, Mitsubishi dealers sold 111,769 passenger cars in 1989.

The company boosted it market share to 1.03% of the total U.S. truck and car market, up from 0.73% in 1988. Only Nissan, Toyota and Honda posted bigger market share gains.

Although Mitsubishi has sold cars in the United States under its own nameplate since October, 1982, it initially took the conservative approach of letting Chrysler do the marketing, said Mike Nash, vice president of marketing for Mitsubishi Motor Sales.

So while Toyota, Honda, Nissan and Mazda have had two decades or more to build an image with American consumers, Mitsubishi-built cars and trucks were sold only as Chrysler products from 1970 through September, 1982.

The Plymouth Champ and Sapporo, Chrysler Conquest and Dodge Colt and Challenger were all Mitsubishi products. The Dodge and Plymouth Colt and Eagle Summit still are.

Mitsubishi decided to start its own dealer network, Jouppi said, because when Japanese cars caught on, "Mitsubishi was embarrassed among its peers in Japan because so few Mitsubishis were being sold by Chrysler."

Recchia, a former Chrysler executive who headed the joint Ferrari/Fiat U.S. distribution company from 1979 until recruited in mid-1981 to set up Mitsubishi Motor Sales, offers a slightly different explanation.

It was Chrysler's near bankruptcy and subsequent slump in sales, he said, that prompted Mitsubishi to set up its own U.S. operation.

In either case, the agreement ending Chrysler's exclusive right to market Mitsubishi cars and trucks in the United States went into effect in late 1982.

It brought Mitsubishi into the United States under its own name more than a decade after the other major Japanese auto firms.

And because Chrysler was already importing a large number of Mitsubishi cars, it left Mitsubishi with a tiny annual allotment under the voluntary import restraint pact.

The import constraints kept Mitsubishi so small that only in the last 18 months has it found the economy of scale necessary to support a national dealer network, Recchia said.

Initially, Mitsubishi was allowed to bring in only 30,000 cars a year, he said. Chrysler got the rest of the import allocation under its agreement with Mitsubishi Motors Corp., the actual manufacturer.

As late as 1986, Mitsubishi Motors was alloted only 55,000 cars--and, with only 140 dealers nationally, sold just under 49,500. Trucks are excused from the allocation and Mitsubishi sold 35,000 in 1986 for total vehicle sales of 84,421.

That same year, Chrysler sold 226,000 Mitsubishi-made cars and trucks.

But in 1987, things began changing.

Mitsubishi Motors, which owns 15% of Hyundai motors, which created an entire new market in the United States with its sub-$7,000 Excel in 1986, arranged for Mitsubishi Motor Sales to import up to 30,000 Excels each year.

The subcompact cars, sold as the Precis, enabled Mitsubishi Motor Sales to boost passenger car sales to 68,000 units in 1987, up from 49,500 a year earlier.

Then, in mid-1988, Mitsubishi replaced its shopworn Tredia and Cordia models--cars distinguished by unmelodious names and an undistinguished design that featured sharply creased, rectangular body panels at a time when the oval was coming into vogue.

"That was the start of the turnaround," Nash said. "We came out with the Galant and the Mirage in the spring of 1988, and a little later with the Montero," Mitsubishi's four-door sports utility vehicle.

The cars were the first ones built with input from Mitsubishi Motors Corp.'s U.S. design studio, located in the company's 21-acre national headquarters complex in Cypress.

To coincide with the launch of its new line, Mitsubishi Motor Sales had begun expanding the dealer network.

The company had 70 dealers in only 22 markets in the United States--mainly on the West and East coasts--when it started business in late 1982. By the beginning of 1987, it had 140 dealers in about 65 markets, and by mid-1988 there were about 225 dealers in 90 markets, still spread around the coastal perimeter of the country with little presence in the middle and northern states.

Although Mitsubishi intentionally maintains a small dealer network in the United States--only 416 at the end of 1989--that number represents a major expansion. More than than 150 dealers were added last year and about 100 more are to be signed up in 1990, Recchia said.

"The philosophy is to have relatively few dealers but support them so they have a high volume of sales," he explained.

Apparently, it works. The company ranked fourth of 30 auto makers in dealer satisfaction last year in a survey by Auto Age, a trade journal for auto dealers. Acura, Honda and Mercedes won the top three spots.

And Mitsubishi dealers who responded to the survey were unanimous in their belief that the value of their franchises would grow over the next five years. Only one other dealer group, those selling Honda's luxury Acura nameplate, were unanimous in believing that their franchises would increase in value.

Mitsubishi dealers' optimism is based in part on the company's intent to keep the dealer body small--only about 650 dealerships are planned.

But new products also have whipped up enthusiasm.

In addition to the 3000-GT, which won't sell in huge numbers but will create an image for the company--as the 300-ZX has for Nissan and the Corvette has for Chevrolet--Mitsubishi is bringing out a top-of-the-line Galant this fall, designated the Galant VR-4 and equipped with many of the technological features of the sports car. Chrysler's Dodge division will sell its own version of the 3000-GT as the Dodge Stealth.

To promote all of that, Mitsubishi has increased its U.S. corporate advertising budget to $100 million for 1990, up from $80 million in 1989. In addition, the company has a $21-million advertising budget to bolster dealer associations' regional advertising campaigns, Nash said.

Recchia is predicting 1990 sales of 185,000 cars and trucks, and the advertising budget works out to $540 for each vehicle. By comparison, Toyota--no slouch when it comes to spreading the word--will spend an average of $260 for each car it sells in the U.S.

"We are not going to try to displace Toyota" as the top Japanese car brand in the United States, Recchia said. "But we are going to build a strong product, a product image and a dealer network that will support 300,000 or more units a year."


The 3000 GT goes on sale in fall 1990. ESTIMATED BASE PRICE: $30,00. 0 TO 60 MPH: 5.4 seconds. SIZE: 97.2-in. wheelbase, 3,750 pounds. POWER: Twin-turbocharged, 24-valve, V-6 engine that devlops 296 horsepower. TECHNO HIGHLIGHTS: All-wheel drive, antilock brakes, four-wheel steering, computer-controlled * WHAT'S IN A NAME? Mitsubishi's Eclipse far outsells identical cars made in the same factory. The difference? The slow-sellers carry the Plymouth and Eagle brands. D7

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World