Mitsubishi Calls Iacocca Promos Just Sour Grapes
The ambient temperature in this western Orange County city climbs a few degrees whenever Chrysler Corp. Chairman Lee A. Iacocca gives his new Japan-bashing speech.
The source of the extra heat is Richard Recchia, who starts steaming when Iacocca sounds off.
Recchia, a former Chrysler executive who left that company about the same time Iacocca joined it, is executive vice president and chief operating officer of Mitsubishi Motor Sales of America.
He is the top U.S.-born official at the company and, with President Kazue Naganuma, directs Mitsubishi’s explosive growth from offices in a block-long, black-glass national headquarters building that is part of Mitsubishi’s 21-acre campus on Katella Avenue.
Mitsubishi, for years an also-ran in the U.S. car market, had a remarkable 1989 with a 32.6% sales increase--the biggest gain of any full-line manufacturer in a year when overall sales were down 6%.
A big part of Mitsubishi’s success derives from the enthusiasm with which the car-buying public has embraced the company’s new generation of cars.
Ironically, its best-selling car, the Eclipse, is a sporty coupe built in Normal, Ill., by Diamond-Star Motors, a joint venture of Mitsubishi Motors Corp. of Japan and Japanese-car-bashing Iacocca’s Chrysler Corp.
What makes Recchia especially angry is that Chrysler on Thursday launched a national advertising campaign aimed at persuading American car buyers that its cars are better buys than cars with Japanese nameplates.
In the ads, and in a series of speeches he delivered around the country in February, Iacocca decries the U.S. consumer’s belief that American cars are inferior and complains that American car buyers prefer a Japanese name even when the car is identical to an American car.
Iacocca doesn’t name names, but what he is talking about is the dismal sales performance of the Plymouth Laser and Eagle Talon when stacked up against their identical twin--Mitsubishi’s Eclipse.
At first, the only difference in the cars was the wheel covers, the grille openings and the fact that half the models that rolled off the line got the Mitsubishi name and half were designated as Chrysler products.
Mitsubishi’s Eclipse sales, however, far outstripped the combined Plymouth and Eagle units’ sales of their versions--Mitsubishi dealers sold an average of 77 Eclipses apiece in 1989, compared with the Plymouth and Eagle dealers’ combined annual average of six sales each.
So in January, Chrysler introduced another difference--a $1,000 rebate on Lasers and Talons.
Recchia said that Mitsubishi doesn’t believe in rebates because they demean the product. “But we had to offer them on the Eclipse because Chrysler forced us to,” he said.
Mitsubishi halted the rebate program at the end of January “because our dealers sold so many that inventories were too low,” said Rick Lepley, the company’s vice president of sales.
Chrysler has extended its rebate program through March but has chopped the Laser and Talon rebates to $750.
Jim Hillson, senior analyst for Phase One Research, a Los Angeles advertising research firm, said Chrysler’s program is an example “of what is wrong with most auto advertising in the U.S.”
“Manufacturers,” he said, “are advertising price instead of product, and the consumer is being told it really doesn’t matter what he buys.”
Hillson said that Mitsubishi’s advertising, however, stresses product, equipment and performance and leaves it to the dealers to do the price-based ads.
“When the rebates are gone,” he said, “the car makers that pushed price aren’t going to have anything to say.”
To that, Recchia adds his observation that Mitsubishi’s 400 dealers weren’t outselling the 4,600 Plymouth and Eagle dealers just because people intentionally sought out a Japanese nameplate.
The cars and the manufacturers’ suggested retail prices are identical, he said.
“Iacocca is neglecting the fact that we just are doing a better marketing job, have created a better image for the Eclipse and our other cars and have put together a better distribution network of committed, enthusiastic dealers,” Recchia said.
Selling the Eclipse-Laser-Talon
Mitsubishi’s hottest selling model, the Eclipse, is built in an advanced technology factory in Normal, Ill., that is populated by nearly as many robots as people. The same assembly line, jointly owned by Chrysler Corp. and Mitsubishi Motors Corp. of Japan, also turns out Plymouth Lasers and Eagle Talons, which differ only slightly from the Eclipse. Yet the Eclipse has been outselling its siblings on a per-dealer basis by as much as 10 to 1.
Mitsubishi Motor Sales of America Owns 50% of Diamond-Star Motors Chrysler Corp. Owns f12% of Mitsubishi Motor Sales of America and 50% of Diamond-Star Motors “Two cars come off the same assembly line in the same assembly plant, the Japanese nameplate on one and the American nameplate on the other, and people prefer the Japanese version. That’s not right.”--Lee Iacocca
MITSUBISHI ECLIPSE U.S. dealers: 416 Total units sold in 1989: 32,018 Units per dealer: 77 PLYMOUTH LASER U.S. dealers: 3,068 Total units sold in 1989: 21,098 Units per dealer: 7 EAGLE TALON U.S. dealers: 1,524 Total units sold in 1989: 7,145 Units per dealer: 5
