Mitsubishi, Circuit City Part Ways

Mitsubishi Electronics America Inc. and the largest customer for its big-screen televisions are parting ways after 22 years.

Circuit City Stores Inc. said Friday that it is dropping all Mitsubishi products, including videocassette recorders and camcorders. The announcement followed a statement Thursday in which Mitsubishi Electronics, based in Cypress, said it had decided to stop distributing to new Circuit City stores in the Midwest to concentrate on smaller retailers that provide better service.

Circuit City, describing Mitsubishi as “a niche video supplier,” said its sales of Mitsubishi products have been “declining for some time” despite the overall growth of the chain. Mitsubishi’s big-screen televisions cost more than those of competitors, Circuit City said, and are less advanced.

“Mitsubishi has become increasingly uncompetitive in both price and technology with the other leading video brands we carry,” Richard L. Sharp, Circuit City’s president, said Friday. Mitsubishi products would have accounted for only 2% of Circuit City’s sales for 1994, he said.

Circuit City sold about $80 million in Mitsubishi equipment last year, Mitsubishi officials said, or about 12% of their company’s sales.

Jack Osborn, president of Mitsubishi’s Consumer Electronics Group subsidiary in Cypress, disputed Circuit City’s contention that Mitsubishi sets are less advanced and more costly.

He said that Mitsubishi products fall into the premium category and that sales personnel in independent, service-oriented stores will be better able to demonstrate them to customers. By dropping Circuit City, which is a discount retailer, Mitsubishi can concentrate on selling its high-end products through independent dealers, he said.

“We feel we will make up a significant portion of (the lost sales) with the remainder of our dealer base,” Osborn said, “and over the next two years we will adjust without any trouble.”

Mitsubishi Electronics said it expects no layoffs to result from the split with Circuit City. Mitsubishi employs about 500 people at factories in Orange County and has a sales and marketing staff of 1,100 nationwide, many of them based in Orange County.

Osborn said Mitsubishi accounted for 45% of all big-screen televisions sold in the United States last year, both direct-view and projection type.

Circuit City, based in Richmond, Va., has more than 250 stores and was the only national retailer that carried Mitsubishi products.