Mitsubishi Seeks to Bolster Identity

DETROIT November 17,2002 John Porretto writing for AP report that Pierre Gagnon is well aware how, not all that long ago, planning sessions at Mitsubishi's U.S. offices didn't start with Mitsubishi's plans at all.

"We'd sit in board rooms ... and say, 'What're Toyota, Honda and Nissan doing,' and gauge our strategy accordingly," Gagnon said in an interview. "We had to stop being a 'me, too' company. We had to take a different approach."

Now the chief executive officer of Mitsubishi Motors Corp.'s North American operation, Gagnon aims to get the fourth-largest Japanese automaker out of its competitors' shadows and enhancing an identity that has grown in recent years among younger drivers.

The challenge is to do so in a weak economy and at a time when its foreign counterparts -- such as Toyota, Honda, Nissan and Hyundai -- are adding new vehicles and manufacturing capacity in North America.

"We've seen a tremendous turnaround in various brands over the years," said Jim Hossack, a consultant with the automotive market research firm AutoPacific Inc. "Mitsubishi has some awfully aggressive objectives. Can it be done? Yes. But I don't mean to say it's going to be easy."

For Mitsubishi's North American division, which is based in Cypress, Calif., it's so far, so good.

Mitsubishi expects to post U.S. sales records for the fourth straight year in 2002, delivering about 350,000 vehicles. By 2007, as the company expands its dealer base in Canada and Mexico, it expects that number to grow to nearly 600,000.

The automaker's U.S. sales have risen 10 percent so far this year, while overall new car and truck demand is off 2.3 percent.

Still, while Asian automakers accounted for 34.7 percent of the U.S. market through September, Mitsubishi's share was only 1.8 percent, according to figures from R.L. Polk & Co.

Gagnon, 46, a soft-spoken Canadian with blue eyes and a boyish look, joined Mitsubishi in 1997 and advanced to president and chief operating officer of the company's U.S. sales and marketing arm.

When the Tokyo-based company, partially owned by DaimlerChrysler AG, announced in July it was consolidating its North American sales, manufacturing, finance and research and development units, it named Gagnon as CEO.

Gagnon said he was lured from General Motors Corp. five years ago by Mitsubishi's product but quickly realized the brand had little name recognition in the United States.

With new designs and savvy marketing -- and even a little input from his teenage daughter, Chantal -- Gagnon helped create a cooler, hipper image for Mitsubishi. The effort included television advertisements showing people singing catchy tunes by groups such as Barenaked Ladies while driving Eclipses and Galants.

The average Mitsubishi buyer is now about 38 years old -- tied for youngest in the industry with Volkswagen, according to Strategic Vision, a market research firm.

"What I like about the program is it's crisp and clean," said Jim Yelverton, a Mitsubishi dealer in Gulfport, Miss. "We're still selling cars to people who are 40 and 50, but it's a product that attracts the younger person and even the future customer who doesn't have his driver's license yet."

Mitsubishi, which has its only U.S. manufacturing plant in Normal, Ill., is scheduled to launch seven new products in North America by 2005, including the Lancer Evolution compact sedan and Endeavor mid-size SUV next year.

Gagnon acknowledges the many challenges, such as maintaining capacity while adding new products. He said the company is studying the issue, which could mean building a new manufacturing plant in North America.

There's also the uncertain economy and poor results for the company at home in Japan, where sales have plunged since the automaker admitted two years ago to systematically hiding car defects for more than 20 years.

"We're going to have some short-term hiccups. We're going to have some economic downturns," Gagnon said. "But we see a very healthy North America in the midterm and long-term."

The troubles in Tokyo aside, industry analyst Mike Wall said the new vehicles and new sales outlets in North America bode well for Mitsubishi's optimistic sales forecast.

The company began selling cars in Canada in September with 18 dealers, and it has 42 today. It expects that number to grow by 25 a year for the next four years. Mexican sales begin early next year.

"I think they'll find a welcome market as long as they keep their message out there," said Wall, who is with the automotive forecasting firm IRN Inc. in Grand Rapids.

Hossack said he doesn't consider capacity to be a major issue for Mitsubishi. He said their options include teaming up with DaimlerChrysler or simply building a new plant.

What he does see as a challenge is achieving such aggressive sales goals in the next few years.

"Everybody has grand plans for increased volume, and I guess I'm concerned about that a little," Hossack said. "Everybody I talk to says their sales are going way up. Chrysler says it. Ford says it. GM says it. Toyota says it. Hyundai says it. Somebody's going to be disappointed."