New Mitsubishi Boss Rich Gilligan Says Automaker Is Poised for a U.S. Comeback

NEW YORK March 24, 2005; John Porretto writing for the AP reported that For someone whose Japanese employer has been plagued by defect-coverup scandals at home and plunging U.S. sales, the new boss at Mitsubishi Motors North America is surprisingly upbeat.

The reason, says Rich Gilligan, tapped to run Mitsubishi's American arm in January, is that beneath all the financial and image problems lies a strong portfolio of vehicles that gets even beefier this year with a new pickup and other offerings.

"We haven't done a very good job of telling our story as well as we can and as well as we will," Gilligan said in an interview with The Associated Press at the New York International Auto Show.

During the show's media preview Thursday, Mitsubishi introduced a new high-performance compact sedan called the Lancer Evolution IX and touted two other vehicles coming to showrooms this year: the next-generation Eclipse coupe and the Raider mid-size pickup, Mitsubishi's first such offering since 1997.

The Eclipse is scheduled to go on sale in June, the Raider in October.

They'll join the lineup of a company that needs all the help it can get.

Poor business in the United States has contributed to Mitsubishi's problems at large, but it's only part of a troubled company. Tokyo-based Mitsubishi said last month that losses more than doubled to about $2 billion in the first nine months of its current fiscal year.

Business has suffered in the wake of the automaker's admissions last year that it had continued to hide auto defects to avert recalls, even though it had promised to end the cover-up when a similar scandal surfaced five years ago.

Gilligan, who worked at Ford Motor Co. for three decades and joined Mitsubishi on the U.S. manufacturing side in 1998, says the key to survival in North America is generating interest in vehicles, not in auto financing schemes that attracted high-risk buyers in the past and led to the company's decline.

Gilligan said the product-led push will begin in earnest in June with a new advertising campaign focused on the Eclipse, a sporty car long popular among the younger set.

"In the late '90s and early 2000, Mitsubishi was a `cool' car company," said Gilligan, 61, who replaced Finbarr O'Neill. O'Neill resigned after only 16 months to join supplier Reynolds & Reynolds.

"We got off track," he said. "We got enamored with volume and put a lot of focus on fleet sales, and that's risky. At the end of the day the product is king. The car has to be the star."

When Mitsubishi was selling 300,000-plus vehicles in the United States a few years ago -- versus 161,609 in 2004 -- 30 percent or more of those sales were to rental and other fleets, which had a negative effect on residual values and, in turn, on customer satisfaction.

Gilligan said the company's new target is roughly 10 percent fleet sales.

"You need enough to get exposure for your product, for people renting on vacation or on business travel, but not to the point where you put the business at risk," he said.

The company also has backed away from its former practice of touting zero-percent financing, requiring no money down and deferring payments for several months -- a lure for many young consumers who eventually were unable to make their payments.

Chuck Barber, an owner of Barber Bros. Mitsubishi in Orem, Utah, said he's also bullish on Mitsubishi's prospects, but he acknowledged that running his Mitsubishi store has been far more challenging than his other businesses that sell Chevrolets and Chryslers.

Like Gilligan, Barber said Mitsubishi's message to consumers became diluted in recent years instead of focusing on the core product, namely cars and sport utility vehicles.

In addition to the Eclipse and the entry-level Lancer, Mitsubishi's lineup includes its top-selling mid-size Galant sedan, which competes against models such as the popular Honda Accord and Toyota Camry.

The truck side includes two car-based SUVs, the Endeavor and Outlander, as well as the upcoming Raider, to be jointly built by DaimlerChrysler AG, the owner of a small stake in Mitsubishi.

"It's a matter of having the proper marketing message and getting it in front of the right people," Barber said. "This business has taken a lot of effort, but we feel like it's an effort that's going to pay off just around the corner."

For now, the results remain dismal. For the first two months of 2005, Mitsubishi's U.S. sales were down 43 percent from a year ago, according to Autodata Corp. They fell 37.3 percent in 2004, though the reduction in fleet business contributed to the fall.

In an effort to cut costs and better align supply with demand, Mitsubishi last year slashed more than 1,000 jobs at its only U.S. plant in Normal, Ill., trimming production as part of a worldwide revival plan.

Gilligan says the plant is key to the company's turnaround, but he acknowledged that sales must improve.

Mitsubishi's U.S. market share was 1 percent last year, compared with 12.2 percent for Toyota Motor Corp., 8.2 percent for Honda Motor Co., 5.8 percent for Nissan Motor Co. and 1.6 percent for Mazda Motor Corp.

Gilligan said he hopes to grow the company's share to closer to 2 percent in the next few years.

Jeff Brodoski, an automotive analyst at J.D. Power and Associates, said he expects Mitsubishi's U.S. business to rebound somewhat in 2006 and 2007, but he doubts it will ever reach the level of a few years ago when fleet sales were such a significant portion of volume.

"It's not that they had a downfall because of a lack of solid products," Brodoski said. "With a few more vehicles, they almost have to see sales go up."

Mitsubishi Motors Corp.: http://www.mitsubishi-motors.com/