Texas Mitsubishi Review

Houston, Texas, June 2007

Hard times are coming for the five smaller Japanese companies; Subaru, Mazda, Isuzu, Suzuki and Mitsubishi.

It's not that these companies make bad cars. They simply lack deep pockets to weather the perfect storm ahead.

Mitsubishi has declined due to a massive quality scandal; blatant defect cover ups and attendant lawsuits, a ban from the growing China market, and loss of consumer confidence in their products in the Japan home market.

Mitsubishi also dramatically lost US sales, especially following DaimlerChrysler's announcement that it would not invest further in ailing Mitsubishi and would sell its 37% share of the company.

In 2003 and 2004, 25% sales declines were observed.

The company needs cash for new products, but Mitsubishi, with $9 billion in debt, lacks the resources to invest in new vehicles. Even with a $4 billion bailout from Japan's "keiretsu" Mitsubishi Group, Mitsubishi's global production capacity must be cut 17% and 10k jobs lost. The goal was a return to profitability by the year ending March 31, 2007.

Market Position

With just .7% of the US market, sales have recently improved to around 124k vehicles annually.

The biggest mistake was using bottom feeding easy credit ripoff schemes to attract "subprime" buyers. High repossession rates and abandonments hurt resale value and brand image. This practice is increasingly untenable with tightening of lending standards following the 207 real estate debacle.

Quality Record

Mitsubishi Motors' single North American assembly plant, at Normal, IL, employs around 2,000 hourly workers. It builds the Eclipse coupe, Galant sedan, Endeavor SUV and Spyder convertible.

Consumer Reports recommends two Mitsus; Endeavor crossover and Galant sedan.

Quality ratings are well below average: JD Power has only 2 stars for mechanical on every Mitsu except Gallant, which garnered 4 stars.

Additional recalls plague the quality-scandal riddled company.

In the J.D. Power and Associates 2006 Customer Retention Study, Mitsubishis ranked 32nd out of 37 makes. Only 30.5% of those surveyed returned to purchase another vehicle.

Mitsubishi Dealer Network

Mitsubishi’s shrinking US dealer network numbers around 570.

U.S. dealers, moving about 38 new vehicles per month, have been forced to rely on sales of used cars and trucks to offset the decline in new vehicle deals.

Inventory levels are high: over 100 days' supply.

In 2007, an energetic new CEO has begun a turnaround, committing Mitsu to survival in the US market. He listens to dealers. Morale has improved, along with sales. It will be an uphill battle.