Market Insight: Mitsubishi on a mission

MITSUBISHI Motors Australia Limited has embarked on an ambitious mission to significantly increase sales and market share, having stumbled in 2012 after largely stagnating in recent years as its main rivals strengthened their position in the marketplace.

At the launch of the upgraded ASX mini-SUV and Lancer small car this week – his first media event in Australia – MMAL’s new CEO Mutsuhiro Oshikiri made the frank admission that the brand needed to change in order to survive, highlighting key issues such as outdated models and a general lack of value for money.

He also revealed that the company planned to increase its market share from six to eight per cent, which would represent a remarkable turnaround in sales of more than 30 per cent or nearly 20,000 new registrations a year to around 80,000 units.

To put this into context, Mitsubishi has not reached this level of sales since 1998, when it was entrenched in fourth position on the Australian sales charts behind Toyota, Holden and Ford, and was reaping the benefits of its big-selling Adelaide-built Magna.

It has also been more than eight years since the Japanese brand held down eight per cent of the new-vehicle market, sitting at around six per cent since 2004 with between 57,000 and 65,000 sales.

From top: Mitsubishi Outlander, ASX and Lancer EVO.

Mitsubishi managed to hang on to this level of market share during 2008 as it discontinued the Magna-replacing 380 sedan – and, with it, abandoned its Australian manufacturing operations – and has stuck to that mark until this year, despite sales falling in 2009 with the absence of a local hero before the new ASX and redesigned Challenger SUV brought it back up to around 60,000 the following year.

While its major rivals are enjoying growth in 2012, including Mazda (up 18.3 per cent), Nissan (+17.5), Hyundai (+5.4), Volkswagen (+29.2) and Subaru (+12.4) – not to mention Toyota (+26.2) and some key imported models from Ford and Holden – Mitsubishi sales are down 5.2 per cent year to date after plummeting 31.1 per cent last month compared to July 2011.

Last month’s decline sent Mitsubishi down to eighth on the local sales chart with just 4.0 per cent market share, and YTD it holds down seventh position with 34,567 sales and a 5.4 per cent share.

There are few models on the positive side of the ledger for Mitsubishi this year, those being ASX (up 18 per cent), Outlander (lineball at +1.6 per cent) and Triton 4x4 (+6.8 per cent), but the 4x2 version of the venerable ute has slipped 12.9 per cent.

Others in the red include the vital Lancer (down 17.4 per cent), Pajero (-6.1) and Challenger (-2.5), and no progress has been made with the outdated Express van (-28.3) and Colt light car (-36.4), which is all but out of steam ahead of the new Mirage due early next year.

The Mirage will be a crucial volume-selling model for Mitsubishi, as will the redesigned Outlander compact SUV also coming in 2013.

But much more will be required from existing nameplates and, potentially, new entrants for Mitsubishi to experience the strong growth Mr Oshikiri has targeted.

As he looks to change the culture and increase showroom traffic, Mr Oshikiri might consider the lack of representation in the increasingly strong medium-size car segment and the overall brand image of Mitsubishi, which has switched to a similar route as Honda in emphasising practical aspects such as economy over excitement-building, crowd-pulling values such as sports performance.

The company’s treasured rally heritage, the iconic Lancer Evolution and more affordable Ralliart-branded models appear to have taken a back seat to city living with its ASX and ultra-niche i-MiEV electric car, the latter having stimulated curiosity and won plenty of accolades, but few sales.

As speculation continues over whether Mitsubishi will kill off the Evo, Toyota has created an instant hit with the all-new 86 coupe developed with Subaru.

Hyundai has followed suit with a turbocharged Veloster now on sale and a string of high-performance models in the pipeline, while Mazda has committed to a new-generation MX-5 well in advance of its production.

Mitsubishi has also admitted to taking a low-tech approach with the new Mirage to cover mature and emerging markets in one hit when its rivals are moving in the opposite direction.

A thorough modernisation of current models is required, too, with Triton left to soldier on amid a bevy of new-generation rivals in the one-tonne utility market – some of which, like the Holden Colorado, are benefiting from massive advertising campaigns – while the Pajero and Challenger are in a similar situation among the mid-size SUVs.

Although it has fallen short in key segments such as light and medium cars and commercial vans, Mitsubishi has not stood still in terms of mainstream model upgrades and ownership incentives in areas such as warranty and servicing.

The road to eight per cent market share will be long and dependent on model-cycles, product development, major decisions on future segment representation in Australia and, not least of all, substantial investment in sales and marketing.

But the upfront and ambitious Mr Oshikiri could be the one who takes the diamond brand from a middle-of-the-road mainstream brand to one that is back in the hunt as a top-four contender and one of Australia’s most wanted.