380 sales: So far, so good

SALES of the Mitsubishi 380 sedan, which reached 1650 in November, are "about on track" with expectations and will begin to rise in the new year, the new managing director of Mitsubishi Motors Australia, Rob McEniry, said this week.

In his first press conference since taking over from Tom Phillips just over 30 days ago, Mr McEniry said that he expected 380 sales to reach 2500 a month, as planned, early in 2006.

He also vowed to avoid discounting the car by using the unique ability of the company’s Adelaide assembly operations to keep production in the plant in line with demand.

He said this would give Mitsubishi Australia a key advantage over carmakers such as Holden and Ford, which had over-produced this year and would be forced to continue to "distress sell" their 2005 cars while Mitsubishi was building to demand.

His key message to buyers was that Mitsubishi Australia would avoid destroying resale values by matching build rates to dealer orders.

Mr McEniry also said that while the 380 had been well received and was generating showroom traffic "the crunch comes with sales results".

"Our assessment of that is: so far, so good," he said.

He said that 380 sales achieved so far were within Mitsubishi’s launch expectations and that there was a danger that the expectations of others within the industry (on 380 sales) could "get out of hand".

He also commented that it always took longer for a new nameplate to get established in the market than a new model of an existing nameplate and that it would take time for the 380 to gain acceptance and to ramp up to the expected sales running rate.

Mr McEniry said that it took both the Mazda6 and the Ford Territory between six and nine months to achieve their running rates, although he did not expect the 380 to take that much time to meet sales targets.

He said the 380 was launched into "possibly the worst launch conditions for a new large car in 20 years" with rivals like Holden and Ford burdened with massive excess stocks brought on by "ego-driven" expectations of the market reaching one million units this year and "tardiness" in fixing their stock levels.

In spite of this he expected the strong interest in the 380 from fleets would translate into sales after the traditionally quiet December-January period in fleet sales.

He said that fleets and leasing companies would wait to buy 380s with 2006 compliance plates which would give Mitsubishi an advantage over Holden and Ford, both of which were still holding large stocks of cars with compliance plates dated from early in 2005.

"We are still very confident that we will reach our 2500 sales a month running rate early next year," he said.

Mr McEniry (left) said that the car market had peaked in September but this was masked by unprecedented discounting campaigns in October and November. He predicted that car sales in the first half of next year would be lower than in 2005.

But he said that Mitsubishi would not reduce the price of the 380 and nor would it dump large quantities into rentals and large fleets just to achieve sales targets because it was determined not to destroy residuals and the value proposition in the brand.

"I don’t mean we won’t be responsive to competitive actions, but our marketing activities will be structured to protect the lifecycle values for our customers," he said.

"We will certainly be a player in the market. We will not be standing out of the action. But we will do it in a structured, professional and sensible way that will preserve the value of the customers’ investments in the product and in our brand.

"There will not be rampant discounting," he said. "Our plan is to manage the things we have control over. That is the supply side.

"So the stated management policy of Mitsubishi is to align production to market demand rather than trying to force the market to maintain production levels.

"You could say that is a noble policy and you might ask what makes us think we can do that better than the other car-makers? "Quite simply, production flexibility has been the key deliverable in all the planning for the 380 project and Mitsubishi has a key competitive advantage (over Holden and Ford) in production flexibility and we intend to exercise it."