April 28^th, 2004

Mitsubishi Endeavors to sell, 'Galant' in the face of adversity

Our three-pronged strategy for the three-pronged Diamond

Mitsubishi Galant IX (2004). More than five million Galants have been built since the car's introduction in 1969. Though never a style leader, the line has generally exhibited pleasing, often aggressive looks and could rarely have been accused of falling prey to passing fads. In 2002, Mitsubishi Galant sales totaled 97,343, compared to Camry’s 434,145; Accord’s 398,980; Taurus’ 332,690, and Altima’s 201,822. Part of Galant’s problem has been its size. Preferring to remain more compact than the Camcord has not played into the value this segment offers. The Galant has always driven well enough but – let’s face it – the average Camcord buyer pores over packaging more than passive rear steer. For 2004, then, the Galant is larger. The platform’s rigidity has been upgraded, and - in GTS form - is remarkably nimble for its weight and ride. This is a driver’s car, with heated seat switches for both front seats over on the driver’s side. The LCD is pointlessly small; the four-speed automatic transmission is not backlit; the rear seat does not split-fold, and expect no dual-zone climate controls, no navigation system, and no power adjustable pedals. Two engines power the Galant; a 2.4-liter, 160hp @ 5,500rpm, 157hp @ 4,000rpm, 4-cylinder starting from $17,997, and a 3.8-liter, 230hp @ 5,250rpm, 250lb-ft @ 4,000rpm 6-cylinder which tops out at $26,572

Mitsubishi Galant VIII (1996-2003). This outgoing Galant even prompted CAR to refer to Mitsubishi as a "Japanese BMW of sorts" in the late '90s and, indeed, the wedge profile of the eighth-generation car was somewhat reminiscent of that Bavarian manufacturer's trademark visual aggression

Mitsubishi Galant VII (1992-1995)

Mitsubishi Galant VI (1987-1991)

Mitsubishi Galant V (1983-1986)

Mitsubishi Galant IV (1981-1982)

Mitsubishi Galant III (1976-1980)

Mitsubishi Galant II (1973-1975)

Mitsubishi Galant I (1969-1972)

Mitsubishi has been present in the American market since 1971, as the Dodge Colt. In 1976, Plymouth brought in the Arrow, with the Sapporo (Dodge Challenger) following in 1978.

However, the Mitsubishi nameplate - which translates to three diamonds - itself did not appear until the 1983 model year.

Seventeen years later, in 2000, the company managed the sale of 314,417 units - not bad for a late (in peripheral terms, at least) entry with a quadra-syllabic name!

With the announcement last Thursday, April 22^nd that DaimlerChrysler is pulling out of a plan to save Mitsubishi Motors, the fourth-largest Japanese automotive company suddenly finds itself in greater trouble than the recognition of its name might suggest.

DCX, having held Mitsubishi stock for more than three years, had intended to sell its 10% stake in Hyundai to assist the Japanese automaker in its recovery.

However, that stake was worth $1 billion. Mitsubishi Motors had been planning to present a restructuring plan on April 30^th, at which point it was - according to Reuters - to request $6.39 billion in bailout money.

That's $1 billion more, for those counting, than that which Renault dropped into Nissan.

Mitsubishi Motors lost $700 million in the last twelve months, after posting approximately $350 million in profit for the 2002 fiscal year. Why DaimlerChrysler, which holds - if now temporarily - a 41% stake in Mitsubishi Motors allowed the company to pursue a zero-financing plan even as DCX officials have been trying arduously to prevent Chrysler from doing the same is anyone's guess.

After the horrors of advertising based largely on zero-percent financing, what does a Mitsubishi stand for now?

Todd Turner of Car Concepts is not sure, telling Adweek that Kia and Hyundai sell comparable cars for less money, while Nissan, Honda, and Toyota offer better quality for the same amount.

Indeed, Mitsubishi's decision to attempt competition with the stalwarts of the market is reminiscent of American Motors Corporation's decision under Roy Abernethy to get rid of its stodgy, (George) Romney image and compete with the Big Three - a luxury the company could hardly afford (see Patrick Foster's excellent book, The Last Independent).

According to the company’s Deutsch ad agency, the recent Superbowl spot - cyber-parked at http://www.seewhathappens.com - is Mitsubishi’s best chance out of its predicament: enthusiasm.

We agree - and would ask the naysayers to pay close attention. As with our recent article on Isuzu (article), we cannot help but notice these doomsayers chanting, convinced that Japan's first - yet only unprofitable - automaker is headed for bankruptcy.

However, we must remind you that Mitsubishi sold 1.5 million vehicles worldwide in the fiscal 2003 year, and 273,000 of those on the American market.

This is not quite a company without hope, or merit.

Describing that merit places three questions into focus, each of which we hope to answer in this three-pronged article:

• 1. What is Mitsubishi's Primary Strength in the U.S? Answer: Younger Buyers
   

• 2. How has the company gone wayward?
  Answer: The Myth of Project America
   

• 3. How to go - in the short-term - from selling rebates, to selling the merits of the vehicles?
  Answer: Promote Galant/Endeavor

A new plan is expected within the next month.

In the meantime, this is the closest you might come to reading about one. We fervently hope theirs resembles ours, and - as always - we welcome your comments at thebear@automobear.com .

Primary Asset: Younger Buyers

Mitsubishi's greatest asset is its popularity with younger buyers. The average age of a Mitsubishi buyer is 38, almost ten years younger than that of the average Toyota buyer.

There are three reasons, we think, for this gravitation of younger buyers toward the brand:

• 1. the reliance of sport-minded models such as all three generations of Eclipse on the capable Galant platforms of the past, thus lending the mainstream sedan a certain savoir-faire amongst opinion-leading Sport Compacters,
   

• 2. the use of wedge-like styling which lent its Galant an aggression not unlike that of BMW,
   

• and 3. the in-crowd appeal of Mitsubishi as a small-town player with several unlikely hits on its hands.

The first point is virtually moot, with the new Galant having emerged while an older Eclipse - now stripped of its all-wheel-drive and turbos - sits on lots.

The second point - while charming in the mid to late-'90s - is rapidly becoming invalid. Olivier Boulay, who currently determines how Mitsubishis look, is determined to turn the company into a masthead for Japanese design. "It's not like there is an American or European version of a Sony digital camera. It's the same one everywhere," he told Australia's Wheels magazine this past January.

"Why not the same with cars? And that's what we're doing with the designs. There's nothing wrong with deciding to cultivate your own roots," affirmed Boulay.

Certainly not, sir. With the popularity of Japanese culture in America amongst younger car buyers, we see no reason for why Mitsubishi could not play on that culture's inherent simplicity and emphasis on modernity. After all, as Boulay suggested to Automobile, May 2004, "in Japanese culture, there is no desire to hang on to the past. It's maybe related to the religion - you're born, you live, you die." Despite the evidence of history and heritage which we may have found in 'The Few Remaining Secrets of the Sport Compact Crowd,' there remains an overt, peripheral psyche of looking forward in the Sport Compact market - which remains an opinion leader, especially for a company which might be looking to retain that crowd.

This would allow Mitsubishi to play on its second strength: a growing familial resemblance in its vehicles, courtesy Boulay's efforts.

The third point encourages Mitsubishi to grow its business through enthusiasm in the marketplace, rather than the overt attempt to attract Camcord buyers that the company has embarked upon in the last few years. Advertising the Galant on the basis of its dynamic superiority over the Camry, and the Endeavor as having more space than the Toyota Highlander, is only partly right.

No one - even Toyota's own Chief Executive of Sales Jim Press, whom we quoted in 'Bear in Review' as suggesting that "the core Camry customer really doesn't care if they can corner at 80 or 90mph - they corner at 60 or 70mph" - considers the Camry a paragon of dynamic accomplishment.

Enthusiasts who nonetheless enjoyed the Galant commercial have little need for the Endeavor's space.

This is Ron Zarella all over again; selling the major investment that a car purchase represents in the same way that one might sell an impulse buy, like toothpaste.

A unifying message is needed. The current efforts muddle the message of a brand that is visually undergoing a unifying transformation. Shout about that transformation!

There are, of course, short-term and long-term ways of correcting the problem.

The Myth Called Project America (and a long-term product-oriented plan)

Mitsubishi has launched a Project America program, in an attempt to appeal to older buyers even as the rest of the industry seems to be bending over itself to do the exact opposite!

Why? Better yet, why is the company publicly saying one thing, but privately plotting another? Adweek notes that, despite plans to adjust ad spending, total Mitsubishi outlay was down $20 million (to $30 million overall) through February 2004. If MMNA CEO Finbarr O’Neill has his way, expect to see some guerilla marketing from Mitsubishi, with the pitch itself changed: no more zero-percent financing - at least, not as a tagline.

Guerilla marketing is best targeted to younger buyers! If theorist Marshall McLuhan was right in suggesting that, "the medium is the message," then attracting the older, network television crowd with more targeted, guerilla marketing is not going to work.

Assuming that Mitsubishi is turning back toward its strengths, then, we have a few questions - and answers - to help along that decision.

Why is a company that created one of the most technologically endowed cars of its time - the 3000GT - allowing Mazda to steal its thunder?
Correction: install an MP3 jack in the standard Mitsubishi stereo, and bundle them across the line. On higher-end stereos, offer MP3 playback. Source a navigation system and place it within the current 'information' binnacle on higher-end models (and shade that binnacle so it does not disappear in sunlight). These are quick fixes, and eminently marketable. See further comments below for more substantial technological bragging rights.

We would also like to see the Galant GTS lightened, with select alloy panels. Galant's expansion has come at a price; weight is at 3,412 lbs., 200 more than the Camry and Hyundai Sonata; 300 over the Malibu, Altima, and Passat, and - astonishingly - almost 400 greater than the Accord and Mazda6.

Over time, offer 'GTS' versions across the models, featuring lighter weight and a manual transmission. A simplifying of the ranges, as described below, should make that feasible.

Where is the next Eclipse?
Correction: speed development of the Eclipse. It is unacceptable to have renewed a bread-and-butter sedan without the corresponding halo model. The 4-cylinder Eclipse is a non-MIVEC model, and the 6-cylinder uses the old 3.0-liter engine. Without that halo, Sport Compacters have no itching to discover what could be made of the Galant platform, and thus the opinion leader effect which has pulled Mitsubishi along for years is gone.

Why is the company that has won the Paris-Dakar rally several times left with just one all-wheel-drive car, while Subaru reaps the benefits?
Correction: place the Galant-based Endeavor's all-wheel-drive system in the next-generation, Galant-based Eclipse. The Endeavor setup is an old-fashioned, 50/50 split rather than the active system of the Evo, but - the Endeavor's mild transmission whine aside - it should be all the cheaper for it. We note that Audi did well enough with a similar system in the '80s.

Why is MIVEC available only on four-cylinder Mitsubishi engines?
Correction: place Mitsubishi's Valve Timing and Electronic lift Control system in the 3.8-liter V6, and promote both the 2.4-liter 4-cylinder and 3.8-liter 6-cylinder engines under the 'MIVEC' label. The money recouped by simplifying the range - removing the old 3.0-liter and 3.5-liter lumps - should pay for the development.

Why are there so few manual transmissions available in Mitsubishi's range?
Correction: place Lancer's manual transmission in its sister SUV, Endeavor. Similarly, drop it in the 4-cylinder Galant and Outlander. In the longer term, develop or source a manual which can cope with the torque of the 3.8-liter V6 - or use the existing manual out of the V6 Eclipse.

For marketing concerns, read on.

Promoting The New Generation: Galant and Endeavor

Galant currently trails the two-year-old Camry by 41% through the first quarter of 2004. Mitsubishi is hoping that, if you like the look of the Galant but want an SUV, the Endeavor might appeal. Yet Endeavor sells at around half of the Galant's volume.

Mitsubishi has had a hard time convincing customers that its bread & butter cars are worth money, preferring to concentrate on trucks and on the in-crowd Lancer Evolution. Indeed, the strategy – as far as the Pajero/ Montero have been concerned – has worked well enough in other markets. On the other hand, it has also meant that the American marketplace has rarely been encouraged to take a good, long, look at the Galant, a perennial also-ran in the midsize segment despite having been blessed with a good deal more enthusiasm than the Camcord number leaders.

In the short-term, the Galant midsize sedan and Endeavor SUV will figure heavily in any recovery.

It’s fitting, really; they both ride on the same platform; both are built in Mitsubishi's Normal, Illinois plant, and the pair represent the newest vehicles in the Japanese automaker’s stable.

Senior Vice President of Marketing Ian Beavis (formerly of Lincoln/ Mercury) recently characterized them as "highly styled with superior driving capabilities" (Adweek, April 12^th, 2004).

The question is, how does one tell people about it? How to go from selling rebates, to selling the merits of the vehicles?

Deutsch's renewed efforts will go a long way. It gives the younger crowd a reason to hang on, and will not only change the message from value to enthusiasm but, additionally, the medium. MMNA's media spending this year will, suggests Beavis, remain around $260 million, with less on network television; more on spot advertising, and a tripling of its print budget to more than $60 million.

Yet there is still no tagline to relate all Mitsubishi's models to each other.

Perhaps, the Art of Japanese Performance might work? Better yet, the Fine Cut of Evolution Perhaps more research is required here; but we submit that both of these are better than the current, wake up and drive, which packs neither the subtlety nor the intricacy required for the task of revitalizing Mitsubishi. This is a pity, considering that the company-with-the-diamond-logo has both a rich history of four-wheel-drive performance, and an announced intention (see Boulay's comments, above) to look forward.

O'Neill has cited difficulty in balancing the budget between the Lancer, on one hand, and the Galant/ Endeavor on the other - which only further demonstrates Mitsubishi's financial peril.

Yet it also explains the importance of the two new models...

... which is why we think they should spearhead the new Mitsubishi ad campaign.

"Influenced by American sedans in its size; Japanese sedans in its execution, but high-end European sedans in both form and proportion," is how Mitsubishi presents the ninth generation of Galant, larger and more deliberately styled than most of its predecessors.

What is especially enthusiastic about the Galant and Endeavor?

Not the aural quality, which is particularly poor in the 4-cylinder. One would have thought that a manufacturer of turbos (not so long ago) would have come up with a better sound.

Not the coordination of the interior; the planks of simulated sand-colored wood color-match the vinyl in the interior, but the console is hard-feeling and the chrome-colored buttons contrast with the rest of the dash. It feels almost like the money ran out after the console; then again, we’re not dash-fondlers. Afterthoughts aside, it all fits together well enough. There’s no real surprise and delight, though; red needles and blue gauges are passé.

The ride/ handling compromise of both, however, is excellent. Promoting the Galant GTS as a sports sedan is not entirely accurate but - more importantly - it virtually sells out lower models that have achieved a certain straight-line gait once the sole property of the roly-poly French. With the supple leather interior, the Galant in particular, out of the Galant/ Endeavor pair, manages a level of ride comfort that belies its minimal roll.

There is a golden opportunity here to advertise the dynamic achievement this represents. A Diamond in the Rough campaign, perhaps, with an Endeavor driving over a rough road, its occupants unperturbed, alongside a Galant? Use your imagination, Mitsubishi!

Together with the performance of the 6-cylinder (which manages a 7.2 second run to 60mph from rest, and a mid-15 second 1/4 mile time) - which would no doubt be enhanced by a manual transmission - it represents something unique on the market.

Incidentally, Galant LS is our pick of the range, at $20,997. Checking the 'Diamond' package which - with its leather wrapped steering wheel - should be mandatory considering the poor quality of the standard steering plastic, and the side impact airbags, forces one to accept the sunroof package. Yet our choice of Galant still comes out at $23,709, a rather good value for something different in the Japanese midsize league.

That is essentially what we would like to see from Mitsubishi - something different in the Japanese midsize league, with spin-off specialist models such as the Eclipse and Evo. A confident, capable company could certainly do it - and Mitsubishi has the history, heritage, and following to pull it off.