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August 2008 - Strategy Magazine
Biz

Word from the corner office: Mitsubishi
Muscle cars

by Mary Dickie and Gariné Tcholakian
page 12

The Canadian auto market isn't known for lots of movement, so when a company goes from non-existent to noteworthy in a couple of years, it's worth finding out what's revving its engines.

Seven years ago, Mitsubishi Motors didn't even exist in Canada. The Japanese autoco has been operating in the U.S. for two decades, but only made its way into the Canadian market in 2002. At first, it blended in quietly, with modest sales of vehicles that didn't really stand out in a crowded marketplace. But things are changing. In mid-2007, Mississauga, Ont.-based Mitsubishi Motor Sales of Canada Inc. (MMSCAN) reported year-to-date sales up nearly 40%, and the growth is continuing this year, with June 2008 sales up 20% over last June - sales of the Lancer are up a whopping 64% over the same period - and year-to-date sales up 18%.

"Mitsubishi went from one of the worst performers in 2004 to leading the industry with 53% growth over last year [2006-07]," says Larry Futers, who was recently director of marketing at Mitsubishi and is now VP at Infield Marketing, which works with Mitsubishi on current programs.

That's pretty impressive for a newcomer in a market where manufacturers fight over every bit of share and have introduced more cars over the past two years than ever before - and where skyrocketing gas prices and dollar fluctuations are compounding those pressures.

In some ways high fuel prices are actually working in Mitsubishi's favour, as consumers abandon gas guzzlers for more fuel-efficient models like Mitsubishi's Galant and Lancer. Further assistance came in 2005, when the company's Tokyo head office changed its management structure so that Mitsubishi Canada now reports directly to Japan instead of going through the U.S. That was, according to Futers, "one of the single best things that happened to the organization." Under the new system, Japan no longer receives reports based on U.S. market interests like pickup trucks and SUVs. Instead, they favour the fuel-efficient models the Canadian market wants. "What that provided to Mitsubishi Canada was freedom - the ability to stand on its own two feet," says Futers, who helped develop Mitsubishi Canada's "Go Far" tagline.

In 2006 Mitsubishi brought in former Europe CEO Koji Soga - who has spent nearly 40 years with the company in various roles, including product planning and corporate responsibility - as president and CEO of Mitsubishi Canada. Soga's mission is to meet his division's needs, whether that means a parts distribution centre, funding or market-appropriate products, and help it liaise more easily with Japan.

Under Soga, Mitsubishi's product portfolio has been realigned to Canadian sensibilities. The company currently sells seven models in the Canadian market: the Outlander and Endeavor SUVs, Galant sport sedan, Lancer sedan, Lancer Evolution sports sedan and Eclipse coupe and Spyder.

In order to compete with similar models made by Toyota and Honda, Mitsubishi Canada introduced a new price point that made its cars five to 10% less expensive than their competition. It also launched the industry's best warranty program (a five-year or 100,000-km bumper-to-bumper, plus a 10-year or 160,000-km limited powertrain warranty and a five-year roadside assistance plan) to demonstrate its confidence in its products.

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