Mitsubishi in better shape than ever
BY MARTON PETTENDY | 2nd Oct 2009
More importantly, Mitsubishi Motors Australia Limited (MMAL) says its financial result in its first full year as a full-line importer will be the best in a decade, as new models and unprecedented customer loyalty and advocacy levels take effect.
The company expects to sell at least 55,000 vehicles this year, making 2009 the company’s worst result since 2006, when it sold just 54,175 vehicles, including 12,423 locally-built 380s.
Of course, the 2009 result also will be well down on Mitsubishi’s halcyon year of 1998, when it sold a record 84,142 vehicles, including almost 33,000 Magnas and more than 17,000 Lancers.
Mitsubishi will sell at least as many Lancers as that this year and although the brand’s total sales are almost 18 per cent down to August 2009 – even worse than the total industry’s 14 per cent decline year-to-date – its first full year without the 380 could have been much worse.
MMAL president and CEO Rob McEniry said at last week’s facelifted Outlander and Triton launch: “In terms of our total market forecast year on year you’ve probably heard us talking about 820,000.
“In the second half of the year we thought (it would be) about 850,000 annualised. Our forecast for the market now is about 900,000.
“Our sales at the beginning of the year we set at about 50,000, based on what we saw at the beginning of the year for the market. That’s been revised to about 54,500 and to be honest our targets internally are a couple of thousand if not a bit more than that over that.
“Compared with last year when we got about 59,000 for our financial year (60,692 for calendar 2008, including 3272 380s), this year we’ll be about 1000 or 1500 off that number. So considering what’s been going on with the financial crisis, we think that’s a pretty good result if you take out about 3000 380s from that last year number.”Mr McEniry said new models in growth segments, such as the Challenger medium SUV and an all-new sub-Outlander compact SUV, would continue the company’s sustained incremental sales growth, while the continued decline of the large-car segment vindicated Mitsubishi’s decision to cease Australian manufacturing in March 2008.
“Importantly for us when you look at our product portfolio, our products are all in the growth segments of the market,” he said.
“Products we’ll be introducing over the next 12 months or so – Challenger and another one that you’ll hear about later on – will just reinforce our product spread in those growth segments, so that’s a good position for us.
“If you look at the segments in which we don’t compete, it’s pretty obvious what would be driving this (downward large-car sales) trend, so we consider ourselves somewhat fortunate that we’re not in those declining segment any more and we see that as an opportunity just for slow growth going forward.”MMAL announced in August that it turned around a $355.5 million loss in its fiscal year ending in March 2008 to a modest $1.0 million profit in its 2008-2009 financial year – its first profit since March 2002.
But Mr McEniry said significant restructuring of both MMAL and its dealer network since the 380’s demise had resulted in further substantial cost savings and profitability increases.
“We have been performing pretty well financially,” he said. “We’ve done a lot of work and major restructuring to eliminate costs from the company, including rationalising the product line in terms of models to get faster turnover of product and fresh product through the system, reducing inventories by $65 million.
“The organisation has been significantly right-sized and the dealer network has been strengthening over the last couple of years.
“In about the last three years we have turned over about 35 per cent of our dealer network. We’ve brought in new dealers and strengthened that markedly and we’ve see the results of that.
“Their profitability is very strong so the total mix is good from a business point of view. From a market point of view in particular we’re getting improved profitability, improved liquidity and improved net worth month on month, so we’re really starting to strengthen.
“Our financial position and our cash position – the total balance sheet including working capital, etc – is such that if we were a publicly listed company we’d be an ideal takeover target. So that’s a big shift from where we were, say, 10 years ago.”The local Mitsubishi chief said his company’s ‘Love that car’ brand campaign had paid big dividends in terms of customer satisfaction, loyalty, advocacy, purchasing intentions and sales.
“We’re introducing a very customer-centric culture and we’re getting a fantastic response to the branding strategy,” he said.
“I probably get about half a dozen letters every week from customers who receive our welcome pack, which is a very specific program to send every customer a welcome pack that has things like a cloth to polish the three diamonds on the front of their car and key-rings and that sort of stuff.
“The responses we get to that always include a quote in there about ‘Love that car’, or love my Lancer or love my Pajero. It has almost become a colloquialism, which is what we wanted it be, and it really does underscore the important elements of loyalty and pride in ownership.
“We’ve seen very positive signs over the past years in customer satisfaction levels going up, as well as loyalty, advocacy by word of mouth, and purchase consideration going up considerably.
“When you look at the intentions to buy (research) for Outlander and Triton they’re going through the roof at the moment, so even though that doesn’t necessarily translate 100 per cent into sales, what it tells us is people are getting to know the cars and be confident about the cars and put them on their shopping list – whereas five to 10 years ago they may not have been.
“There has been extremely good recall and awareness of our programs out in the marketplace.
“We’re about product, people and pride, and we think we’ve got a good foundation now as a business and with our product range to move quietly forward.”
