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Mitsubishi: One-track minded

Leading light: Tom Phillips with an artist's impression of the all-new Magna replacement. Digital image: Chris Harris/Norm Robinson.

Mitsubishi heralds its Magna replacement with Australia's best new-car warranty

1 Dec 2004

TEN months before the covers come off its vital Magna replacement, Mitsubishi Motors Australia has effectively started the car’s launch campaign by announcing the industry’s longest new-vehicle warranty.

While the five-year/130,000km ‘bumper-to-bumper’ warranty with a further five years and 30,000km on powertrain covers all new vehicles sold by MMAL from today (December 1), the initiative has been introduced with the Magna replacement very much in mind.

MMAL knows it has to build consumer confidence in the brand between now and next October’s launch of the car, codenamed PS41, or have no hope of selling its 30,000 per annum break-even figure.

Mitsubishi’s own research shows that 80 per cent of Australians think the company isn’t going to sell cars here, let alone survive long term as amanufacturer.

The warranty announcement is the first step in a campaign called ‘Best-Built Best-Backed Cars’ that is designed to regain Mitsubishi credibility, get it back on shopping lists and generate more floor traffic in dealerships.

"It is time for us to get on the front foot. It’s time for Mitsubishi Motors to come out fighting," MMAL president and CEO Tom Phillips declared this week.

"We are laying the foundations to try and put some confidence back in the market before we launch the new car. If we go through the next 10 months or so with the same attitude in the market, there is no way in the world we are going to be able to lift our volumes basically overnight to what we expect to be able to do with the new car.

"If we don’t get this right, if we don’t give people reasons to be coming into our dealerships and giving them confidence, (telling them) we are going to be here indefinitely regardless of whether we are manufacturing, then the new car will just not get off the ground."The bumper-to-bumper warranty is fully transferable but the powertrain warranty is restricted to the original owner. Mitsubishi previously offered a three-year/100,000km warranty like the other three local manufacturers.

Mr Phillips will be the face of the multi-faceted confidence-building campaign planned to run in its first phase through until March next year at a cost of around $9 million.

Included in that will be sneak previews of the replacement for the slow selling Magna. And from March, Mitsubishi is planning a BA Falcon-style rollout of the Magna replacement to the media.

Although based on the US-market Galant, PS41 has been substantially changed for Australia and total investment in its development (including plant re-development and the like) has been put at $600 million.

By the end of March, the car’s name should also have been decided, with a list of four currently in final research.

"We’re going to peel away the layers over the next 12 months and show Australians some of the exciting things that we are doing at Mitsubishi," Mr Phillips said.

"Over the past several months there is no doubt that things have been difficult. But I believe that from December 1 we will be in a position where we can come out fighting and start the process of returning Mitsubishi to a position of strength in the Australian marketplace."Mitsubishi is presenting the warranty move, which is similar to a North American initiative, as a highly symbolic but hopefully not too expensive signal that it is in Australia to stay.

"Our vehicles have an extremely good track record when it comes to reliability and longevity," Mr Phillips said.

"Our statistical projections clearly show this initiative is not going to be a significant cost burden for the company to carry."Mr Phillips conceded that an extended warranty would not alone quell consumer concern about MMAL’s future.

He said that was why the decision was taken to preview the new car and the investment surrounding it as well.

"We want to demonstrate what’s happening. It’s much more than a warranty program, it’s a corporate confidence program," he said.

"It will be a very broad program ... this is about telling people what Mitsubishi is as a company and will be."

Mitsu boss looks forward to happier times

MITSUBISHI Motors Australia boss Tom Phillips never beats about the bush, and his assessment of recent times is typically blunt.

"The past 12 months or so have certainly been the hardest in my life and I am looking forward to happier times in 2005," he said.

Mitsubishi sales in Australia (to the end of October) have slumped from 60,998 in 2003 to 46,586 this year, a drop of 23 per cent in a record market.

Leading the fall is the failure of the ageing and controversially styled Magnaand Verada, which has just been updated to TW/KW specification.

This year, the locally-manufactured double act has managed just 12,996 sales, compared to 16,744 YTD in 2003.

That’s a drop of more than 23 per cent despite pricing that has fallen as low as$26,990 for Magna special editions.

Such has been the paucity of demand that the Tonsley Park assembly plant hadtwo weeks off in July and since September has worked a four-day week, a regime that continues until Easter. There will also be an extended Christmas break.

Mitsubishi has had to apply for a special dispensation to continue to receive funding from the Federal Government’s Automotive Component and Investments Scheme.

ACIS cuts off at 30,000 local production per annum, but MMAL will build no morethan 24,000 cars total this year, including exports. The dispensation, pushed through by Industry Minister Ian Macfarlane, is worth $25 million to MMAL.

Of course, all that comes on top of Mitsubishi’s widely chronicled internationalstruggles triggered by the free credit offer in the US (which ended up killing off Magna/Diamante exports) and the recall scandal in Japan, which has sapped public confidence and dropped sales by virtually 50 per cent there.

The company is swimming in red ink, last month announcing its net loss nearlydoubled to Y146.16 billion in the six months to September and downgrading itsfull year earnings forecast.

The decision by DaimlerChrysler to back out of MMC rather than invest in anotherrevitalisation plan earlier this year brought new management from Mitsubishi Group to the company’s global headquarters.

As part of a rigorous restructure, they ordered the closure of the Lonsdale engine plant and foundry. That will be completed by next August with the loss of 600 jobs.

Twenty-eight expressions of interest had been received for Lonsdale when the tender period expired last week. More restructuring and cost-cutting is expected to be announced in December.

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