Hans Greimel
Automotive News
December 14, 2009 - 12:01 am ET
TOKYO -- Yes, it has been a triumphant decade in the United States for most Japanese automakers, but there are two glaring exceptions.
Japanese share has shot up from 26 percent in 2000 to 40 percent this year. But Mitsubishi's market penetration dipped sharply in that period, and Suzuki has lost the momentum it had at mid-decade. To get back on track, the two laggards are adjusting their product lineups -- and taking different approaches.
Even as U.S. sales begin to stabilize, Mitsubishi and Suzuki keep tumbling. Each has underperformed a terrible market this year.
Mitsubishi is down 46 percent in 2009. Its U.S. market share has fallen from a high of 2.0 percent in 2002 to 0.5 percent so far this year.
Suzuki sales were off 55 percent through November, its share slipping to 0.4 percent from 0.7 percent for the first 11 months of 2008 .
Both are heading for a third year of operating losses in North America. Indeed, the success of new products arriving in the next 12 months may determine whether the two brands have a future in this country.
The haunting precedent is Isuzu, which let its U.S. lineup and market share wither until it became, in January 2009, the first big Japanese brand to quit the United States.
But for the time being, Mitsubishi and Suzuki still have deep roots in this country.
New models
The two companies are following different product strategies. Mitsubishi, oriented more toward SUVs and large sedans, wants to shrink with global small cars. Suzuki, noted for its small-car competence, is rolling out the Kizashi mid-sized sedan, a risky attempt to go upmarket.
Says Chris Richter, an auto analyst with CLSA Asia-Pacific Markets: "There are a lot of countries where their strategies fit, but unfortunately, the United States doesn't seem to be one of them."
Suzuki reached the long-sought sales milestone of 100,000 units in 2006. But since then it has lost three rebadged cars built by Daewoo, leaving big holes in Suzuki's lineup.
The Kizashi, which debuts this month, is seen as key to plugging them. The mid-sized sedan was designed to tackle the U.S. market.
But although it is priced against segment leaders such as the Toyota Camry and Honda Accord, it's smaller.
Toshihiro Suzuki, Suzuki Motor Corp.'s chief director of overseas sales, says the Kizashi isn't Suzuki's last chance. But he conceded that a flop would mean rethinking Suzuki's U.S. market position.
Mitsubishi is coming from the other end.
Its lineup is filled with slow-selling vehicles geared toward the United States, such as the Eclipse sporty car, Galant mid-sized car and Endeavor crossover. It wants to go small.
"Revitalization of the U.S. business is very important," Mitsubishi President Osamu Masuko says. "There are a lot of things we are considering, including the introduction of new vehicles."
The new product push starts next fall with U.S. arrival of a small crossover based on the Lancer platform. Mitsubishi follows that in 2012 with a small global car that also may come in a plug-in hybrid or all-electric version in 2013.
In the meantime, Mitsubishi's four-seat i-MiEV electric car is due in mid-2011.
The rollouts are meant to reposition Mitsubishi as a maker of fuel-efficient, gasoline-powered cars and electric and hybrid vehicles. A capital tie-up with PSA/Peugeot-Citroen, now being discussed, could bolster the makeover by injecting badly needed funds into the struggling automaker.
Commitment questions
Both Mitsubishi and Suzuki say they are committed to staying in the United States. But a big hurdle is simply getting on people's shopping lists, analysts say.
"The hardest problem is getting you to consider the car when no one you know drives one," says Kurt Sanger, an auto analyst with Deutsche Securities in Tokyo. "They are so small, they don't even have a brand image."
It is also clear that emerging markets, such as India, China and Russia, are taking priority for both companies.
Suzuki -- which sold a 20 percent stake of the company to Volkswagen AG last week -- has a head start against rivals in India and wants to keep it. Mitsubishi has more level footing in fast-growing markets where virtually all global players are just starting.
North America is by far the smallest global market for Mitsubishi. The region accounted for just 10 percent of worldwide sales of 445,000 vehicles in the fiscal first half, which ended Sept. 30.
At Suzuki, it's a similar picture. North America chipped in only 2 percent of total global sales of 1.04 million vehicles in the first half.
Last month Suzuki announced it was building a $220 million factory to assemble compact cars in Thailand. Two weeks later it abandoned its manufacturing center in North America: the CAMI joint venture with General Motors Co.
"Pulling out could be one of the easiest options," says Koji Endo, an auto analyst for Advanced Research Japan, noting that the growth markets for Mitsubishi and Suzuki are elsewhere. But for now, both remain entrenched in the United States.
Mitsubishi still has its factory in Normal, Ill., despite shrinking ranks of dealers. Suzuki's dealer count has fallen sharply as well. After growing from 341 dealers in 2000 to 460 last summer, Suzuki has lost nearly 100 dealers in the past year, including its top-three volume franchises.
If new products don't pull the two brands out of their American funk, they may have no choice but to refocus on other markets
