Mitsubishi Motors seeks salvation

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Mitsubishi motors North America, under new management since last September, is trying to overcome the sins of its past leadership. The marketer has a long and difficult road ahead, industry experts predict.

The Japanese automaker's North America arm, which handed out generous incentives under its former regime, is "going back to basics and building the brand," says Ian Beavis, senior VP-marketing at Mitsubishi since November. "We're a challenger brand, and people are going to know it. All of our advertising is directed at conquesting" owners from other brands.

Mitsubishi had become known in the U.S. as "the giveaway car" due to former management's easy credit and no payments for a year, says Todd Turner, president of consultancy CarConcepts. The brand lost equity when many of its cars were repossessed.

As part of the new strategy, recent ads from Interpublic Group of Cos.' Deutsch, Los Angeles, directly compare the redone 2004 Galant sedan to entries from two leading major Asian transplant competitors, the Toyota Camry and Honda Accord. Mitsubishi is trying to convey quality, value, performance and product packages in all its communications, which Mr. Beavis says he's integrating for the first time.

Armed with a bigger ad budget for the fiscal year that started April 1, Mr. Beavis is making a bigger push online, both to keep current owners and to attract conquests. The biggest spending jump will be in events and promotions rarely used in the past. Mitsubishi is considering a test-drive event tour, a tactic gaining in popularity in the industry.

Mitsubishi spent $275 million in measured media last year, down 2.1% from 2002, says TNS Media Intelligence/CMR.

SUPER BOWL CLIFFHANGER

The marketer's big online push started with a cliffhanger Super Bowl ad for the Galant that directed viewers to seewhathappens.com. The TV spot continued to run sporadically in the first quarter of 2004 and will be succeeded by other executions.

"We know what TV programs do best" to drive traffic to the Web site, Mr. Beavis says. Although he declines to give specifics, consumers at seewhathappens.com show indications of buying intentions because of the time spent on the site and areas they visit, including dealer locators.

Mr. Beavis is working to increase buyer consideration, something he says the former regime didn't do. The former strategy was merely to create awareness, which worked. Mitsubishi now has 64% brand awareness, he says. But the brand has low consideration. CNW Marketing/Research reports the percentage of shoppers who put Mitsubishi on their list and bought one was 15.1% last year, tied with American Suzuki Motor Corp. Of the 35 auto brands CNW studied, only three had lower scores in 2003: Chrysler brand (13.9%), American Isuzu Motors (7.6%) and Oldsmobile (6.1%), which General Motors Corp. will eliminate after the 2004 model year.

Mitsubishi's first quarter 2004 sales dropped 18.9% from a year ago to 56,861 vehicles, but March alone was down only 2.8%.

Mitsubishi beefed up its powertrain warranty early this year to 10 years and 100,000 miles to convey product durability. The same tactic worked to improve sales at Hyundai Motor America after its 1998 introduction under the leadership of Finbarr O'Neill. He joined Mitsubishi in September as co-chairman and CEO.

The automaker's Japanese parent, Mitsubishi Motors Corp., said earlier this year it expected a loss of some $670 million for the fiscal year ended March 31, which would be its fourth loss in seven years. Later this month, the automaker is expected to get a cash infusion of $1 billion from Germany's DaimlerChrysler, which owns 37% of Mitsubishi.

Mr. Turner questions the wisdom of throwing more cash at a fix. "There's as much negative as positive imagery for the brand," he says, "and if that's the best you can say about Mitsubishi after 25 years, what are the odds that it will turn around in another five years or so?"

Mitsubishi says it's making progress.

"We've got a lot of work to do," Mr. Beavis admits. "We're not wasting time."

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