Mitsubishi Rescues US-Based Production… But For What?
Automotive News [sub] reports that Mitsubishi Motors North America has reached a deal with the workers of UAW Local 2488 to keep its assembly plant in Normal, Il open for the foreseeable future, building vehicles based on a new platform. Mitsubishi previously missed a deadline to assign new products to the Normal plant, forcing the firm to increase base wages there. With wages increasing and no new products in the offing, many have speculated that Mitsu would exit the US market, a move its CEO has strongly rejected. In fact, it now appears that Mitsubishi will cut back or abandon its European production rather than exit the US. But the new deal with its US labor force hasn’t shed any new light on how Mitsubishi will achieve its goal to quadruple sales… and until the firm announces new products for US production, this mystery will only deepen.
Though Mitsubishi hasn’t announced what new products will be assembled in Normal, the firm’s CEO does acknowledge that
from what we know at the moment, it is not possible to continue with the models that we have had
And he isn’t kidding. The Endeavor, Galant and Eclipse models that have been assembled in the US on Mitsu’s PS Platform (aka “Project America”) are dead in the water. The Normal plant could build some 240,000 units per year, but is set to produce only 27,000 units in 2010. Though Mitsubishi has tried to lower the Normal plant’s breakeven from 100k units to 70k units, low sales numbers of the aging PS-based products have put even that goal out of reach.
In fact, the products that Mitsubishi touts as the basis for a turnaround in the US are all built in Japan. The Outlander, its shortened sibling the Outlander Sport (known elsewhere as the ASX/RVR) and the MiEV are the only Mitsu products with any traction at all in the US. With the Yen hurting the value of Japanese exports, it is possible that Mitusbishi will elect to build the Outlander and Outlander Sport in Normal, possibly adding other GS-platform products such as the Lancer or even the Delica to the mix.
But is the platform that gave birth to the Chrysler Sebring going to cut it as the basis for a US-market turnaround? These products couldn’t do much worse than the larger PS-based Mitsubishi’s currently being built in Illinois, but as plans to quadruple sales go, this one seems to be lacking a certain something. If Mitsubishi is even remotely serious about the US market, it will probably have to roll out a new midsized platform to replace the moribund PS products. And if work on that new platform isn’t already well underway it will be too little too late. Because right now, Mitsubishi may have a US factory, but there’s still not even a hint of how it will actually be able to reverse its eight-year sales decline.
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I worked with Mitsubishi Motor Sales of America communications for 2 years. I think tparkit has it right. They're holding on to Normal for the production facility until the cavalry comes in. Who would that be? My guesses would be Mahindra or another Indian co., one of the Chinese, or Peugeot, in that order. No one else needs the capacity. The U.S. dealer network is their best asset -- very good, loyal and long-suffering despite all the ways that MMSA has stuck it to them over the years. I would think Subaru, VW or anyone else on an expansion quick should be talking to them.
That's quite unfortunate about the UAW situatio. I didn't follow the brand closely but I never understood why they did so poorly here. My family has had good experiences with (3 older) Mitsus. We still have a 2004 Montero Sport AWD with 90,000 on it that has been a terrific, reliable vehicle and still looks great. You still see a LOT of these trucks on the road which I've found to almost always be a good sign regarding longevity. None of their current stuff really stands out to me but the same could be said for a lot of brands.