Eternal Underdog: Mitsubishi May Not Sell Enough Cars in the U.S. to Worry About Tariffs
While still an industrial giant on the global scene, Mitsubishi is a shadow of its former self in the United States. After leaning a bit too hard on its status as a value brand, annual deliveries went from about 346,000 units to just 58,000 between 2002 and 2012. Meaningful progress has been made since then, but the road to redemption has been a hard one.
The looming threat of tariffs isn’t making things any easier for Mitsubishi. The automaker doesn’t have a single production facility in the U.S., meaning it will receive the full force of whatever percentage is tacked onto the import fee. There is hope, however. Bizarrely, the brand’s biggest weakness (U.S. sales) is also its greatest strength when it comes to enduring import tariffs.
In an interview with Automotive News, Mitsubishi COO Trevor Mann says the company is well positioned to handle the problem. “It’s not going to be a corporate disaster for us,” he said. “The impact on us would be less than on many other brands. It’s a bump in the road that we’re going to have to repair.”
Presently, the United States accounts for just 10 percent of Mitsubishi’s worldwide sales and even less in profits. That’s beneficial in the short term, easing the overall impact of tax-based losses, but Mitsubishi intends to increase North American sales 23 percent to 190,000 vehicles by the fiscal year ending in March 2020. If those cars come from Asia, the brand will end up tossing a significant portion of its profits to the U.S. government.
However, that’s not the plan. If Mitsubishi can bolster U.S. volume to 70,000 on a single nameplate, Mann says it can justify local output. But something like the Outlander, one of Mitsubishi’s best-sellers worldwide, might eek by with less if it shares underpinnings with Nissan.
“It would probably be unlikely that we’d build a factory of our own,” Mann said. But sharing one with Nissan is far more likely thanks to alliance synergies. The COO also said Mitsubishi will re-examine North American production regardless of tariffs. There is also a chance a deal could be worked out to perform join-production with Renault in South Korea — a nation which currently enjoys a free-trade agreement with the United States.
The automotive alliance has already worked magic on Mitsubishi. The brand reported a 36 percent jump in operating profit on rising sales in every key market this month and worldwide retail sales grew 21 percent to 292,000 vehicles in the fiscal first quarter ending on June 30th.
“Mitsubishi was a bit of a sleeping giant. As a brand, we have great potential,” said Mann. “I think we’re demonstrating that we’re waking up.”
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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