Mitsubishi Ain't Dead Yet
Author’s note: I am currently an undergrad student of economics in my 2nd year, and I like to study the performance of automakers in the marketplace. I’m going to try doing a weekly write-up on a particular sector of the car industry, for the more business-minded among you, under the hashtag #Ecarnomics. Opinions are strictly my own, DO NOT consider them to be a source of investment information.
When Mitsubishi announced that they were discontinuing the Lancer Evolution, it signaled a warning sign of the state of the company to most petrolheads. This was particularly true in the North American market, where their market share and level of competitiveness have been slipping for about a decade. Eventually, it got to the point where many people questioned whether or not Mitsubishi Motors would remain in the North American market. The introduction of the horrid Mirage subcompact seemed to suggest that Mitsubishi had all but given up trying to compete there, despite Mitsubishi’s industry-leading factory warranty. The fair-to-middling Outlander is by far Mitsubishi’s most competitive offering, and the once-popular Lancer has seemingly been forsaken over the past 10 years. The decline of the once-great automaker has been painful to watch for enthusiasts, and it has seemed as though Mitsubishi is about to go the way of Isuzu and Suzuki.
So when Mitsubishi announced at the beginning of the year that their 2015 sales were over 22% higher than in 2014, it was safe to say that a lot of people were surprised, to say the least. That’s a big number not only for a ‘dying’ carmaker, but also for one that’s alive and well at the top. Of course, in terms of volume, Mitsubishi still isn’t lighting the record books on fire (they only sold just under 100,000 vehicles last year), but do they really need to? They still seem to be growing—last February alone, the 3 Diamonds sold 4.6% more vehicles (7,870) than they did in the February previous. These growth trends are actually nothing new—sales growth has actually been remarkably consistent over the past year for the ‘struggling’ automaker.
So what the hell is going on? Mitsubishi’s product line is, at best, average, and at worst, incompetent. Certainly, they aren’t using Mazda’s strategy of appealing to enthusiasts. They aren’t exactly relying on cutting-edge technology, either. Compare an equally-priced Civic to a Lancer, and the equipment deficits become too numerous to mention. In terms of MItsu’s perceived quality, the Lancer once can’t hold a candle to a Golf or a Focus, and it is nowhere near as roomy or as comfortable as a Jetta. In short, whether or not you’re a tech geek or a devout petrolhead, the bottom of your long-list of new cars is likely going to be populated by a lot of Mitsubishis.
Yes, I can say first-hand that Mitsubishi’s model line-up is no hell. I’ve driven the Outlander Sport (RVR in Canada, ASX in Europe) and is easily the most pathetic car I’ve ever driven. The interior was as black, plasticky and tacky as a black plastic tack. It drove like a drunk sloth, the CVT was laggier than dial-up, and everything from the brake pedal to the electric power steering felt like an old sponge. It was a miserable experience, and I’m told that the Mirage is 10 times worse. Not that I expected much out of a 4-figure-priced car with a 74-horse 3-banger, but it’s been a long time since an automaker has put out something so unashamedly awful.
We know Mitsubishi can do better. Their All-Wheel Control system is still one of the best AWD systems on the market, and the Super-AWC from the old Evo is still available on the top-of-the-line Outlanders. Mitsubishi’s interior controls are also notoriously simple and user-friendly. And, when it died, the Lancer Evolution was still a god amongst sportscars. Personally, I was a big fan of the previous-generation Outlander. So I, like many of you, took Mitsubishi’s decline in competitiveness as a sign of apathy and, therefore, a start to the shut-down process. This notion was certainly bolstered by the closure of its Normal, Illinois production facility in 2015.
However, it seems as though Mitsubishi knows what they are doing, after all. What if all you’re looking for is 4 wheels, a steering wheel, and a hell of a lot of value? You might still laugh at the prospect of even driving by a Mitsubishi dealer, but what if you didn’t have much choice? In Canada, you can get a bog-standard Mirage for less than $9,000 (before taxes). If your only prerequisite for buying a car is that it has to be a car, then the Mirage is as cheap as it gets. This doesn’t even include the 5-year, 100,000 km bumper-to-bumper warranty or the staggering 10-year, 150,000km powertrain warranty, both of which are the best in the business. Good luck finding a 2-year-old Accent for that kind of cash. The Outlander offers similar value by being one of few SUVs to offer a 3rd-row seat while occupying the compact crossover price bracket.
By offering some no-nonsense, old-school Hyundai-style bang for your buck, Mitsubishi is using a strategy that most North American players have gone away from. The Mitsubishi Mirage is North America’s Dacia Sandero: it’s good at dirt-cheap, no-frills transportation, if not much else. It’s a sad regression, but it seems to be working. Perhaps Mitsubishi is about as cynical of the future economic conditions in North America as I am, what with the price of oil at rock-bottom. There’s a huge market segment of cost-cutters that’s just waiting to bust open. Canada is facing the prospect of having to implement negative interest rates to get people to spend more money. With the oil economy as far into the toilet as it is, I wouldn’t be surprised to see Mitsubishi’s gamble pay off in a big way pretty soon.
But Mitsubishi doesn’t have to strip itself down to the bare necessities, at least, not completely. Like I said before, we all know Mitsubishi is capable of building better cars. Perhaps they should leverage a little bit of their regrowth in the North American sector by building a few Subaru-style niche market vehicles that their dyed-in-the-wool enthusiasts will return to (a new, better Eclipse?). Mitsubishi is already starting to tap in the market niches in Europe with the Outlander plug-in hybrid, which has a lot of potential across the pond as well. Hopefully, the next-generation Lancer is finally able to compete in the compact sector as more than just a value-based offering. It would really be nice to see Mitsubishi return to its former glory.
But, for now, let’s put to rest all the urban legends that Mitsubishi is getting ready to pull out of North America. They’re not going anywhere just yet.