Awake, and Driving

Brandweek, April 3, 2000 by Jeff Green

Mitsubishi's U.S. operation has veered from perennial sick sister among Japanese carmakers to vivacious belle of the ball, with sales up by one-third so far this year. In a Brandweek interview, evp/COO Pierre Gagnon details how the resurgence could begin only after Mitsubishi stopped looking over its shoulder at its Japanese rivals and zeroed in on the excitement that comprises its brand essence. Still, brand awareness is low, and getting to 400,000 unit sales will be a tough slog.

Mitsubishi Motor Sales of America (MMSA) has been the perennial sickly sister among Japanese automakers since its vehicles entered the market in 1983--even in the dark days of the domestic automakers, when it looked like the Japanese might be unstoppable.

While Honda and Toyota capitalized on the momentum they gained with emerging baby boomers looking for cheap, reliable, high-mileage cars, the Cypress, Calif.-based importer, like many of the lesser Japanese automakers, was left behind.

In fact, the U.S. arm of the company that once built the mighty Zero fighter plane did so poorly that it actually helped suck the profits out of its Japanese parent. For several years in the late 1990s the company was bleeding red ink.

MMSA had languished at annual sales of about 200,000 units in the U.S. for the last decade--lurching from crisis to crisis with too much emphasis on what its rivals Honda, Toyota, Nissan and Mazda were up to, and not enough time spent worrying about what Mitsubishi itself needed to stand for.

Then three years ago the automaker decided it was time to stop looking for salvation in the plans of its peers and find its own place in the auto world. That plan has worked out much better: Mitsubishi posted a 36.6% increase in U.S. sales for 1999 under its new "Wake Up and Drive "tagline, actually passing Mazda for the first time for the No.8 spot in the U.S.

Sales are up 32.6% so far this year and in February were up a blistering 50.6%, according to Ward's Automotive Reports. This year, sales are expected to top 300,000 vehicles.

Times are so good that its parent in Japan is actually showing a small profit, although still burdened by heavy debt incurred during the bad times. In fact, things have gone well enough that DaimlerChrysler a week ago agreed to purchase a 33.4% share in Mitsubishi and assume control, creating the world's third-largest automaker behind General Motors and Ford. The combined operations would produce about 6.5 million vehicles annually, catapulting DaimlerChrysler past Volkswagen and Toyota on the worldwide leader's list.

Conformity has not been the secret of MMSA's recent success. The automaker has bucked trends in the U.S. industry toward greater control over dealers, aggressively working to give its retail outlets more control over the advertising.

"Its really not one account, it's 150 different accounts," said Eric Hirshberg, evp/executive creative director at Deutsch, Los Angeles, the sole Mitsubishi agency in the U.S.

Deutsch's TV branding spots for Mitsubishi, featuring flashy images, reflections in vehicle panels and driving rock beats, now are widely copied in the industry.

Such highly styled vehicles as the Eclipse and Galant, and the rising popularity of Mitsubishi's Montero sport utility vehicle and its all-new sibling Montero Sport are helping energize the company's image.

But Hirshberg admits the job is far from finished. Public awareness of the brand remains at about 53%, even with a 20% bump from the new branding campaigns. "I think this brand has just started to climb a very steep peak," he said.

The person widely credited with beginning the climb toward respectability is MMSA evp and COO Pierre Gagnon, a former consumer marketing whiz at Saturn Corp. (when that still meant something) who came to MMSA in 1997. He is responsible for the day-to-day operations for MMSA including marketing, sales, service, and engineering and parts on through to corporate planning. Gagnon recently reviewed with Brandweek automotive reporter Jeff Green what MMSA has had to overcome to get to this point in its recovery, and what lies ahead.

Brandweek: What was the turning point for Mitsubishi in the U.S.?

Pierre Gagnon: We decided about two and a half years ago that we definitely needed to change our direction. Before that we were trying to be everything to everybody. We would sit around in meetings and say "What's Nissan doing, what's Mazda doing, what's Toyota doing?" and base our strategy on that. We realized we weren't getting anywhere. Not a lot of Americans knew about us. Our brand awareness was in the toilet and we really needed to change.

So we really looked at what are our strengths versus our key competitors--Nissan, Mazda, Toyota and Honda--and we said let's capitalize on that, let's stick to this brand positioning. So we created a brand team of people throughout our own organization, including some of our own dealer people, and various members from many agencies that we had at the time and said, "Who are we?" If you ask 50 Mitsubishi customers and 50 employees and 50 dealers what kind of answers would you get? We'd probably get 25 different answers. So we really put a stake in the ground and we came up with the brand character statement "spirited products for spirited people" that really was a statement reflecting our strengths.