Comeback King

Comeback King image

Text: Iñigo S. Roces / Photos: Iñigo S. Roces | posted February 03, 2010 19:17

We catch up with Mitsubishi Motors Corporation's President

In the competitive automotive world, brands can rise and fall with the times and trends. 10 years ago, we'd have never guessed who'd be at the top, just as we'd never guessed who'd go under. It only goes to show that even the largest of titans are beholden to the fragile world economy.

Yet as disheartening as it is to hear some of the most storied brands being traded around like poker chips, one brand's comeback serves as inspiration for those in the darkest of tunnels.

If there's an award for best corporate comeback, it ought to go to Mitsubishi Motors. Having separated from DaimlerChrysler, weathering two financial crisis (Asian 1997 and US 2008), suffering lackluster sales, dwindling cash flow and a few scandals to boot, the company's revitalization plan started in 2005 is starting to pay dividends.

Today, products like the Outlander, Pajero, Lancer, i and Delica:D5 are drawing attention and that's just the start of another parade of much awaited new models.

Key to this turnaround is current Mitsubishi Motors President, Osamu Masuko. Having taken seat since January 2005, he's been witness to both red and black days. He has recently paid a visit to the Philippine factory in Cainta, Rizal in time for the start of the local production of the Lancer EX.

We caught up with him as early as the recent Tokyo Motor Show to talk about the three diamond star's plans for the future. Among Mitsubishi's concepts were the newly unveiled i-Miev cargo and plug-in i-Miev, highlighting the company's vision of an electric-powered future.

Interviewer: Is this the start of an all-electric line and the end of the ICE for Mitsu?

Osamu Masuko: We'll do everything from electric vehicle to plug-in hybrid to gasoline and diesel. That's not the only direction that we're headed for.

First of all, the industry has moved from gasoline to hybrid to plug-in hybrid. And the respective automotive manufacturers are trying various types of vehicles. But now, I think the technology is going to go to electric.

With regards to the electric vehicle, we have developed our own electric vehicle. Concerning the technology, we would like to use this technology to the fullest. We're going to produce a plug-in hybrid from 2013 onwards. What we'll do with the technology of the electric vehicle is that we would like to expand the source of our technology. We're not going to concentrate just on electric hybrid but various items.

I: We might be a long way from plug-ins but is there some development with ethanol?

OM: That depends on what the Philippines demands.

Brazil said they would like to launch a lot of FFV vehicles, therefore, we are making these vehicles in Brazil.

In Thailand, it's a government policy that wants to increase the use of ethanol. Therefore we have introduced E85 in Thailand. Last week, in Thailand, there was a line-up ceremony of the new Lancer. This is the first FFV which will be produced. This meets the needs of E85. We're not just concentrating on electric vehicles but on ethanol technology too.

Hong Kong and New Zealand said they would like electric vehicles. If the Philippines can tell us what they want or demand, we can provide that vehicle.

In various areas as well as various countries, the situation differs. We have to meet the needs of fuel as well as vehicle depending on the necessity of the country or the regions.

I: Does this mean our government has not requested a particular specification yet?

OM: Yes, currently, we have not heard anything.

I: That's unfortunate. Moving on, there's a lot of development of vehicles for other countries but not much for Japan. It seems Japan car sales have gone down even before the recession hit. Why so?

OM: It has to do with the structural problem of the Japanese society. It's an aging society and there are less children in Japan. We do not foresee the demand of the vehicles to increase in the future.

Young people do not have that much of a strong interest in cars. I thought this trend was only in Japan. This is actually a trend among young people who live in big cities in developed countries. There's an increase of young people in Paris who do not purchase or ride in cars. There is a tendency for people to live in the city that, thought they do not have a car, they do not feel inconvenienced at all. There are many modes of transport like the subway bus and trains. They can also walk.

I: Are people losing interest in cars also because of their environmental impact?

OM: For some, it has to do with the environment but that is a very small part of the reason. The biggest reason is really economics. In Tokyo, it is very expensive. You have to secure a parking space even if you go out. You still have to park somewhere when you go out and it costs a lot of money.

I used to live in a big apartment, but for one month, the parking cost was 52,500 yen. I paid that much for 1 month. I moved out. Right now, I pay 21,000 yen for my parking lot.

I: Does that mean the trend is more toward personal mobility in cities? Single seaters perhaps? Like the Toyota i-Swing or Honda U3-X?

OM: We don't have to think about that. What's selling right now is electric bicycles for a low price. One-seater automobiles will not work. Most of these are concepts. Some might not be a reality.

I: So what is your strategy for these areas with dwindling demand?

OM: As a Japanese car manufacturer, if we think about the growth of the vehicles in countries like this, I don't think we can grow in Japan. We have to think of other markets.

The Philippines has a lot of opportunities and chance for growth. And so for us, the Philippines is indeed a very important market and we would like to put our concerted effort there.

I: Speaking of which, the Japan-Philippines Economic Partnership Agreement (JAPEPA) is a hot topic right now. Is this also a concern with Mitsubishi?

OM: First of all, we need not think of the benefits of the free trade agreement for the respective business enterprise or corporation. With regard to what is important, it has to be for the benefit of the people and citizens living in those countries. It has to be beneficial to people of both countries; whether their life standard will go up or they will become affluent or their economy will improve. If it's a disadvantage for the people of the Philippines, it's meaningless.

What is important with regard to the free trade agreement is for the economic level of the Philippines to go up. When the economic level goes up, it means that there's going to be more cars sold in the Philippines. The more volume sold means that it's impossible for Japan to bring in all the vehicles into the Philippines. If this is the case, common sense dictates that we make automobiles there where there is demand.

I: Is sales the only considering factor?

OM: First of all, what we manufacture in the Philippines, if it is expensive and the quality is bad, if it doesn't sell, we cannot operate our business.

I think the production in the Philippines will rise if we produce good quality with a competitive price. That will be an increase in production .

This is the principle of economy, if you don't make competitive products, it cannot sell. We have to make competitive products in order to be competitive in the market.

With regard to the sales, if the sales volume increase, it means the production volume in Philippines will increase, which means the investment will increase and the employment will increase. So this is the basis of economy.

Just to give you an example, in Thailand, we are producing 150,000 pickups a year for export. Not from Thailand to Japan. It's from Thailand to all over the world. If the Philippines makes an effort, it can do that too.

I: Speaking of global, what is the status of Mitsubishi's JV with other manufacturers?

OM: Mitsubishi does not have a joint venture right now. We are not a joint venture company with PSA DC or Hyundai or Proton. With regard to the cooperation in terms of capital, we don't have any current cooperation. What we do have are alliances (tie-ups) with OEM supply, technology and components.

We get the Raider truck from DaimlerChrysler in the U.S., and we're together with the development and manufacturing of the World Engine (for both Chrysler and Mitsubishi vehicles). MMC supplies engines to DaimlerChrysler. We supply OEM minicars to Nissan in Japan. We also do an OEM supply of the Outlander to PSA in Europe. DaimlerChrysler, in turn, supplies us with diesel engines. We, MMC, also buy diesel engines from Volkswagen.

As the technology becomes difficult, it's advantageous to have a collaboration with other companies. With regard to working together, then you have to share the philosophy of car manufacturing or a common understanding of the future direction but what the vehicles will bring to the market as well as to that country. I think that companies should promote collaboration with other companies in terms of technological alliance.

I: With regards to motorsports many are disappointed about your decision to withdraw from WRC. Was it a difficult one to make?

OM: With regard to WRC, it was a very difficult situation and we came to a conclusion that we will not participate. We have decided that we are going to focus our resources on the environment Driving for the betterment of the future. At the moment, we do not have any plans to revive or participate again in the WRC.

I: Is there a chance Mitsubishi might shift to a different motorsports discipline? Say F1?

OM: Getting into Formula 1 will cost a lot of money. We don't have that much money to enter into and win in Formula 1.

We have a long history in rally, and we were able to produce good vehicles such as the Pajero and Evolution. These are major assets of the company.

Even though we do not enter or participate in the rally, we have a very good technical basis for manufacturing and developing vehicles of the future.

From now on, we have to concentrate on durability as well as how to run fast. That was what we were doing. Now we have to allocate our resource into the environmental related issue. That's why we have introduced a plug-in hybrid and this is the direction that we are going to.

I: Aside from the vehicles, what environmental issue is drawing your attention?

OM: When you think about disposing batteries, it's not good on the environment. We have to concentrate on recycling the batteries. As for the batteries installed in the vehicles we have at the moment, we should be able to run for 150,000 kilometers which is good for 5 years.

Right now we are discussing and reviewing what to do after the batteries have passed the 5 year and 10 year term and how to handle this.

Just one example of what we do for the batteries, when their lifespan has ended for vehicle usage, we can remove the battery from the car and bring it to a big factory or plant and we can make use of that battery for electricity. We can accumulate this energy at night time and store them in the batteries. So this is just one possibility.

Pressing appointments with members of the press of other countries had cut the interview short, yet the new direction of Mitsubishi is crystal clear. It may not be what some have hoped, particularly with a clear absence of motorsports in its plan, but the commitment is apparent and Mitsubishi's future is certainly looking bright.