PaulyG CT

Service in the future for your Mitsubishi will be available at Fiat/Citroen dealer.......

Mitsubishi Motors Seeks
Buyer for U.S. Businesses
Talks Focus on Sales Arm,
Plant as Losses Pressure
The Japanese Auto Maker

By NORIHIKO SHIROUZU and JATHON SAPSFORD
Staff Reporters of THE WALL STREET JOURNAL
February 18, 2005

Mitsubishi Motors Corp. is quietly seeking a buyer for its U.S. operations, a move that may well signal the Japanese auto maker's intent to exit from the world's largest car market, people familiar with the matter said.

Mitsubishi Motors' new president, Osamu Masuko, traveled to Detroit in January to begin talks with potential buyers during the North American International Auto Show, they said. He was accompanied by Yasushi Ando, head of Tokyo-based investment and workout fund Phoenix Capital Co., which currently holds a 21.2% stake in Mitsubishi Motors, these people said.


The two Japanese executives met privately with several industry executives, including representatives from U.S. private-equity fund Ripplewood Holdings LLC, these people said. A representative for Ripplewood declined to comment. People familiar with the matter said Ripplewood didn't show much interest in Mitsubishi's U.S. operations.

These talks mainly focused on Mitsubishi's assembly plant in Normal, Ill., and its North American sales unit in Southern California, they said.

Mitsubishi representatives said Messrs. Masuko and Ando attended the Detroit auto show, but declined to comment on the meetings, adding only that Mitsubishi has "no plans to withdraw from the North American market."

If Mitsubishi Motors pulls out of the U.S., it would be the first major overseas car maker to do so in more than a decade. The late 1980s and early 1990s saw the departure of French car makers PSA Peugeot-Citroen SA and Renault SA and Japan's Daihatsu.

Hyundai Motor Co., the South Korean car maker, pulled out of the U.S. market and then relaunched its efforts in North America and is now achieving considerable success.

Mitsubishi Motors' discussions with potential buyers of its U.S. operations are part of an effort to sharpen the focus of the company and stem massive losses, according to people familiar with the company's strategies. Sales in crucial markets are falling faster than the company can cut costs. Mitsubishi Motors said in January that its loss for the fiscal year to March 31 will reach 472 billion yen ($4.48 billion).

Mitsubishi has been in crisis for more than a year, its global sales falling because of a public recall scandal in Japan and a weak sales strategy in the U.S. But so far, the Mitsubishi group has vowed to save the auto maker that bears the group name, and has arranged for two capital injections over the past year, totaling more than $10 billion.

People familiar with the group's thinking say that certain key members of the group, notably those at the Bank of Tokyo-Mitsubishi Ltd., are growing impatient with the lack of progress in fixing the car maker. Executives at the bank, these people say, are under pressure from regulators who are growing nervous about the bank's exposure to the car maker. Bank of Tokyo-Mitsubishi declined to comment.

The company has relatively strong operations in Asia. Taiwan's China Motor Corp. said Thursday that its mainland Chinese joint venture, Southeast Motor Corp., will start selling Mitsubishi-branded cars to Chinese consumers in July. Mitsubishi Motors holds a 15% stake in China Motor.

The Japanese car maker may have trouble attracting a buyer for the comparatively weak U.S. operations. The U.S. sales arm ran up losses after giving loans to young consumers who had weak credit histories and later defaulted on the payments. In 2004, Mitsubishi's U.S. arm sold 161,609 vehicles, down 37% from 2003. Its share of the U.S. car market has fallen to less than 1% from about 2% two years ago.

The image of the plant in Normal was tarnished during a discrimination and sexual-harassment lawsuit filed in 1994 by more than 300 women employees. More important for potential buyers, the plant's unionized workers command wages of $26 an hour or more, not including benefits, making the plant uncompetitive in an era in which car makers are increasingly able to produce in low-wage markets from China to Mexico. Mitsubishi cut roughly 40% of the plant's work force last year, more than 1,000 jobs, and reduced capacity to one shift.

Outlaws eXtreme

Yay, maybe I can get an EVO for dirt cheap as my beater car.

Or Ford/Mazda could just buy them out... how ironic... :P

Hmmm 2 8's in the family...

Xyntax

I still wonder how Mitsubishi (all) stays big when they always get into trouble.

Too bad for the Evo. Great car, bad manufacturer

jsh1120

Gee, I wonder what "young consumers who had weak credit histories and later defaulted on the payments" were buying?

EyeBall Fixer...(o)(x)

I smell a DeLorean :p

Rhawb

That sucks for Mitsubishi owners, but I can honestly say I've seen it coming. Aside from the Evo, when was the last time a Mitsubishi caught your eye? It probably hasn't been since the 3000GT, which is pretty much the slot the Evo is filling right now. Not since the previous generation Eclipse has Mitsubishi had a truly great selling car. None of their current cars are going anywhere either. They're a company that's in need of a serious Chrysler-style miracle overhaul.

Outlaws eXtreme

That's why Mazda should take it under it's wing... The Eclipse could be the Mazda 5, the Evo remain Evo VIII, and uhmm.. get rid of the rest.

Photic

I like how it stresses in this big press statement.. Classic.

I think they should have gone with a different look for the EVO, It preforms well but... looks like something my dead grandmother would drive.. and I'm not a huge fan of the Shopping cart handle spolier on the VIII.

MrH

There's already a Mazda5 coming out. It's a smaller, European-ish mini van.

Mazda won't take them in, that's for sure. I'm kind of doubting anyone will.

This news should come as no shock after DaimlerChrysler announced they were withdrawing funding from Mitsubishi.

Outlaws eXtreme

Mini van huh.. hmm Those Scion type cars are growing on me. Very affordable, yet fun to drive. Why the heck can't Mitsubishi get their act together and redesign their car. The new Eclipse in the other thread can't even save them.. it looks blah.

PaulyG CT

poor quality control+lack of financial planning+DC backing out of JV=bye! bye! I would stock up on spare parts now. Yes, yes they will make promises to support their waranties but after that you will be on your own......

truemagellen

Mitsubishi has been in the ******* for almost a decade now...no one will bail them out this time

goodbye Mitsu...you made me lust after your Eclipses when I was very young...now I salute you as you come out with the G-d aweful Eclipse 06....may the car be recalled indefinitely so I don't have to see it on the road

Steiner

Mitsubishi Motors is just one wing of the Mitsubishi Corporation. In terms of revenue, it's ranked 11th or 12th among their subsidiaries. Mitsubishi isn't going anywhere. However their USDM Motors division better hope the new Eclipse and a couple other cars they have coming out will be a hit.

truemagellen

I was talking about their Motor division OF COURSE...this thread is in the General Automotive section

Key playing your Mitsubishi flute though and watch your Mitsubishi Tv (I have one too :D) :p :D

m477

Does it really matter?

Mitsubishi tries to void anyone's warranty who doesn't drive like an old grandma, so basically you're screwed either way.

PaulyG CT

But at least you can still get parts....for now!

MrH

I'm pretty sure all those divisions are actually different companies, despite having the same name. They were forced to split after WWII I think. So Mitsubishi Motors is going down.

Not positive if what I said is true, but I think that's what happened.

Razz1

Ok here's the truth.

There's nothing wrong with their cars. They have good qualty.

When your a car manufacturer your job is to sell cars.

Well their stategy failed. Biggest market is the USA. USA is in major recession.
Interest rates drop.
Results:
Most people and incomes go into buying houses.
The balance bought new cars.
The marketing strategy put owners of new Mitsubishi's upside down.
New owners must keep their cars 4 or 5 years. Most will have to keep longer.

The no payment for a year option killed the customer loyalty resales of the future.

Most car payments extend 6 years now.. If you don't pay for the first year that makes it seven.
How can you sell cars when all your customers are stuck paying for upside down loan?

New house owners are not going to buy a car for a few years.

The old Japanese trick of flooding the market with your product will not work in the case scenario. The return of investment won't start for 5 to 7 years.

They must hold on that long in order to survive.

That's why my Mitsu dealer sells all used cars of other manufactures.

Looks kinda funny driving by a Mitsu dealr and not seeing any Mitsu cars.

You have to go into the shoew room to see one.

BlueEyes

Plus there was that defect cover-up scandal which left them with a bit of a black eye in the eyes of the consumer. I certainly wouldn't trust them after that.

GotBass

So why should the buyer beware? Its not like the company will take your car with them. And the people who know how to work on the cars will still be here too. If someone really likes the car maybe they should buy it and help keep the company here.

downshift

Most probably because if the company closes shop, you lose your warranty coverage. So even if there are people that will work on it, you have to pay that out of your pocket.

Elara

The problem is that there WERE problems with their cars- and they repeatedly covered it up, even after being dinged for it twice. Sales were going crappy. so they started offering the 0, 0,0 thing, and because they were handing out credit every which way and to every person who asked, they're suddenly finding themselves with a TON of non-paid and defaulted loans. Their sales have fallen throught the floor, the only exciting car to come out from Mitsu recently is the EVO, and unless they can find a buyer or just a CEO who actually has a clue on how to turn the company around, they're screwed. And their cars still don't have very good quality- try and find a cheap aftermarket warranty for one. They're pretty expensive, and it's partly because they AREN'T up to Toyota quality, and partly because they have a horrible reputation now.

Steiner

400 miles and no problems yet with my new Evo. LOL.

Xyntax

For those of you who plan on getting a Business degree, watch out coz Mitsubishi Motors will be one of the many case studies you will be doing for "How not to run a business" :D

I know we (current generation) have studied the Webvan case (bad).

Japan8

'
Mitsubishi group was a former zaibatsu pre-WII. Basically a family(ies)-owned umbrella company... they made their own machinery, cars, housing, and even financed themselves. It really dates back even further to mrechant families that grew powerful by the end of the Edo Period (while the samurai class had generally become heavily indebt to them) and combined with other factors led to the fall of the Tokugawa Bakufu (Shogunate run by the Tokugawa family). Their rise to prominence and power during the modernization/industrialization that began with the Meiji Restoration in 1867. But I diagress... that was a little background on how old and powerful this group is.

During the early years of the Occupation 1945-1947 , the zaibatsu and monopolies were attempted to be broken up by SCAP (occupation authorities)... among other reforms. Howeve these groups reformed as keiretsu.. cross-holdings companies when recovery, not reform became the priority under the mounting costs of the Marshall plan in Europe and the reform/recovery of Japan (and a few other factors as well).

Under "gaiatsu" (foreign pressure) over the years, particularly the 80's, the connections between these groups, de-regulation of the markets and government support was reduced or abolished... depending on the specific market and group.

Over the last 5 years we have seen some of this work coming undone in the face of the extended economic downturn. There have been numerous mergers in the banking industry and a backlash against foreign buyouts of the Ripplewood (Japan Long-term Credit Bank/ Shinsei Bank) variety.

The continued non-performance of the Japanese economy and failure of businesses stems from what could be termed as a cultural problem. Namely adaptability. What Japan severly lacks is the ability to question the way things are. In the past, even if there was a lack of this at the bottom of society, the top (leaders) had this ability. Today, Japan is left with incompetent leadership both politically and in the business world that purely seeks to secure their own power and wealth. This when combined with their blind ageism and superiority complex leave them unable to ever see beyond the boundaries they live within.