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Mitsubishi Makes Headway in US Despite Industry Slump

By Paul A. EisensteinSpecial to The Christian Science Monitor / June 21, 1989



TROY,MICH.

AT least one Japanese carmaker is bucking the United States auto industry slump in a big way. Mitsubishi Motors Corporation's US sales arm expects a 36 percent sales increase this year. After years of being limited by ``voluntary'' quotas on Japanese auto imports, Mitsubishi Motor Sales of America (MMSA) is being boosted by its new US assembly plant.

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Mitsubishi cars have been around the US for several decades. But until recently, the only place you could find them was at a Chrysler dealer, where they sold under such names as the Plymouth Arrow and Dodge Colt.

In 1983, however, Chrysler and Mitsubishi reached an agreement to permit some vehicles to be diverted to the new MMSA dealer network. But because of the quotas, the volume of available cars was so small that Mitsubishi had to limit itself to East, West, and Gulf Coast markets. That first year, 83 MMSA dealers in 23 US markets sold a total of 42,000 Mitsubishi cars and trucks.

In the five years since then, MMSA slowly expanded its operations, relying on sales of pickups and other light trucks not covered by quotas. It established a number of ``limited product dealerships,'' or LPDs, that sold only trucks. Last year, 250 dealers sold 114,000 vehicles.

Today, most of the LPD outlets have been converted to full-line dealerships. By year's end Mitsubishi hopes to add another 150 dealers and boost sales to 155,000.

The bulk of those new dealers is being opened in the Midwest, says Dick Recchia, MMSA's top US executive. ``There's a lot of opportunity,'' he says. ``The Midwest has been void ground for us.'' Japanese automakers in general have had a harder time in the American heartland. The MMSA is virtually unknown in Des Moines, Kankakee, and Toledo, due to its lack of dealers.

Still, tackling the Midwest will be a costly effort, Recchia admits. People there ``don't know if Mitsubishi is a fly-by-night company [on which] a lot of consumers aren't willing to take a chance. That means we're going to have to spend a lot on advertising,'' he says.

``A lot'' means about $100 million, much of it spent on network television. By comparison, Toyota is expected to spend about $263 million this year on advertising. But Toyota's total car and truck sales last year were nearly seven times greater than Mitsubishi's. The new MMSA strategy will emphasize cars, not trucks. Even though the Japanese car quotas are still in place, MMSA can skirt those limits through the new Diamond Star Motors plant it operates in a joint venture with Chrysler.

That plant in Bloomington-Normal, Ill., is still in its ``launch curve'' with production rising every month. By October it should reach full speed, providing Chrysler and Mitsubishi with about 5,000 cars a month each.

Both automakers are getting essentially identical vehicles from the Diamond Star plant - sporty, high-performance coupes dubbed the Mitsubishi Eclipse and the Plymouth Laser. A new version of the Eclipse, the four-wheel-drive GSX, was unveiled this week.

Ironically, while the products are identical (and while Chrysler has a dealer network that dwarfs Mitsubishi's), MMSA dealers ``have outsold Plymouth [by about 25 percent] ... every month since the launch of this product,'' Recchia notes.

So far this year, MMSA sales have actually been running ahead of the company's projections, despite the decline in US new car sales. Because of production limits at Diamond Star and quotas on Japanese-made cars, the automaker will face a slow-up late in the year.

``We're going to have to slow down or we'll run out of product,'' Recchia says. Mitsubishi still must offer incentives on many vehicles because of greater competition.

Recchia says he is planning for more growth in the future. By 1991, he hopes to bring the dealer total to 520. That same year, Mitsubishi will replace its top-of-the-line Sigma sedan with an even larger and more lavish model to compete in the low-end luxury market, with a price tag somewhere between $22,000 and $30,000.