Mitsu COO sees alliance enabling big strides

Mitsubishi sold 103,686 vehicles in the U.S. last year, the first time it topped 100,000 since 2007.

Looking long term, Mitsubishi Motors Corp. COO Trevor Mann, 57, foresees the automaker flirting with 300,000 U.S. sales as it introduces new products such as the Eclipse Cross and begins to roll out vehicles on platforms that are shared with Renault-Nissan around 2021.

Mann visited the U.S. this month to check on the local operation and meet with dealers. He spoke with Staff Reporter Vince Bond Jr. on April 5 about Mitsubishi"s growth in China, efforts to improve relations with dealers and the early savings the automaker is seeing as part of the Renault-Nissan-Mitsubishi Alliance.

Q: One of the big priorities for you coming in was to get finances in order. How is that going?

Trevor Mann

A:We are completely on track in terms of the midterm plan that we announced in October of last year. Just to refresh your memory on those numbers, to go from around 1 million sales to 1.3 million sales globally. Also a 30 percent increase in our revenues and to return to a 6 percent margin in terms of level profitability. We just collected all of the results for our fiscal year and it"s 1.1 million [units]. We"re ahead of the profit target and we"re ahead of the volume target. Overall, I"m quite pleased. We"re doing well.

Will the U.S. be one of Mitsubishi"s big profit drivers?

The U.S. is one of our focus markets together with China. Over 30 million [vehicle sales] in China, 17 million in the U.S. As a company, we"ve performed relatively poorly in those markets. We"re looking for significant growth. With our joint-venture partner in China, that brand alone, we grew almost 90 percent last year, partly helped with the localization of Outlander into that market. In the U.S., where we hadn"t launched a new model until the end of the fiscal year, we"ve seen 10 percent growth. What that demonstrates is we"re coming back together as a company in the U.S., together with our dealer body.

It was reported a year ago that I said we"ve got a bit of disengagement with our dealer body. We"ve worked hard over the last 18 months or so. I think this is my fifth visit to the U.S. in that period. Every time I come, we sit down with dealers. Understanding their voices, understanding their opinions, sharing our voices, opinions and needs with them is starting to work and we"re starting to see the benefit in terms of overall performance of our dealer body. Ten percent growth in the U.S. last year without the significant impact of a new model suggests that we are starting to do things right collectively.

We have a lot of work to do still. We"re aiming for significant growth in the future. In the mid to long term, I see us moving over the 100,000 units in the U.S. to really getting towards 300,000 units over the long term.

What type of feedback have you been getting from dealers?

One of the issues raised was in terms of our financing ability with Ally Bank. There were a number of issues raised with how we go out to market and the type of packages we"re offering. Are we competitive? We said, let"s take that example and work together with Ally and a subset of the dealer advisory body, and let"s fix the issues people have raised. Yesterday, we had meetings with Ally. Today, meetings with the dealer advisory board. We"re starting to put these issues to bed. We"re starting to get significant improvement in those type of things. They are issues that are hindering our growth.

Does Mitsubishi still want to add dealers in the U.S.?

I think that at some point in time, we"ll have to come across that. The most important thing is that we grow within our current network. What we need to do is make sure they grow, and grow profitably. If you look at our throughput for dealer performance, it"s well below where we"d expect it to be.

Dealers have said they want a pickup for the U.S. Is that a possibility?

It"s something we will look to address in our long-range product plan. It"s on everybody"s shopping list. It"s obviously in our long-range product plan to make it work for us in the U.S., but we have nothing to actually announce right now.

What benefits have you seen from being in the alliance?

The alliance is a two-way street. We make contributions to the alliance. In terms of the benefits we are seeing on our bottom line, we should expect to see around $250 million directly to our bottom line for fiscal year "17. We would expect that would grow in fiscal year "18. The bulk of those savings came from procurement in terms of purchasing cost reductions, parts and services.

Our engineers are working now on common platforms and common powertrains, so the investments we have to make in those technologies are either a half or a third of what we would have to make if we were doing it by ourselves. We see that today as a cost avoidance instead of a profit improvement. We"ll start to see the benefits of them in the models that will start to hit the streets around 2020, 2021.