(EXPANDED FROM 11/3/2022)
Mitsubishi’s U.S. sales have somewhat stabilized in recent years, but they are still well below seven other entry-level Asian brands. That’s quite a fall for a brand that in the year 2000 ranked No. 4, behind Toyota, Honda and Nissan.
For all the media puffery about Mitsubishi’s supposed comeback, it strikes me as a failed brand. And that raises the question: What went wrong?
A few years ago Paul Niedermeyer (2020) offered an interesting theory. He suggested that the Japanese automaker made a big mistake when it entered the U.S. market by teaming up with the Chrysler Corp. In the early-70s rebadged Mitsubishis were sold through Dodge and Chrysler-Plymouth dealers. This contrasted with the strategy used by Toyota, Nissan and Honda, which got their start in the U.S. by launching their own brands and dealer networks.
“Mitsubishi missed out on the best years in which to create a strong U.S. operation,” Niedermeyer (2020) argued. “And they never fully caught up with the others as a consequence.”
This theory makes intuitive sense, but let’s test it with the sales data.
Despite late start Mitsubishi did well — for a while
Mitsubishi didn’t begin to sell cars under its own brand and dealer network until 1982. That was more than a decade later than its two closest rivals, Subaru and Mazda. Even so, by the end of the 1980s Mitsubishi was outselling Subaru. Within another decade the brand would outsell Mazda as well.
The graph below shows how Mitsubishi’s golden years were 1999-2003. During that time period the automaker averaged over 300,000 units per year in the U.S. But then sales collapsed. In 2009 Mitsubishi sold less than 54,000 units.
Analysts blamed a number of factors. Perhaps the most significant one was a reckless effort by Mitsubishi’s financing arm to goose sales by loaning to an unusually high proportion of credit-risky buyers. Meanwhile, a recall cover-up scandal in Japan may have tainted the brand’s reputation in the U.S. as well (Wikipedia, 2020).
Mitsubishi got too big for its britches
An additional factor spurring Mitsubishi’s downfall may have been that the automaker vainly tried to compete model for model against Toyota, Nissan and Honda. Mitsubishi simply did not have the resources to keep up. The stacked graph below shows how the automaker was a marginal player even at its peak.
The next graph gives a more granular sense of why this happened. Beginning in the early-80s, the Toyota, Honda and Nissan brands saw their sales soar above Mitsubishi, Mazda and Subaru. (Note that these figures do not include the luxury brands introduced by each of the “Big Three” Japanese automakers.)
For example, Honda — which as late as 1971 sold under 10,000 units in the U.S. — topped 1 million for the first time in 2000. Even in its peak year of 2003 Mitsubishi sold only 346,000 units.
The mismatch in scale can also be seen when you compare individual models. Mitsubishi’s entry into the mid-sized family car field, the Galant, peaked at 97,000 units in 2002. That was only one fourth of the Honda Accord’s volume.
Things only got worse from there. By 2009 the Galant had tumbled to under 12,000 units. This wasn’t nearly enough volume to support a competitive design. Thus, the car was discontinued in 2014. A similar pattern occurred with the automaker’s other once-promising models, such as the Eclipse and Lancer.
Subaru overtakes Mitsubishi by focusing on AWD
Subaru made the same mistake as Mitsubishi in the late-80s when it tried to compete directly against first-tier Japanese automakers. Sales fell almost in half from 1986 to 1994.
Unlike Mitsubishi, Subaru did not keep beating its head against the wall. Instead, the brand shifted back to pioneering new niches. Since 1997 Subaru has focused entirely on a relatively narrow range of all-wheel-drive vehicles. This strategy has been wildly successful. As a case in point, from 2009 to 2019 sales more than tripled to 700,000 units.
Meanwhile, Mazda has adopted a hybrid strategy. It has continued to compete in a few high-volume fields while also offers niche vehicles.
The positive side of the coin is that Mazda has maintained fairly consistent sales in the 300,000-unit range. The negative side of the coin is that the brand has not experienced a post-2010 recession boom like its larger competitors. This is despite having entries in fast-growing CUV fields.
Hyundai and Kia show late entry can be successful
Another useful set of data is how the Korean brands Hyundai and Kia have fared in the U.S. compared to Mitsubishi.
Hyundai entered the U.S. market in 1986. That was four years after Mitsubishi launched its own brand and dealer network. Initially, Hyundai’s sales were higher than Mitsubishi’s on the strength of its entry-level Excel models. However, quality issues resulted in Hyundai sales hovering below Mitsubishi’s up through 2001. From then on, Hyundai volume mostly moved upwards.
Kia had a much slower start than Hyundai but surpassed Mitsubishi in sales in 2003. By 2019 Hyundai and Kia were both selling upwards of 600,000 units. In contrast, Mitsubishi barely surpassed 121,000 units.
A key takeaway from this crowded graph is that Hyundai and Kia managed to establish themselves as almost full-line brands in the U.S. despite being later entrants than any of the Japanese automakers — including Mitsubishi.
Also see ‘Mitsubishi tanked in U.S. due to epic mismanagement and lack of vision’
That said, Subaru’s sales from 2017-2020 ran neck and neck with Hyundai and Kia. This occurred despite Subaru having a narrower lineup of vehicles. This shows how a smaller automaker can be successful by focusing on niches rather than trying to compete with bigger competitors model for model.
So should Mitsubishi have gone it alone in the 1970s?
Now that we’ve run through the relevant sales data, let’s go back to Niedermeyer’s theory. Would Mitsubishi have been better off building its own distribution system in the U.S. rather than tying its fortunes to Chrysler?
We should start by noting that Mitsubishi benefitted from more than getting a quick foothold in the U.S. market. In 1971 Chrysler bought a 15-percent stake in the Japanese automaker and distributed its vehicles worldwide, although that declined with Chrysler’s disposal of almost all of its foreign holdings in the late-70s. Mitsubishi also supplied Chrysler with engines (Hyde, 2003).
When Mitsubishi later launched its own U.S. distribution network, it proved to be competitive with Subaru and Mazda. One reason why may have been that Mitsubishi was already a known quantity even though its cars had been rebadged. In addition, the marketplace was fluid enough in the 1980s and 1990s that you could ramp up a new distribution network fairly quickly.
A countervailing argument is that Mitsubishi might have been able to grow its sales well above that of Mazda and Subaru if had gone its own way in the early-70s. A key reason why is that Mitsubishi’s products might have sold better at the automaker’s own dealers. In the 1970s, typical Chrysler dealers likely emphasized bigger cars because they generated greater profits than smaller cars. Another consideration is that Mitsubishi could have also better controlled the quality of dealer service if it built its own network.
An independent Mitsubishi could have plausibly grown into an almost full-line brand akin to Hyundai. Or it could have enjoyed a similar level of success as Subaru in recent years by focusing on niche markets. At the very least, Mitsubishi should have done at least as well as Mazda.
That said, I don’t see in the data direct evidence that Mitsubishi’s failure in the U.S. is primarily a result of its tie-up with Chrysler. A series of bad decisions around the turn of the century would appear to have had a bigger negative impact. The biggest mistake of all would appear to have been overextending its limited resources with a range of “me-too” products.
A new beginning or the end?
Every once in a while Automotive News publishes a story that suggests Mitsubishi is making a comeback (e.g., Iliff, 2020; Greimel, 2022). The automaker invariably points to new-found economies of scale from a “strategic partnership” it entered into with Renault and Nissan in 2017 (Wikipedia, 2023). The tie-up has resulted in the second-generation Outlander sport-utility vehicle being placed on the Nissan Rogue’s platform (Iliff, 2020).
Last spring Mitsubishi projected that North American profits would soar due to lower incentives, better foreign exchange rates and solid sales of its Outlander plug-in hybrid crossover Greimel, 2023). In the U.S. sales did increase 3 percent in the 2023 calendar year to almost 89,000 units. That was somewhat better than the dismal levels of 2012-13, when they hovered around 60,000 units. However, over the last two years sales have dropped off from roughly 101,000 units in 2021 and more than 121,000 in 2019.
What’s the problem? Could it be that the automaker doesn’t stand out from the crowd . . . at least aside from the Outlander’s bizarre front-end styling?
Mitsubishi seems to think that it is worth staying in the U.S. market, where in 2022 sales represented about 10 percent of the automaker’s total global output. That ain’t nothing, but Mitsubishi is now such a marginal player in the U.S. that it could very easily be washed away in the next recession.
What’s tragic is that Mitsubishi could have been somebody. And perhaps it still could if it pioneered new market niches in the U.S., such as a modern simple car (go here for further discussion).
NOTES:
This story was originally posted on July 24, 2020 and expanded on Oct. 3, 2022 and Feb. 9, 2024. U.S. sales figures are from carsalesbase.com (2022) and Automotive News (2023).
Share your reactions to this post with a comment below or a note to the editor.
RE:SOURCES
- Automotive News; 2023. “U.S. light-vehicle sales by nameplate – 2023 vs. 2022.” Dec. 25 issue: pp. 62-63 (subscription required; print edition).
- carsalesbase.com; 2022. Accessed Nov. 3.
- Greimel, Hans; 2022. “Mitsubishi bounces back to profitability.” Automotive News (subscription required). Posted July 28.
- ——; 2023. “Rebounding Mitsubishi expects North American profitability to surge.” Automotive News (subscription required). Posted May 9.
- Hyde, Charles K.; 2003. Riding the Roller Coaster: A History of the Chrysler Corporation. Wayne State University Press.
- Iliff, Laurence: 2020. “Mitsubishi promises next-gen Outlander in 2021.” Automotive News (subscription required). Posted July 22.
- Niedermeyer, Paul; 2020. Comment in “Curbside Classic: 1973 Mitsubishi Colt Galant (A50) 16L GS – Preserved For Posterity.” Curbside Classic. Posted 8:55 a.m., July 23.
- Wikipedia; 2020. “Mitsubishi Motors North America.” Page last edited July 19.
- ——; 2023. “Renault–Nissan–Mitsubishi Alliance.” Page last edited Dec. 3.
ADVERTISING & BROCHURES
- oldcaradvertising.com: Dodge Colt (1972, 1975, 1977); Dodge Challenger (1980)
- oldcarbrochures.org: Dodge Colt (1974); Dodge Challenger (1980)
The situation at Nissan isn’t rosy either since the “Ghosngate” and there’s rumors then Nissan want to sell its stake in Mitsubishi. https://www.autonews.com/automakers-suppliers/nissan-split-would-be-blow-mitsu
What went wrong with Mits could fill a book. Selling to poor credit customers being way too kind. They sold cars with a no money down no payments for one year plan. Not surprisingly, a number of customers took the car, beat the crap out of it, and 364 days later tossed the keys on the desk. Another bit of bad luck was agreeing a badge engineered Dakota. They started with heavily optioned penis extenders in 2005, just when the midsize pickupmarket took a dive. Mits agreed to a first run of 20,000 trucks. It took them five years to sell them. I purchased an 09, last year. It was like buying an equivalent Dakota for about 20% less. You willalso notice that Mitsubishi usually is in the bottom in the various quality ratings.
Yup. It’s too bad because they made some interesting cars for a while.
I should correct my statement. I didn’t buy the Raider last year, I bought a 2009 which was the last production year. Instead of just badge engineering, they did different lights,interior, and sheet metal all around, even the tailgate. Nothing except the rear doors are interchangeable with the Dakota.
Now this. This has started my depression.
That’s unfortunate. Why?
Mit marketed some interesting sport coupes. All wheel drive, turbos, 5-speed. attractive styling. I guess that the market jut wasn’t big enough and they abandoned those cars. The 3000, the Eclipse, were pretty funky cars and IMHO they should have built on those as a traffic draw.
Found it strange Mitsubishi never went at it along in the early-1970s and instead opted to team up with Chrysler, the team up held the former back whilst also further harming the latter’s European division (instead of making it an asset) and almost driving itself under in the late-1970s.
Could Mitsubishi though have reached similar heights as Hyundai, based on how the latter made effective use of using Mitsubishi sourced parts (after using Ford sourced parts) before carving out its own niche?
Mitsu built some really neat cars like the 3000 and the Eclipse. There were 4-wheel drive, turbos, funky convertibles. They stuck with outdated sedans for too long, their quality control suffered, and then they tried to boost sales of old engineered sedans by crazy financing deals. What dimmed their sales was a growing reputation of poor quality control and unreliability. Extended warranties and a quality built SUV may save them.
The short answer is mismanagement and lack of vision on an epic level. But, the question covers a lot of ground and really needs dissected further.
In the 1970’s once you got away from the US coasts there were very few Japanese car dealerships. I can remember one of my brothers dating a woman who had a Toyota Corolla in the mid 70’s. It was a decent car for the times, but any parts or maintenance involved a drive to a dealership an hour away. The only truly consistent foreign car dealerships were mostly VW dealerships. There was a reason why Chevy sold tons of Vegas and Ford sold tons of Pintos because there was at least one dealer or the other in just about every small town. Also factor into the by the early-mid 80’s the Voluntary Import Restraints, which I believe this arrangement was able to avoid the restrictions, but I may be mistaken on this point.
This makes Mitsubishi’s relationship with Chrysler a symbiotic one; Chrysler had a good sales/parts/distribution network and Chrysler needed a value-priced, high content, economical series of vehicles that Mitsubishi could provide. Later on, Chrysler used Mitsubishi’s engineering resources for a number of engines and ultimately vehicles (Diamond-Star) in to the later 80’s and 90’s.
Oddly, when Mitsubishi announced they were going to create their own dealership network, I thought it was a bit strange. Why float the costs to establish a whole new network when they already had a distribution network in place? As an example, why couldn’t they have negotiated with Chrysler to establish a series of Mitsubishi-branded boutique networks within the Chrysler dealership network? They could have “twinned” with Chrysler to offer products that the Chrysler dealers didn’t. OTOH, look at the Studebaker / Mercedes-Benz arrangement; maybe they did take a lesson from history and decided to strike out on their own.
But, then for a decade or so after announcing their independence, (with a few exceptions) they sold largely the same products as the ones they supplied to Chrysler, offering only detail differences between the cars. Diamond-Star was a big step forward in Mitsubish establishing a beachhead in the US, but beyond those cars, we never really saw anything unique coming from this arrangement. At least not in the same vein as Honda with the US Accord or Toyota with the US Camry.
During this time period, I’d hoped that Mitsubish and Chrysler would merge, because I really thought the synergies and the long-term relationship would have been good for both of the companies. Instead we got a bunch of unremarkable product from Mitsubish and the disastrous “Merger of Equals” with Daimler and Chrysler. Then Mitsubish doubled-down on the insanity and went for a series of dubious financing schemes in North America and a scandal in the home market. Not good for either company.
There was a brief moment in time where Mitsubish had a spark of redemption vis-a-vis the iMiev, one of the earlier retail attempts of electric vehicles, but ultimately it was not followed up with anything of substance and has faded into irrelevance. Then, the focus on a nearly all SUV lineup, both conventional ICE and hybrid. They still have a car entry with the Mirage, but its claim to fame is occasionally being the lowest price car in the US. Not a great legacy for that once storied nameplate. But with the unraveling of Renault/Nissan*, Mitsubish was acquired by R/N in a somewhat puzzling move. I believe the internal conflicts at R/N will only relegate Mitsubish to a sideshow before it will be absorbed completely.
There was a time that Mitsubishi was quite the auto manufacturer and I really thought they had a very bright future. But the rampant mis-management and poor decision making will relegate them to irrelevance in the future.
*(It’s still happening folks. Nissan doesn’t want any gaijin running the show and they’ll scorch the earth to make it happen.)
George, this is a terrific comment. To give it more visibility I have reposted your missive on the front page as a letter to the editor. See my response to your comment there.
Renault is the Pepe’ LePew of French car companies. How many companies have been sullied by forced financial relations with Renault? AMC, MOPAR, Nissan…
I liked Mitsu. I saw their Mirage sedan as a way to get Japanese quality in a commuter without spending Toyota money or the same for something sporting like the Eclipse. Their coachwork and paint seemed to be of generic Japanese quality, so it wouldn’t fade quickly like GMs were doing at the time. They were remora’d onto the side of a local Dodge dealer and so I went in there after work one night in the mid 90s, pay stub in my wallet. 20 minutes later, and no one having spoken to me while wandering around the showroom, I left. I still wish I had wandered next door and looked at a Neon with the ACR competition pack and short 5th gear they had but I didn’t like the colour.
Now? I wouldn’t buy one. The closest dealer is 60 miles away, and if I’m going to drive that far, I’m going to the Subaru or Mazda dealer nearby. Those stores have vehicles I like. If I were to shop on price, nah, the Mirage is the automotive equivalent of a hairshirt, even CR recommends buying something used for that price, and any money saved isn’t worth the trouble of 120 mile round trips when they might keep the car for warranty work and there’s no solid guarantee of a loaner. Much less hating myself for buying the thing.
Meanwhile, The J-3, K-2 and D-3 are here a few minutes away on this side of the mountains and I could order a base Versa or Accent if I wanted cheap. Even VW is here.But not Mitsu.
What niche could they fill where they would be successful here? I suggest all electric, no gasoline or diesel. And, oh yeah, more dealerships.
In the late 1980s and into the 1990s, Mitsubishi was introducing interesting cars, but other than partying 18-to-34-year-old-targeted television and print ads featuring exciting hot-looking cars with top rock music soundtracks, what was Mitsubishi as a brand ? What was the marketing difference to the American car-buying marketplace ? If it was to sell more Gallants, the message was off. The advertising was pushing Lancers and Eclipses to first-time new car buyers whom were not the best credit risks. Honda, Toyota and Nissan sold Civics, Tercels, Corollas and Sentras to entry-level car-buyers successfully. Other than a Chrysler dealer, how did one outside an urban area access the range of Mitsubishi models ? One thing I remember from the 1950s and 1960s was that VW, Volvo, then Toyota, Datsun (Nissan) and Honda opened dealerships in small cities and towns (like Bloomington and Lafayette, Indiana) that were home to major colleges and universities as well as major and medium urban markets. While the tie-in to Chrysler Corporation was important in the 1970s and early 1980s, I believe Diamond-Star missed the opportunity to transition to more stand-alone dealerships. Today in the metro Indianapolis market, there are only two Mitsubishi dealers with four locations between them, north, south, east and west, each with piddling sales. Each one of the three Indianapolis Subaru dealers easily outsell all of the Indianapolis Mitsubishi dealerships combined. Similarly, there are three Mazda dealers in Indianapolis, all very well-established, with four locations between them, and each one sells more Mazdas at each location than the four combined sales of all locations of the Mitsubishi dealers.
I admire Mitsubishi for sticking with the Mirage in the U.S., as I regret the Yaris, Fit, Accent, Sonic, Spark, Fiesta, and soon Rio are no longer be sold in the U.S. If/when the U.S. has a serious recession as in the late 70’s/early 80’s (when Chevette, Escort, etc. were big sellers), people will wish affordable small cars were still available.
With this update, I still note that Mitsubishi’s quality evaluations have not improved. I believe the word about Mitsu’s quality is out there. I think Hyundai / Kia have taken Mitsubishi’s market in the U.S. How is Mitsubishi doing in their home market ?
Whilst view on Mitsubishi has not changed since last comment and believe tie up with Chrysler had a negative impact on both manufacturers, was there some room for the Omni to include some content from the fourth-to-fifth generation Dodge Colt and first-to-second generation Mitsubishi Mirage & Lancer Fiore as they were launched around the same time?
Depending on the extent of the collaboration and cross-fertilisation with the Omni & Colt, would that have had a negative impact on Chrysler’s L-Car and K-Car projects?
Have also been thinking about the degree of which the sixth-to-seventh generation Dodge Colt and contemporary third-to-fifth generation Mitsubishi Mirage & Lancer were to the previous generations above.
Did Chrysler test Mitsubishi engines like say the Sirius diesel in the Omni in place of their own four-cylinder diesel project or consider it for models like the Shadow and Neon?
Also cannot help notice some degree of vague similarities between the first generation Neon and the fourth-to-fifth generation Mirage & fifth-to-sixth Lancer, the Lancer and the Neon in particular being of similar dimensions give or take a few inches.
It wasn’t just in the US, they seemed to collapse globally. While I realize this article is about their collapse in the US, I think a look at the wider perspective will perhaps help some.
Undoubtedly there were managemental issues, but whatever was going on behind the scenes, I think a dumbing-down of the product line was also a factor. From making a concerted effort to be best-in-class or pretty close, they seem to move to more of a “Meh! Good enough!” approach to product. Almost as though they were disinterested.
I could (and will) point to the ninth-generation Galant (’08-on) in your picture above, which didn’t seem to be particularly competitive against the Japanese competition. What reason was there to buy one of these instead of a Honda, Mazda or even Toyota? Discontinued with no replacement. Or the last Lancer, which stagnated from 2007 onwards, until being replaced in 2017 – but only in certain Asian markets. Apparently the rest of the world didn’t matter any more. There really was no reason to purchase it over anything else. Or the last Colt (2012-on) which (in Australian spec, anyway) was frankly an embarrassment, being not as good a drive as the previous model. The tiny wheels accented the unfortunate blobby, small-windowed styling. It just didn’t look inviting.
SUVs, yeah, they do them, but once again, they’re not noticeably different to the competition, let alone better.
We’ve been Mitsubishi owners since 1989. Thye were a progressive, enthusiastic company. Now they seem to have become automotive zombies.