George Denzinger recently wrote a lengthy — and quite nuanced — comment that I would like to highlight on the front page as a letter to the editor. His missive was in response to the story, “Why did Mitsubishi fail in the United States?”
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 Denzinger
RE:SOURCES
- Wikipedia; 2022. “Mitsubishi Mirage.” Page last edited Jan. 31.
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George, you make some great points — and fill in a variety of worthwhile details. For example, your point is well taken that there were times, particularly early on, when the relationship between Chrysler and Mitsubishi was quite valuable to both sides.
I find your idea of a Mitsubishi dealer network within Chrysler to be particularly interesting. That approach could have completely eliminated badge engineering of Mitsubishi products if both Dodge and Chrysler-Plymouth dealers were allowed to sell the Mitsubishi line. That might have raised a stink with dealers located in close proximity to each other, but such redundancy needed to get weeded out anyway.
I say that recognizing how Iacocca may have been afraid to integrate the Chrysler dealer networks when he had the greatest opportunity to do so — during bailout negotiations. Or, perhaps given his experience at Ford in the 1970s, he didn’t have a problem with badge engineering (go here for further discussion).
I see from a recent Automotive News story that Mitsubishi saw stronger sales last year. Perhaps that means we won’t see the brand close up shop in the U.S. anytime soon. However, I still don’t get what distinguishes Mitsubishi these days besides weird styling.
Interesting discussion. I’d look a little further back.
MMC was late to the party as an OEM in Japan. Perhaps it was a bit of hubris of the Mitsubishi keiretsu to think they could compete with Toyota and Nissan in auto manufacturing decades after they had been established. But Mitsubishi was among the biggest of the keiretsus if not the biggest and hubris may have gone with the territory. By 1971 they had managed to develop competitive product. But with substantial financial losses, and no real path to profitability. As I understand it that’s why Mitsubishi wanted to sell a chunk of MMC to a multinational — to have the multinational teach MMC how to make cars profitably. And the Japanese government had been promoting consolidation in the industry (see e.g. the merger of Nissan and Prince), so this may also have been a matter of survival for MMC.
Unfortunately, Chrysler was not an ideal partner. It didn’t have the know how to teach MMC how to profitably make and sell small cars. It was only marginally able to do that with SIMCA, and was failing miserably with Rootes. And its motivation in acquiring stakes in each of these operations was GM envy, not a global strategy of its own. It wanted a MMC stake primarily for exposure to the Japanese consumer market, not for MMC’s capacity to export.
This mismatch was perhaps tolerable for the first few years since Townsend’s Chrysler had decided to forego making its own subcompact in competition with the Vega, Pinto and Gremlin and needed to give its dealers something to sell in that segment. And the Rootes product they initially sold through the Plymouth franchise bombed. So MMC got an advantage that Honda, the other relative newcomer in manufacturing in Japan lacked.
But then came CAFE in 1975. This made it impossible for Chrysler to avoid competing with MMC. It had to make its own small cars, and sell them in volume to bring its corporate average fuel economy down. It had to make the Omni/Horizon and then the K cars. And it had to push them through its dealer networks in maximum volume to the expense of MMC. MMC’s decision to set up its own dealer network in the early 80’s is very likely a product of this dynamic that would not have happened if CAFE had not happened.
So while Honda rode the import wave to breakthrough success in the late 1970s and early 1980s, MMC was hamstrung.
On the what could have been front, I wonder whether pursuing a Diamond Star type collaboration from the outset would have enabled success where both of Chrysler and MMC ended up struggling. Could the 3rd generation Galant been co-developed with a Hillman Hunter replacement and domestic Dodge around 1977? And perhaps the 2nd generation Lancer as well? Would MMC have been interested in participating in L Body development to sell a fwd hatch in Japan? Would MMC have been prepared to invest in and share factories in England or the US? Could Chrysler have learned Japanese lean manufacturing techniques earlier than its Detroit rivals?
The above essay and comments paint a picture that is a fascinating example of how a series of bad decisions, missteps and mismatched advertising can result in disaster.
In the mid-1970s and early 1980s, I drove the entry-level “rice-burners” as urban commuter cars on the roads and highways in Central Indiana. (My wife drove my Chevy Nova Custom.) We owned a Honda Civic, then a Toyota Corona (!) and then a Dodge Colt (1.5-litre) station wagon. The Honda was too small, but I wound up driving the Corona until it was rear-ended on the Interstate in stopped traffic, but earlier, at 57,000-miles, the Toyota engine lost its timing chain at 55-m.p.h., requiring a complete rebuild.
Later, I drove the Dodge Colt wagon, but it too puked its timing chain and destroyed the engine. All of the Japanese cars were easily infected by the tin-worm given the calcium-chloride / salt mixture used by the highway departments. By the early-1980s, Honda, Toyota and Mitsubishi had all improved the durability of their engines; however, it was Honda, Toyota and Subaru that had earned the reputation for reliable transportation.
By the time Diamond Star Motors had finished their plant in Normal, Illinois, Mitsubishi was churning out a large range of vehicles and was a major supplier of engines and entry-level cars for Chrysler. What happened in the 1990s from my professional (mass media / advertising) perspective is that Mitsubishi’s TV and print advertising was aimed squarely at first-time new car buyers, ages 18-34, whose credit was building, yet wanted exciting and flashy vehicles. Lancers and Colts were not Civics, Tercels or Corollas in terms of durability and staying power, so like the original Hyundais, they were just driven into the ground, with owners who found that their formerly exciting Mitsubishis were not as reliable as they thought as the “new” wore off.
Stir in the zero-interest financing and poor due-diligence, the word was out that Mitsubishis were just not as good as the rock music advertising image portrayed. On the other hand, look at how Subaru, Honda and Toyota’s advertising from the mid-1980s on matched customers’ perceptions and expectations.
My in-laws bought a mid-80s Galant that was very comfortable and technologically impressive. It had rear seat headrests and reclining rear seatbacks that were greatly appreciated on long family trips, and the interior was richly trimmed… a cut above Toyota, Honda and Nissan. That car completely changed my impression of the company, but only for a time. They too often failed to build on their successes.
In the Seventies I have to wonder if their name was an inhibitor to marketing their own cars. WW2 was still fresh in the minds of many middle-aged and older folks.