In the space of two months Japanese car brand Mitsubishi has lost every key figure associated with its UK marketing operation.
The rout began in March when Stephen Dixon, former managing director of the Colt Car Company (which handles Mitsubishi’s UK concession), left after allegedly being unable to settle terms for a new contract.
Two weeks ago Colin Peirce, Mitsubishi’s UK marketing director of the past 21 years, and Andrew Wenzel, sales director, followed him out of the door (MW May 6).
The entire team at Mitsubishi’s ad agency RPM3, including joint chief executive Matthew Lutos, have also been taken off the business and replaced by other executives at the agency. RPM3 is now likely to face a review of its account, according to Mitsubishi.
It is apparent that Peirce and Wenzel were pushed out by Colt’s new acting managing director, Denis Murphy, who plans to merge the sales and marketing departments under one directorship. Murphy is streamlining the entire UK operation and has postponed existing activities while he and Colt’s shareholders urgently formulate a new business plan in time for the next licence-plate change in September.
Exactly what has prompted the sudden and bloody overhaul remains, to some extent, shrouded in mystery. The official line is that it is a response to growth. But the real reason is more likely to be a malaise within Mitsubishi’s UK business, specifically an uncertain approach to the market and a problem brand with a confused personality.
Statistics from the Society of Motor Manufacturers & Traders show in the year to April, Mitsubishi’s market share has slipped from 1.11 per cent last year to 0.92 per cent this year. That mirrors a broadly similar decline from the 22,130 vehicles sold in 1997 to the 20,938 vehicles sold last year. Before that, Mitsubishi’s sales were rising.
Industry observers believe Mitsubishi’s Achilles’ heel over the past few years has been the Carisma, the first of its cars to be manufactured in Europe through a joint arrangement with Volvo. Launched in 1996, it was designed to be a competitor to the likes of the Ford Mondeo or the Vauxhall Vectra in the upper medium sector of the retail and fleet car markets.
Until the Carisma arrived, Mitsubishi in the UK was a niche player whose image had been built on the success of the low-volume Shogun 4×4. The Carisma was Mitsubishi’s big attempt to break into the mass market and boost its share to two per cent across Europe by 2000. But despite the car being perfectly adequate, it simply hasn’t delivered.
Professor Garel Rhys, director of the Institute for Automotive Industry Research at the Cardiff University Business School, says: “The Carisma has not had an easy time because it has been very late on the scene and the market is full of competitors. You have to get into the fleet market with that sort of vehicle and it was not capable of doing it.”
In the UK, marketing investment rose to about 20m a year when the Carisma launched but this year it has dipped and the model has been sold on the back of an offer to replace every new S-registered Carisma with a new one in six months. It is this offer which has really signalled desperation to the car industry.
The official rationale is that Mitsubishi needs a stock of low-mileage used cars because it wants to launch a secondhand car service to support its dealers. The Carisma two-for-one deal delivers this stock.
But however Mitsubishi spins it, special offers are often the first refuge of a struggling manufacturer. In the meantime, the Carisma’s residual values its ability to hold its value between the new and secondhand markets are crumbling at almost twice the rate of the equivalent Mondeo or Vectra.
As mass-market cars have broadly similar performance, pricing and specifications, sales come down to image and positioning. Mitsubishi appears to have struggled with making the transition from the niche market to the mass market in the UK. But that may not be purely the fault of the local marketing personnel.
Mitsubishi cars have a reputation for possessing virtually no corporate identity. As Rhys points out, if you lined up all of the Mitsubishi models in the UK, you would be hard pressed to isolate obvious design characteristics that showed it was a Mitsubishi. That is a fault of product development in Japan, and it spills over into the brand.
David Miles, PR manager for Mitsubishi, says: “It has been a constant struggle to get recognition for the Mitsubishi name. Because Mitsubishi produces a whole range of © products which don’t come from the car company, there is a misunderstanding of what Mitsubishi stands for. One of the reasons the UK company was started with the name Colt in 1974, was that it was an easier name to market.”
That has passed into practice. In October last year, Mitsubishi announced that its new five-door hatchback, the Space Star, would carry the Colt model brand. Differing model names in the UK have isolated the market from the pan-European branding activity that the Japanese parent company has developed through advertising agency Asatsu.
All of this appears to have combined to create an identity crisis for Mitsubishi in the UK. It is a brand with little personality that has been defined primarily by niche, low-volume, expensive models. Then it has launched into the high-volume market which requires a different marketing strategy. Now the brand is faced with explaining to consumers why they should pay 23,000 for a Shogun, when other Mitsubishis are practically being given away.
It’s a point acknowledged by Miles: “Effectively what we have is two brands. On the one hand we are niche and on the other we are volume. We need to combine those two images.”
That is one of the issues Colt’s new business plan, due in about three weeks, will be examining. One possibility is to follow Toyota’s example and split its volume and niche products into two brands, but this seems unlikely.
Mitsubishi in the UK is more likely to link its marketing closely with that of Europe’s in a drive to improve the image and personality of its brand. These will be possibilities for the new sales and marketing team to juggle with.,