Friday, March 25, 2005

Richard Drew / Associated Press It's hoped the 2006 Mitsubishi Lancer Evolution IX introduced Thursday will polish the firm's mottled image.

2005 New York Auto Show

Mitsubishi poised for sales to shine in U.S., CEO says

Cover-up scandal obscures a gleaming vehicle lineup, its new leader claims.

By John Porretto / Associated Press

Richard Drew / Associated Press Richard Gilligan, 61, the new CEO of Mitsubishi Motors North America, says a glowing lineup of vehicles will help return the firm to a time when "Mitsubishi was a 'cool' car company" and did not emphasize automotive fleet sales, he says. Comment on this story Send this story to a friend Get Home Delivery

NEW YORK -- For someone whose Japanese employer has been plagued by defect cover-up scandals at home and plunging U.S. sales, the new boss at Mitsubishi Motors North America is surprisingly upbeat.

The reason, said Richard Gilligan, tapped to run Mitsubishi's American arm in January, is that beneath all the financial and image problems lies a strong portfolio of vehicles that gets even beefier this year with a new pickup and other offerings.

"We haven't done a very good job of telling our story as well as we can and as well as we will," Gilligan said in an interview with The Associated Press at the New York International Auto Show.

During the show's media preview Thursday, Mitsubishi introduced a new high-performance compact sedan called the Lancer Evolution IX and touted two other vehicles coming to showrooms this year: the next-generation Eclipse coupe and the Raider mid-size pickup, Mitsubishi's first such offering since 1997.

The Eclipse is scheduled to go on sale in June, the Raider in October.

They'll join the lineup of a company that needs all the help it can get.

Poor business in the United States has contributed to Mitsubishi's problems at large, but it's only part of an extremely troubled company. Tokyo-based Mitsubishi said last month that losses more than doubled to about $2 billion in the first nine months of its current fiscal year.

Business has suffered in the wake of the automaker's admissions last year that it had continued to hide auto defects to avert recalls, even though it had promised to end the cover-up when a similar scandal surfaced five years ago.

Gilligan, who worked at Ford Motor Co. for three decades and joined Mitsubishi on the U.S. manufacturing side in 1998, says the key to survival in North America is generating interest in vehicles, not in the former financing schemes that attracted high-risk buyers and led in part to the company's decline.

Gilligan said the product-led push will begin in earnest in June with a new advertising campaign focused on the Eclipse, a sporty car long popular among the younger set.

"In the late '90s and early 2000, Mitsubishi was a 'cool' car company," said Gilligan, 61, who replaced Finbarr O'Neill following O'Neill's resignation after only 16 months to join supplier Reynolds & Reynolds.

"We got off track," he said. "We got enamored with volume and put a lot of focus on fleet sales, and that's risky. At the end of the day the product is king. The car has to be the star."

When Mitsubishi was selling 300,000-plus vehicles in the United States a few years ago -- versus 161,609 in 2004 -- 30 percent or more of those sales were to rental and other fleets, which had a negative effect on residual values and, in turn, on customer satisfaction.

Gilligan said the company's new target is roughly 10 percent fleet sales.

"You need enough to get exposure for your product, for people renting on vacation or on business travel, but not to the point where you put the business at risk," he said.

The company also has backed away from its former practice of touting zero-percent financing, requiring no money down and deferring payments for several months.