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Mitsubishi sets sights on profit

Mitsubishi has fixed its sights on a 50,000 market in the UK with a refocused model line-up.

The Japanese carmaker’s UK importer, Colt Car Company, which trades as Mitsubishi UK, stresses the need for profits rather than volume and says by taking this approach it will be able to maintain its current network of almost 150 dealers.

Lance Bradley, Mitsubishi UK sales and marketing director, says: “This year we will sell 40,000-42,000 cars and we will be at 40,000-45,000 for the foreseeable future. If the new Lancer is a big success we could hit 50,000, but I don’t want to go much further. You can’t be a specialist player with mainstream volume.”

Pinin Sport will be dropped in favour of a Colt, Lancer, Evo, Outlander, Shogun, L200 line-up. Bradley expects the number of dealer owners to fall from 90 to around 75 over time, but adds: “This will be natural with some retailers selling up or changing franchise – we are not trying to get rid of any dealers.”

The company has enjoyed a strong year to date, with Colt and L200 pushing sales up 13% in a market down 10%. Dealer profits are under pressure, particularly with growing emphasis on the smaller, lower margin supermini, but Mitsubishi attempted to alleviate some of the pain with a surprise second quarter bonus. “We gave every dealer an additional bonus of £200 on each car they registered during that period,” says Bradley. “That helped their profits.”

New car margins, averaging 9%, are largely given away to customers, with dealers receiving revenues for achieving their franchise standards, plus two-stage target bonuses for first meeting monthly targets and second for achieving more than 100 sales above target.

While most dealers are profitable, some are making big losses. “We employed two former dealer principals at the end of last year as dealer development managers to work with around a dozen of our least profitable dealers,” Bradley says. “It’s been really successful and we are considering employing another two.”

Strategy keeps it simple

Mitsubishi believes its future lies in finding niches and moving the pricing point upstream rather than chasing volume. Styling with practicality is key.

“Our vision is for better cars that are moved upstream,” says Tim Tozer, Mitsubishi Motors Europe CEO. “We can have niche model ranges, but we don’t have to have every possible body style and engine.”

Tozer implies that the Colt, available with three- and five-door versions, plus a wide range of engines, will be the last time the company offers such a broad line-up. “Our strategy is to keep it simple for our dealers. And by having fewer derivatives it makes production more efficient, which reduces costs.”

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