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Mitsubishi says no to discount 'madness'

Mitsubishi UK managing director Jim Tyrrell has vowed that the brand will not participate in the “madness” of huge new car discounts and self-registrations that some rival Japanese brands are doing.

He has been supporting his network's focus on more profitable used car sales since January, and hopes the resurgence of demand in that sector will shift to new cars as supplies of quality used cars diminishes.

“We run the business for margin. I don't get excited about sales volumes” he said. “We're definitely not going chasing market share at the expense of our and dealers' profitability.”

“We said to dealers not to expect no targets because they will need to achieve a volume, but we have set targets that we think are reasonable for dealers and we expect them to strive to achieve these.”

For some dealers who had a very poor start to 2009's new car sales, he has made their March target figure into their total objective for Q1.

Profitability has been a major issue.

Most of Mitsubishi's dealers are independent or regional operators and too few ended 2008 in the black.

That prompted the carmaker to strip the operating costs of its franchise for 2009, equivalent to a £50,000 saving for a small dealer.

Tyrrell's business plan is to achieve breakeven at the year-end.

Aftermarket programmes are also helping dealers, he said.

The timely launch of the Mitsubishi Service Plan two years back has achieved 98% penetration rate, and 90% use it, meaning more second and third services are kept within the network.

A national deal with Millers Oils has enabled dealers to reduce the costs of their lubricants, and while maintaining the same margin have passed on a more competitive service offer to Mitsubishi owners.

A similarly-styled tyre programme has just been signed off with an independent distributor.

“It's about helping to keep service and repair costs down,” said Tyrrell.

Mitsubishi dealer reaction

A Mitsubishi dealer, who asked not to be named, said in response to Tyrrell: “The new car sales target is lower and it is achievable.

But we need the tools to do the job, by which I mean, more marketing support in order for us to compete against other Japanese brands on a fairer footing. I sell other Japanese marques and they are flying out the door because we get holistic support.”

Another Mitsubishi dealer, who also wanted to remain anonymous, said: "They’ve made some positive steps to take a lot of cost out of the business for us this year. The target reductions that have been set have also been sensible in reaction to the current market.

“We’re happy with the amount of support we’ve had from their marketing this year too.

"They’ve managed to get on television with advertising which has helped boost footfall at our showroom. We’re feeling very motivated at the moment.”
 

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