Mitsubishi pulls out out of UK and European markets.

[mmcartalk]

This one caught me at least partly by surprise. Mike (Mikeavelli) and I, years ago, used to discuss how long we thought it might take for Mitsubishi to pull out of the American market. Well, it looks like they are calling it quits across the pond, but they are still hanging on by a thread here in the U.S.

As I see it (although some others disagree with me), Mitsubishi's main problem is a simple lack of dealerships. I'm a firm believer in that, in most cases, at least in a traditional automotive business, you cannot sell what you don't have franchised dealerships for. Even Tesla, though not a traditional franchise-operation, at least has a network of company-owned shops. But, here, in the U.S., Mitsubishi's problem (besides dropping too many models), is that they did the same thing that Isuzu and Suzuki did before they folded......simply allowed their network dealerships to trickle down to almost nothing. At one time, maybe ten years ago, there were four or five Mitsu dealerships in the Northern Virginia area where I live....that number trickled down to zero until a new Mitsu franchise opened up in Manassas last year (I did a unusual MM-Dealer-Review on it). But it is a rather unimpressive dealership that operates out of very old warehouse-type buildings that are shared with a used-car franchise and an industrial park. While this is a sign that the company is not yet quite dead in the U.S., it is still holding on by a thread.....until it gets some more dealerships.

Case in point...I had a friend, in Carson City, NV, who was interested in a new Mitsubishi Outlander Sport, because it was a decent small crossover SUV, with AWD, at a nice low price and very long warranty. What stopped him?.......the nearest Mitsubishi shop was 80 or 90 miles away, in California, on the other side of Lake Tahoe, and it may not even be there any more. So much for that.

Mitsubishi to pull out of the UK and other European markets

Mitsubishi Motors in the UK has written to all its UK franchised retail partners to tell them that the Japanese car manufacturer is pulling out of the UK and European new car markets.

www.businessinnovationmag.co.uk

MITSUBISHI TO PULL OUT OF THE UK AND OTHER EUROPEAN MARKETS
28th July 2020

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Mitsubishi Motors in the UK has written to all its UK franchised retail partners to tell them that the Japanese car manufacturer is pulling out of the UK and European new car markets.
A statement from the company said: “On Monday July 27 The Colt Car Company learned that Mitsubishi Motors Corporation is freezing the introduction of new vehicles in Europe, including the UK. The current range of Mitsubishi vehicles will remain on sale, however, and our valued customers can be assured that they will continue to receive FULL support in terms of service, repair, warranty, recalls, parts and accessories well into the future.”
“There are currently 247 employees in Cirencester (across The Colt Car Company, Spitalgate Dealer Services Limited and Shogun Retail Limited)
“Although Mitsubishi Motors Corporation will not be bringing in any new cars to the European market, including the UK, the Colt Car Company will continue to sell the current Mitsubishi Motors range to our UK Dealer network from our base here in Cirencester.
“The Colt Car Company has been looking for additional complimentary brands to bring to the UK market and has commenced some very preliminary discussions in this respect and with the announcement from Mitsubishi Motors will be looking now to accelerate this effort.”
Mitsubishi cars have been imported into the UK by the Cirencester-based Colt Car Company since 1974. The company, which seems to have had no prior inkling of the announcement, said that it would attempt to accelerate its plan to bring other emerging brands into the UK to replace the space left vacant by Mitsubishi. The company turns over more than £500 million annually and employs around 350 people.
Colt has written to its network to say that it had not foreseen the news and that as many retailers as possible would be retained as part of a parts and aftersales network.
Mitsubishi Motors, a junior member of the auto alliance of Nissan Motor and Renault SA, said that it had no choice but to reduce its fixed costs by 20 per cent and focus on investment in core markets where it sees potential.
Globally the company sold just 139,000 vehicles in the April-June quarter, down more than 50 per cent from last year.
The global pandemic has accelerated the adoption of electric, hybrid and plug-in cars in Europe, with diesel and petrol vehicles losing traction as a result. June was no exception to this trend. While petrol and diesel registrations fell by 32 per cent and 31 per cent respectively, compared to June 2019, the volume of new EVs registered rose from 111,300 units in June 2019 to 183,300 units last month, up by 65 per cent. In other words, the market share of EVs was 16.2 per cent, which closes the gap to less than eight percentage points compared to the market share for diesel cars. For every EV registered, in June 2019, there were 1.7 diesel cars registered – a ratio of 4.1 to 1, according to JATO Dynamics which provides timely, accurate and up-to-date automotive information on vehicle specifications across the world, pricing, sales and registrations.

 

[Sulu]

As I see it (although some others disagree with me), Mitsubishi's main problem is a simple lack of dealerships. I'm a firm believer in that, in most cases, at least in a traditional automotive business, you cannot sell what you don't have franchised dealerships for.

You and I have had this discussion elsewhere, Mike. I don't disagree with you. I just believe that it is a chicken-and-egg, cause-and-effect issue.

You are correct that any automaker without enough dealerships is going to have a problem selling cars. But in Mitsubishi's case, the lack of dealerships was probably the effect of dealerships closing due to selling so few cars. If a dealership cannot sell enough of a brand of cars, it may voluntarily give up the franchise or the automaker may force them to give up the franchise (it also costs the automaker money to keep dealerships stocked so to minimize costs, an automaker may force poorly-performing dealers to give up their franchise). I remember GM (was it Chevrolet?) trying to get dealers to give up their franchises during GM's bankruptcy proceedings.

Poor sales leads to fewer dealerships, leads to poorer sales, leads to even fewer dealerships. The trick is to be long-term strategic and close dealers in truly slow-selling areas but keep dealers in areas where Mitsubishi is most likely to sell.

As for the pullout from UK and Europe (what, UK is no longer considered to be a European country??), it sounds like they are trying to point the finger at Renault and Nissan's cutbacks, now that Mitsubishi is a junior member of that alliance (under Nissan's thumb).

 

[mmcartalk]

You and I have had this discussion elsewhere, Mike. I don't disagree with you. I just believe that it is a chicken-and-egg, cause-and-effect issue.

Yes, I understand the chicken/egg concept. But, in my experience, from what I've seen, in the auto business, the chicken usually causes the problem. No chickens means no eggs. Tesla has also proved (although their company-owned shops are admittedly expensive to run and maintain), that an auto manufacturer can have places to sell their vehicles even without traditional franchised dealerships.

I remember GM (was it Chevrolet?) trying to get dealers to give up their franchises during GM's bankruptcy proceedings.

That was also the case with Chrysler, during their bankruptcy hearings.