Mitsubishi, Suzuki should ‘forget’ the US car market, say analysts

ajnagpur · 10th July 2009, 13:18

Source: India Automotive: Mitsubishi, Suzuki should ‘forget’ the US car market, say analysts

According to a Bloomberg report, Suzuki Motor Corp. and Mitsubishi Motors Corp. might be forced to leave the US car market, due to plunging sales and excess plant capacities in North America. Both carmakers have been present in the US for more than two decades, but are now witnessing their worst ever performances in that market.

In June this year, Suzuki logged a 78% decline in sales in the US while Mitsubishi’s sales were down 51%. According to one Tokyo-based analyst, both car manufacturers should simply withdraw from the North American market. ‘It’s time for them to decide whether they pay a high price to continue business there or stop the bleeding,’ says Yuuki Sakurai, CEO, Fukoku Capital Management Inc. Indeed, another Japanese car manufacturer – Isuzu – has already left the US car market earlier this year.

Suzuki and Mitsubishi are, more or less, out of the reckoning already, in the US. According to automotive research analysts, car buyers in the US don’t even think of these two brands when deciding on which new car to buy. Both are among the bottom five, out of 35 car brands that are tracked in the US by Strategic Vision. In order to change that, both companies would have to invest heavily in marketing activity and neither is likely to be in a position to do so. ‘We’re not talking about a one-time investment, but a consistent, sustained effort. If they’re looking for a quick fix, continuing in the market will be tough,’ says Sakurai.

On the other hand, the carmakers are quite adamant on continuing in the US. ‘We will never give up the US market. The U.S. will return to being the world’s biggest market,’ said Osamu Masuko (President - Mitsubishi Motors) recently. However, Mitsubishi does plan on changing its product mix for the US and will look at launching hybrid, EVs and other smaller, more fuel-efficient cars there, including the i-MiEV electric car, in 2010.

Suzuki, too, still hasn’t given up on the US. The company continues to work on its new mid-size sedan, the Kizashi, with which it hopes to take on cars like the Accord and Camry in the US. However, the Suzuki name is associated with smaller cars in the US (as, we suppose, elsewhere in the world…) and peddling a bigger car may be a challenge for the company.

‘It makes more sense for Suzuki to put its limited resources into small cars and forget about America,’ says Yasuaki Iwamoto, an automotive analyst at the Tokyo-based Okasan Securities Co.

GTO · 10th July 2009, 19:12

Quote:

Originally Posted by ajnagpur

Both carmakers have been present in the US for more than two decades, but are now witnessing their worst ever performances in that market.

Actually, Suzuki & Mitsubishi were always bottom of the pack performers in the United States. Simply put, no one wanted to buy their cars. And the ones who did faced the lowest resale values when it was time to sell. Hyundai faced the same situation in the 80's and a part of the 90's, yet managed to improve their position in the worlds ex-largest car market (Is China still the leader in sales?) with extremely aggressive product, marketing, branding and warranty strategies.

In the car industry, you can't be everything to everyone. Just ask Daimler - Chrysler. Amongst the most successful small (relatively) independent car makers of today are Honda & BMW. Reason? Focus. BMW on high-end luxury cars and Honda with its Civic, Accord and CRV. Suzuki has always been competent at making small cars, sadly the US was never a small car marketplace. Mitsubishi simply didn't have the R&D money to invest in new cars, look at their flagship SUV : The Montero (aka the Pajero). It's based on a decade old platform, the current gen is only facelifted. It's also a well known fact that Suzuki & Mitsubishi never quite matched the long-term quality of Toyota & Honda.

I can understand their unwillingness to move out of such a profitable market. But tough times generally skin out the weakest players. It's inevitable.

Nitin · 10th July 2009, 20:58

Makes me wonder, why in the first place did I go in for the Lancer!
Suzuki & Mitsubishi both need to rethink their stratergies if they want to remain in the market. Mitsubishi Raider (the pick up truck)has been such a failure, I don't understand why they'd still have it in their line up. Suzuki Forenza is another one.
Kinda OT:
I got a letter from the dealership saying that they are looking to buy back a lot of cars due to the demand for used cars. I've got 1/2 a mind to see if they'll take back the car and give me a decent amount for it. The flip side being the negative equity I rolled over into this car!.

devarshi84 · 11th July 2009, 00:22

Mitsubishi and Suzuki are going nowhere from the US.

Mitsubishi just stopped production of the gallant recently (discontinued in Australia last month under a different name). Mitsubishi is now taking the road followed by Subaru. Well built fun to drive cars. One of the mistakes they made was rely too much on Chrysler in the 90's for their badge engineered Eagle cars which didnt sell well. Now they have the plant capacity but not the sales. The need more dealerships and awareness among the consumers to be competitive. Mitsubishi was once the frontrunner to sell Pontiacs for GM based on Mitsubishi. They also courted the new Saturn brand owners (Penske). Dont know if anything worked out.

Suzuki has been shadowed by GM for a long time. Suzuki still needs decent cars to compete in the market. The best way would be to bring in their best hatches in this environment.

Different companies behave differently and most companies take hard hits before understanding it.

Mazda and Subaru are two of the small Jap companies who have done well in the NA market. Mitsubishi and Suzuki must learn from them.

PS: On a side note, are there any talks of mergers or even the slightest hints? Usually such bizarre news creep up when something is cooking. And with so many mergers, bankruptcies and sales, there is high probability.

Parm · 11th July 2009, 00:26

well both are welcomed to increase their range of vehicles in india!

specially MMC which is still selling the outdated jurasic park pajero!

abhi1309 · 11th July 2009, 12:06

I doubt the survival of MMC even in India. The company has severely been low on cash. No new launches, nothing exciting coming up. Nothing but the driving challenge gimmick.

aaggoswami · 11th July 2009, 17:48

Quote:

Originally Posted by GTO

It's also a well known fact that Suzuki & Mitsubishi never quite matched the long-term quality of Toyota & Honda.

I can understand their unwillingness to move out of such a profitable market. But tough times generally skin out the weakest players. It's inevitable.

I think that Suzuki with its small SUV and Mitsubishi for Lancer and Pajero had a following in US. Suzuki is unfortunately not associated with cars, but rather with motorcycles. Suzuki is one of the three manufacturers that were first making two wheelers and then upgraded to cars. The other two are Honda and BMW. BMW made airplane engines, but I am talking in reference with cars and bikes.

The mechanical reliability of Suzuki and Mitsubishi are as good as Toyota or Honda. If a Suzuki can survive in India, it can do so anywhere in the world. Yes, its not better than what Toyota offers, but then its not bad either. Its atleast better than what GM and Ford had to offer.

The current Suzuki lineup, specially SX4 is well appreciated and received positive reviews from the media, but still Suzuki is not able to sell them. Its IMHO, bad luck to say the least. Similar is true for Lancer.

Rather than a flawed line up, I think its strategy and bad luck that have pulled them down. Suzuki's major mistake is not giving the current swift to US. They were asking for it, but Suzuki was late. Suzuki has admitted to this mistake and said " not everyone is like toyota ". They are paying the price for it.

I am not sure what Mitsubishi has in its store, but for Suzuki the next generation line up might be of some help. The upcoming Kizashi sedan that is rumored to be unveiled in December in some motor show can be helpful for the company. The next generation Swift that is expected in around March 2010 is also destined for US market, so its still a strong case for Suzuki. Add to that the fact that US is moving towards smaller cars.

sushanthr77 · 11th July 2009, 19:26

Quote:

Originally Posted by aaggoswami

If a Suzuki can survive in India, it can do so anywhere in the world.

Can it? With what line up? The SX4 and the Vitara? Suzuki is not just a survivor in India but is also the market leader. And it does so not because of the above vehicles. It simply does not have the vehicles / technology to compete with Toyota / Honda / GM / Ford and the rest. From the scheme of things it will probably not have anything competent for the US market in the near future.

Quote:

Originally Posted by aaggoswami

Its atleast better than what GM and Ford had to offer.

In US?! You must be kidding!!! (Or is it India you are talking about?) In fact, Suzuki can't even compete with the diverse Hyundai / Kia in US!

aaggoswami · 11th July 2009, 19:44

Quote:

Originally Posted by sushanthr77

Can it? With what line up? The SX4 and the Vitara? Suzuki is not just a survivor in India but is also the market leader. And it does so not because of the above vehicles. It simply does not have the vehicles / technology to compete with Toyota / Honda / GM / Ford and the rest. From the scheme of things it will probably not have anything competent for the US market in the near future.

In US?! You must be kidding!!! (Or is it India you are talking about?) In fact, Suzuki can't even compete with the diverse Hyundai / Kia in US!

I was talking in reference with mechanical reliability. They are short on products, but may be I am an Indian so my reference is just limited to reliability i.e. the car does not break down. Thats all. I can live with rattles if they come up.
But as far as powertrain reliability goes, I think Suzuki is quite good and better than GM or Ford and upto the level of Toyota and Honda.

greatmana2000 · 10th May 2010, 22:27

Quote:

Originally Posted by sushanthr77

Can it? With what line up? The SX4 and the Vitara? Suzuki is not just a survivor in India but is also the market leader. And it does so not because of the above vehicles. It simply does not have the vehicles / technology to compete with Toyota / Honda / GM / Ford and the rest. From the scheme of things it will probably not have anything competent for the US market in the near future.

TOday technology is something which can be bought off the shelf . I think suzuki has much better access to technology than Honda .. Classic case would be the multijet engines .May be they just dont know what vehicle they need to sell in the US market .

In US?! You must be kidding!!! (Or is it India you are talking about?) In fact, Suzuki can't even compete with the diverse Hyundai / Kia in US!

Well, in many countries I think Suzuki has a much better model lineup and name as well .

10th July 2009, 13:18	#1
ajnagpur BHPian Join Date: Feb 2008 Location: Nagpur, Pune, Washington DC Posts: 253 Thanked: 145 Times	Mitsubishi, Suzuki should ‘forget’ the US car market, say analysts Source: India Automotive: Mitsubishi, Suzuki should ‘forget’ the US car market, say analysts According to a Bloomberg report, Suzuki Motor Corp. and Mitsubishi Motors Corp. might be forced to leave the US car market, due to plunging sales and excess plant capacities in North America. Both carmakers have been present in the US for more than two decades, but are now witnessing their worst ever performances in that market. In June this year, Suzuki logged a 78% decline in sales in the US while Mitsubishi’s sales were down 51%. According to one Tokyo-based analyst, both car manufacturers should simply withdraw from the North American market. ‘It’s time for them to decide whether they pay a high price to continue business there or stop the bleeding,’ says Yuuki Sakurai, CEO, Fukoku Capital Management Inc. Indeed, another Japanese car manufacturer – Isuzu – has already left the US car market earlier this year. Suzuki and Mitsubishi are, more or less, out of the reckoning already, in the US. According to automotive research analysts, car buyers in the US don’t even think of these two brands when deciding on which new car to buy. Both are among the bottom five, out of 35 car brands that are tracked in the US by Strategic Vision. In order to change that, both companies would have to invest heavily in marketing activity and neither is likely to be in a position to do so. ‘We’re not talking about a one-time investment, but a consistent, sustained effort. If they’re looking for a quick fix, continuing in the market will be tough,’ says Sakurai. On the other hand, the carmakers are quite adamant on continuing in the US. ‘We will never give up the US market. The U.S. will return to being the world’s biggest market,’ said Osamu Masuko (President - Mitsubishi Motors) recently. However, Mitsubishi does plan on changing its product mix for the US and will look at launching hybrid, EVs and other smaller, more fuel-efficient cars there, including the i-MiEV electric car, in 2010. Suzuki, too, still hasn’t given up on the US. The company continues to work on its new mid-size sedan, the Kizashi, with which it hopes to take on cars like the Accord and Camry in the US. However, the Suzuki name is associated with smaller cars in the US (as, we suppose, elsewhere in the world…) and peddling a bigger car may be a challenge for the company. ‘It makes more sense for Suzuki to put its limited resources into small cars and forget about America,’ says Yasuaki Iwamoto, an automotive analyst at the Tokyo-based Okasan Securities Co. Last edited by GTO : 10th July 2009 at 19:04.
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10th July 2009, 20:58	#3
Nitin Senior - BHPian Join Date: May 2006 Location: Houston, Texas Posts: 3,294 Thanked: 20 Times View My Garage	Makes me wonder, why in the first place did I go in for the Lancer! Suzuki & Mitsubishi both need to rethink their stratergies if they want to remain in the market. Mitsubishi Raider (the pick up truck)has been such a failure, I don't understand why they'd still have it in their line up. Suzuki Forenza is another one. Kinda OT: I got a letter from the dealership saying that they are looking to buy back a lot of cars due to the demand for used cars. I've got 1/2 a mind to see if they'll take back the car and give me a decent amount for it. The flip side being the negative equity I rolled over into this car!.
	() Thanks

11th July 2009, 00:22	#4
devarshi84 Senior - BHPian Join Date: Jun 2005 Location: Ahmedabad - Tor Posts: 4,024 Thanked: 211 Times View My Garage	Mitsubishi and Suzuki are going nowhere from the US. Mitsubishi just stopped production of the gallant recently (discontinued in Australia last month under a different name). Mitsubishi is now taking the road followed by Subaru. Well built fun to drive cars. One of the mistakes they made was rely too much on Chrysler in the 90's for their badge engineered Eagle cars which didnt sell well. Now they have the plant capacity but not the sales. The need more dealerships and awareness among the consumers to be competitive. Mitsubishi was once the frontrunner to sell Pontiacs for GM based on Mitsubishi. They also courted the new Saturn brand owners (Penske). Dont know if anything worked out. Suzuki has been shadowed by GM for a long time. Suzuki still needs decent cars to compete in the market. The best way would be to bring in their best hatches in this environment. Different companies behave differently and most companies take hard hits before understanding it. Mazda and Subaru are two of the small Jap companies who have done well in the NA market. Mitsubishi and Suzuki must learn from them. PS: On a side note, are there any talks of mergers or even the slightest hints? Usually such bizarre news creep up when something is cooking. And with so many mergers, bankruptcies and sales, there is high probability. Last edited by devarshi84 : 11th July 2009 at 00:25.
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11th July 2009, 00:26	#5
Parm Senior - BHPian Join Date: Jul 2008 Location: in a Toyota! Posts: 2,753 Thanked: 890 Times	well both are welcomed to increase their range of vehicles in india! specially MMC which is still selling the outdated jurasic park pajero!
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11th July 2009, 12:06	#6
abhi1309 BHPian Join Date: Jun 2007 Location: Pune Posts: 446 Thanked: 68 Times View My Garage	I doubt the survival of MMC even in India. The company has severely been low on cash. No new launches, nothing exciting coming up. Nothing but the driving challenge gimmick.
	() Thanks