Will FCA come to the rescue?
Pity Mitsubishi. The smallest of the six remaining Japanese car manufacturers has been dealt what may prove to be a fatal blow. Well, at least a blow against its US sales aspirations.
Declining sales for years have hurt Mitsubishi’s position tremendously. However, in 2014, the company reversed course, enjoying a 24.8 percent gain that was augmented by earlier news that it would soon import a midsize sedan from South Korea to pad its thin North American lineup. That model, what was to have been supplied by a Renault-Nissan assembly plant, will not happen after all as reported by Automotive News earlier this week.
Korean Won a Loss for Mitsubishi
Blame exchange rates for the cancellation as Korea’s won suddenly appreciated against both the US dollar and the Japanese yen, making exporting the prospective model unfeasible. The midsize sedan was to replace the discontinued Galant sedan; a second model to update the aging Lancer had also been discussed and is now shelved.
The proposition appeared to be a win for all parties involved. Mitsubishi would gain one or two models, it couldn’t justify building on its own. The Renault-Nissan alliance would have benefited as underutilized capacity would be put to work.
Of course, the logical arrangement would have had Nissan build the car for Mitsubishi in the US, but the company has no additional manufacturing capacity available. Moreover, those vehicles Nissan produces in the US and doesn’t sell in North America are shipped overseas, ironically to Korea where exchange rates work in its favor.
Seeking Outside Assistance
Mitsubishi isn’t throwing in the towel and will look elsewhere to flesh out its product line. Its sole assembly plant in the US is operating below capacity and would be the natural place to produce a midsize sedan. However, that model wouldn’t be sold outside of North America and volume wouldn’t be practical or profitable enough to justify designing a new vehicle from the ground up.
Two models, the subcompact Mirage and Outlander crossover utility vehicle, helped to propel Mitsubishi’s sales in 2014. Mitsubishi’s Lancer, long-favored by tuners and other small car enthusiasts, was last updated in 2008 and is now in its eighth model year. Meanwhile, the performance Lancer Evolution edition will be cancelled after the 2015 model year. Furthermore, an electric i-MiEV model is available, but its sales impact is inconsequential.
FCA and Mitsubishi
For the short term, Mitsubishi will have to rely on its two key models, while scouring the world for a manufacturing partner. FCA, also known as Fiat Chrysler, might be an alliance possibility. The companies are no strangers either as Mitsubishi long-supplied the old Chrysler Corporation with captive imports such as the Dodge Colt and Plymouth Sapporo for years. Later, Mitsubishi began to sell products under its own name and flourished for a season.
An FCA-Mitsubishi alliance could benefit FCA too. In exchange for supplying Mitsubishi with one or two models, the Japanese partner could provide FCA with improved access to Asia. Just as Renault and Nissan forged an alliance in the 1990s, FCA and Mitsubishi might look for a similar arrangement.