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Stratagem
 
MITSUBISHI: INDIA PREDICAMENT
Have you Heard of The ‘BRIC’ Strategy?
It’s sad how a Giant like Mitsubishi has almost Fallen by The Wayside in The India Auto-Sweepstakes, with much of it being its Own Undoing. B&E does a to-date-legacy Summary on The Death of a Brand…in India.
Issue Date - 17/02/2011
 
With a presence in over 170 countries, there is no denying that Mitsubishi is one of the oldest names operating in the global automobile circuit, and has had glorious moments in its journey, which started way back in 1917 with the Model A. It stands as the 7th largest Japanese auto major today and the 17th largest globally.

It also took an important lead, when it set up its Chennai car plant in 1998, in collaboration with Hindustan Motors Ltd. However, despite having received rave reviews for its cars (particularly Lancer), the company is actually facing humbling times in the Indian market. One wonders why the company hasn’t been too interested in being a part of the success story of the second fastest growing auto market in the world – India. In fact, Brazil has found better favour as the Japanese automaker recently made it clear that it is trying to quickly lift global production to 1.5 million units by redistributing business resources and will be investing close to $241.5 million for securing a 50% share in MMC Automotores do Brasil SA (a Brazilian company responsible for production of Mitsubishi products). Going simply by the numbers, even globally the company seems to be developing a laudable vision – Mitsubishi is eying sales of over 13,70,000 units by the end of FY 2013 from the current sales of 1,000,000 units by the end of FY2010. The company is planning to build a third factory in Thailand, which will make it the second largest export hub after Japan. It is aiming to strengthen production in China and even start producing a new SUV series in Russia.

And what about India? Well, in all of Mitsubishi’s BRIC speak, the ‘I’, that is India, is strangely absent. And the more intriguing part is, one isn’t quite able to understand the reasons that Mitsubishi might be avoiding mentioning India as one of its topmost priorities. What could be called the ‘clarion call’ of 2010 for Mitsubishi was the fact that while Hindustan Motors sold close to 490 units of the decades-old Ambassador in the month of December 2010, Mitsubishi managed to deliver only 143 units, combining all the offerings that it has in its India portfolio! And the response of Mitsubishi to all this? Well, nothing to write home about.

It’s quite intriguing, the current situation for Mitsubishi in India. During the late 1990s, Lancer was the epitome of technology and style for the Indian consumer. The modern looks coupled with the superior technology offered exactly what its target segment was looking for. However, the years that followed have only taken the company only deeper into the woods. The biggest issue facing the Japanese giant is the product portfolio. Today, the situation is such that while any prospective buyer in India would be able to drivel off various car brand names of Mitsubishi’s competitors like Honda, Toyota, GM, it’s rare now to meet a buyer who would be able to recall even three brand names of Mitsubishi vehicles (the list starts at Lancer and ends at Pajero). Over the years, while competitors kept introducing new models specifically targeted at various demographic and psychographic consumer segments, Mitsubishi’s product portfolio has remained an awkward mix with a couple of sedans and SUVs minus a hatchback. Yes, Mitsubishi had recently showcased its global concept car at the Geneva Motor Show, which is scheduled to launch from its Thailand facility in 2012. The company has even confirmed this in its global mid-term business plan from 2011-2013, which it calls Jump 2013. But concept cars are, well, only concept cars.

 
Yes again, Mitsubishi is reportedly exploring a joint venture with France’s PSA Peugeot Citroen SA and Nissan for its small car manufacturing plans, but even these plans are unlikely to benefit their India strategy in the short-run. Worse, now the India problems for the Japanese automaker have now gone beyond the product mix – its partner (Hindustan Motors) is also facing severe challenges on its end. It is now even being reported that the Mitsubishi is now firming up its plans to part ways with Hindustan Motors. While the company has a long history of managing partnerships, it also has had bitter experiences with names like Chrysler and Mahindra in the past (Currently, the company leverages 20 business partner facilities in about 10 countries apart from eight of its own in six countries).

“But another area that Mitsubishi has been facing issues within India is that of distribution. While the product strategy for any company is very important to ensure a successful journey in any market for that matter, distribution is equally so,” says Abdul Majeed, India Leader for Automotive Practice, PricewaterhouseCoopers. In this regard, breaking up with HM might actually be a blessing in disguise. And that’s because once Mitsubishi is out of the stifling HM alliance, it could well attempt to join hands with its global partners like Peugeot and Nissan in India as well. This, quite obviously, would have the two required benefits – one, Mitsubishi’s product portfolio could get an immediate boost; two, Mitsubishi could immediately synergize its cost portfolio in production and distribution with its alliance partners and work more efficiently.

There’s also this lingering suspicion that all Mitsubishi lacks in India is visionary and energetic leadership. Take this for example. As the company launched the Lancer Evolution X model in the country last year, it was able to generate a lot of buzz in the Indian market. However, as there were no follow up efforts from Mitsubishi’s end to keep the excitement going, the consumer interest also vanished in the meantime. Be it the Lancer, Cedia or the Pajero, while the consumer is aware of these products – and might even be intending to buy them en masse – Mitsubishi itself doesn’t seem too excited of getting the Indian consumer to buy its cars (PwC’s Majeed even says, “Mitsubishi isn’t much interested in India. The company is happy selling in other parts of the world.”).

There’s also this fatalistic conjecture that Mitsubishi is actually planning to leave India in the near future and focus whole heartedly on China. Well, while we’re sure that this is only a conjecture, the fact is that if Mitsubishi even now doesn’t show extreme aggression in its India strategies, we could well be witnessing the demise of an iconic brand... in India, to say the least!

Pawan Chabra           

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