COMPANY PROFILE -Mitsubishi Motors
Business Sector :Automobile
Operating Geography :Asia, Japan, Global
About Mitsubishi Motors :Initially started as an automotive division of the Mitsubishi Heavy industries in 1917, it was incorporated as a wholly owned subsidiary in 1970. It is a multinational automobile manufacturer, headquartered in Tokyo, Japan and has around 30,000 employees globally.
Mitsubishi Motors Revenue :$20.126 billion – FY ending March 2016
Competitive Analysis of Mitsubishi Motors
|1. Strong support from the Mitsubishi group companies|
2. Affordable pricing relative to competitors
3. Comprehensive product portfolio across the automobile categories
|1. Recurring quality and safety issues leading to high recall and repair costs
2. Negligible market share in non-SUV segments
3. Low brand awareness in the western markets
4. Weak governance systems
|1. Strategic alliance with Nissan |
2. Strong presence in the high-growth economies of ASEAN region
3. Increasing adoption of hybrid and electric cars in developed countries
|1. Loss of credibility due to the fuel efficiency scandal
2. Declining Japanese economy
3. Political and economic turmoil in Europe, US and Russia
4. Intensifying competition in the automobile industry
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Detailed SWOT Analysis of Mitsubishi Motors
1) Recurring quality and safety issues leading to high recall and repair costs: Mitsubishi Motors has faced significant issues regarding the quality and safety of its cars leading to frequent recalls over the years. In fact, with a recall rate of 1.09, it ranks among the lowest in reliability among the major automobile companies in the world.
2) Negligible market-share in non-SUV segments: As per FY2015 data, the SUVs and pick-up trucks account for more than 50% of the sales of Mitsubishi Motors by volume. Though Lancer and Mirage have decent foothold in some markets, other mini-cars and sedans are struggling to capture market-share in their segments.
3) Weak governance systems: Weak governance was identified as the root cause of the fuel mileage scandal by an independent probe panel hired to investigate the matter. It found that the company suffered from lack of communication, excessive pressure on engineers and lack of a unified approach to manufacturing.
4) Low brand awareness in the Western markets: While having a niche positioning in some segments may be desirable, the company suffers from lack of brand awareness in countries like the US which hampers it from attaining economies of scale in these markets.
1) Strategic alliance with Nissan: Nissan Motors got into a strategic alliance with Mitsubishi Motors by acquiring 34% stake in May 2016. This deal makes Mitsubishi a part of the global Renault-Nissan alliance thus helping to leverage the production, distribution and technological capabilities of these companies for greater profitability.
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References used in Mitsubishi Motors Analysis Report
1. Mitsubishi Motors Annual Report 2016: www.mitsubishi-motors.com/content/dam/com/ir_en/pdf/anual/2016/annual2016.pdf
2. Mitsubishi Motors Mid-Term Business Plan FY2014-16: https://www.mitsubishi-motors.com/content/dam/com/ir_en/pdf/financial/2013/131106-1c.pdf
3. Mitsubishi Motors – Facts and Figures 2016 :https://www.mitsubishi-motors.com/content/dam/com/ir_en/pdf/fact/2016/fact_2016_15.pdf
4. Economist (May 27, 2004) - All in the family: https://www.economist.com/node/2714699
5. SeekingAlpha - Mitsubishi Motors Selling at 27% below its NAVPS (Feb 20,2015): https://seekingalpha.com/article/2935226-mitsubishi-motors-selling-at-27-percent-below-its-navps/?page=2
6. Forbes - Automakers with the highest and lowest recall rates (Mar 26, 2014): https://www.forbes.com/sites/jimgorzelany/2014/03/26/automakers-with-the-lowest-and-highest-recall-rates/2
7. Forbes - A conversation with CEO of Mitsubishi Motors North America (Nov 19, 2016): https://www.forbes.com/sites/jasonfogelson/2016/11/19/a-conversation-with-don-swearingen-ceo-of-mitsubishi-motors-north-america/2
8. Wall Street Journal – Mitsubishi Motors probe finds weak governance at root of scandal: https://www.wsj.com/articles/mitsubishi-motors-probe-finds-weak-governance-at-root-of-scandal-1470141587
9. Mitsubishi Motors press release (Oct 20, 2016): https://www.mitsubishi-motors.com/publish/pressrelease_en/corporate/2016/news/detailga23.html
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