Mitsubishi Motors Europe (MME) president and CEO Tim Tozer is a big fan of the “entrepreneurialism” of independent importers and dealers.
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Tozer, an Englishman who joined MME in September 2004, has previously worked at Austin Rover, and for independent Mazda importers in Finland, Russia, France and the UK. He also spent a year with Chrysler France between his last two Mazda posts.
Unlike his previous employer, Mazda, which has been gradually replacing independent European importers with factory-owned distribution companies, MME plans “broadly” to stick with the independents.
In Denmark, for example, MME has recently sold its own import business to an independent, effective last 1 January.
“We are fighting for our survival. Things are on track but equally things like cash generation and working capital are very important issues. The advantage of an independent importer is that they pay me at the factory gate,” Tozer said.
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By GlobalData“I’ve run independent Mazda distributors in the UK and France and I think the benefit you have of entrepreneurialism, commercialism, focus on profit and the focus on representing the brand efficiently and effectively comes very naturally to business people in the independent distributors.
“I’m not saying the guys in what we call our ‘captive distributors’ are bad, far from it. We have some very competent people but they are by definition ‘more corporate’, we’re a bigger business and therefore slightly less entrepreneurial and our decision-making processes are a bit more convoluted.”
Tozer said MME was comfortable having independent distributors in its strong markets such as Russia and the UK.
“The key issues are do these guys perform, do they represent the brand well, do they look after their customers well, do they develop and strengthen their dealer networks?”
He said the size of dealer networks across Europe was about right with no major expansions planned. The UK has 150 well established outlets but dealer groupings mean that is around 100 “relationships”, Russia has recently appointed around 15 in the last 12 months to take the total to 67 and Germany still has “a very high number, around 550”.
“We’ve closed some big city open points and in the country there are still some small dealers but that’s how a Japanese brand works in Germany – some of the smaller country areas are really important. On paper you could say we have too many but the reality is if we started to change our strategy we would lose some volume.”
Tozer said France was the only European market where MME could strengthen its dealer network noticeably. “We have some open points, we actually own and operate some retailers ourselves and strategically I’m not comfortable with that in the slightest.
“I don’t think distribution companies know how to run retail and so we are moving to dispose of those retail interests. I think independent retailers will do a better job than us in France for the same reasons. It’s just a different layer, at a level closer to the customer.”
After 18 months heading MME, Tozer described his post as “a challenge”.
“We are fighting for our survival in a global sense but there are indications that what we are doing is heading in the right direction both globally and also in Europe.”
Tozer said MME has been working in the year since Mitsubishi Motors Corporation unveiled a new business plan to maximise volumes, take cost out, protect and grow profit and work with its mainly independent distributors to move the brand forward.
“Certainly in Europe, we have moved forward,” he said. “We’ve had some great results. In overall terms our volume was up 18% to 265,000 units in calendar year ’05 and in that we got some stonking results – Russia was up 85%.
“Russia for us is now our biggest market – top-selling imported [built-up] brand.”
Tozer said Russian middle class buyers now aspire to own a Mitsubishi Lancer sedan but he is realistic about that.
“I guess if you looked at the same sort of aspiring middle class in the UK they’d want a BMW 5-series – in Russia it’s a Mitsubishi Lancer because Japanese product has a phenomenal reputation and we have a great importer who does a really good job.”
Tozer stressed that the customer is nonetheless king in this rapidly developing market.
“If anyone thinks a Russian dealer doesn’t have to think about customer care, or proper salesmanship, or professionally trained people, think again. There are some dealers in some western European countries that could learn a lot from the way the Russians do the job.
“It’s a really professional, solid business, and we’ve grown quicker than the market. It’s growing dramatically because disposable incomes for the 50 million-odd middle class are very, very high.”
Tozer said 10-15% of the population are middle class earnng around $US40,000 a year of which $28-30,000 is disposable income after tax and living expenses. That is quite high by global standards.
“Russians don’t really save money – they spend it, that’s just their culture. A car is a very visible expression of ‘I’m middle class, I’m succeeding’.”
He said that after years of being restricted to waiting years for a poor quality, locally built car, Russian buyers like full imports.
“Built-up imports have a cachet all of their own. Those middle class aspiring people, if they wanted to, could buy a Lada but they wouldn’t be seen dead in a Lada.”
Tozer said MME’s NedCar plant in Holland is set up as an independent manufacturer supplying Mitsubishi and Smart. At full two-shift capacity it can build 200,000 cars a year but is currently running at around 120,000. Plugging the gap is “under review” but he would not be drawn further.
He acknowledged the increasing number of foreign brands either operating local assembly facilities in Russia or planning to do so soon but said there were no plans for Mitsubishi to follow suit.
“We have established a reputation as purveyors of built-up imported cars and that is striking a chord with Russian consumers.”
He acknowledged that rivals assembling locally like Ford and Hyundai would “probably access a bigger marketplace than us but, taking everything into balance, do we need to locally assemble? No, not really.” He added that, for one model line, an annual build of about 100,000 units was necessary to justify an assembly plant.
MME is now rolling out the redesigned Thai-built L200 pickup line across Europe, beginning with the truck’s most important market, the UK. Germany follows later this month.
Pininfarina is scheduled to build Colt CZC (coupe-cabriolet) Job One on 7 March and that will be launched first in Germany, followed by the UK in May.
Next on the list later in 2006 is the redesigned C-segment Lancer line, sharing its global platform with the Dodge Caliber and redesigned Outlander crossover. That model, already on sale in Japan and Asia, goes next to the US and then reaches Europe in January 2007.
Tozer would have liked the new Outlander earlier but said that MMC has finite engineering resources and that MME has had to take its place in the queue behind two regions where seven-seat crossovers are strong sellers.
Further out is a replacement for the large, and ageing, Pajero/Shogun/Montero model line but Tozer would not indicate timing. He said MME still has a 4% share of the European Discovery-size SUV segment which is still growing.
There will, however, be no replacements for the little Pininfarina-built Shogun Pinin (Pajero io in Asia/Pacific markets), now on run-out, or the Galant sedan once sold in Europe.
“What we’re doing in product terms, is saying we can’t be all things to all people, we have an engineering resource which is concentrated in certain areas. Historically, we spent a lot of time and money going into and coming out of a sector – Space Star, Carisma, Pinin, and so on.
“Now we’re saying, very simply, our product plan is three passenger cars – Colt, Lancer, and Grandis [a minivan], a one-tonne pickup [the L200], and then Outlander and Pajero. That’s our product plan in Europe.
“In Europe, frankly, there’s no point in Mitsubishi going into the D-sector [to replace the Galant] – it’s dying unless you’re a premium brand. Arguably Peugeot with the 407 is not a premium brand and they do it OK but Nissan Primera has failed and Avensis works a bit hard so we don’t want to be there.
“In the product plan that is coming together the cars I’ve outlined are pretty much global products excepting the pickup which isn’t sold in North America.”
Graeme Roberts
