Mitsubishi Motors Corporation has replaced North American CEO Pierre Gagnon with Finbarr O’Neill, the man who powered rival South Korea’s Hyundai Motors to record sales in the United States, company officials and other sources told The Detroit News.
The paper said that, in recruiting O’Neill, Mitsubishi is trying to reverse an alarming drop in sales and shore up earnings in the United States. The affiliate of DaimlerChrysler AG, had targeted the US market for major growth this decade, but its sales in the United States have fallen 22% so far this year, the report noted.
The Detroit News said O’Neill, who oversaw a 400% sales increase at Hyundai Motor America since taking the helm in 1998, told his subordinates at the company’s North American headquarters in Fountain Valley, California, of his departure late last week.
“After long and difficult consideration, I am leaving Hyundai Motor America,” O’Neill wrote in a note to employees obtained by The Detroit News.
The newspaper noted that Mitsubishi’s US operations, which had been the Japanese car maker’s main source of profits in recent years, ran up a $95 million loss in North America for the January to March quarter, mostly due to losses at the company’s credit arm.
Industry analysts told the Detroit News the company offered financing to too many customers with sub-par credit to boost sales but he risky loans led to a high default rate and Mitsubishi has acknowledged that it has tightened its credit policies following the losses in North America.
In an effort to pump up volumes, Mitsubishi sharply increased business with rental car companies and other fleets, the paper added – during the first quarter, they accounted for 42% of its total sales, well above the industry average.
Even so, to the end of July, sales of Mitsubishi vehicles totalled 161,738 vehicles in the United States, down 22% from the year-earlier period, the Detroit News said, noting that the US market overall fell 2.2%.
The paper noted that Hyundai, by contrast, is on a roll with American buyers – its sales rose 3.9% to the end of July, and the company is on pace to break its annual sales record in the United States.