Mitsubishi turns to rentals for 380 sales

Mitsubishi has announced a deal to supply 2500 380s to rental car firm Avis next year as the large sedan continues to struggle to find private buyers.

When it was launched last October as a replacement for the long-running Magna, then-new Mitsubishi boss Rob McEniry said he hoped to be selling about 2500 cars a month by March this year. However, according to the latest official VFacts sales figures, in the nine months to the end of September, Mitsubishi had sold just 9603 380s or an average of just over 1000 a month.

With the Magna having garnered a reputation for poorer than average resale values, Mitsubishi was adamant at the launch of the 380 that it would not resort to major fleet or rental sales to prop up sales volumes.

In December last year, McEniry said: "Our top market priority for 380 is to preserve the lifecycle values so we will not be reducing the recommended retail price of that car nor will we be dumping large quantities of cars into rental or other fleets just to achieve sales targets," he said.

Contended McEniry then: "Both these actions destroy residuals and damage the value proposition in the longer term for our customers. I don't mean that we will not be responsive to competitive actions but our marketing activities will be structured to protect lifecycle values for our customers."

In April this year, Mitsubishi slashed the recommended retail price of the locally-built 380 sedan by up to $6500 (or nearly 20 per cent) from its original $34,490 price at launch. The current retail starting price for the 3.8-litre manual sedan is $27,990.

McEniry explained the price cut at the time saying it was an acknowledgement that the company had originally priced the car out of the market.

"This is certainly one area where Mitsubishi doesn't have a good track record," McEniry said in April.

"The market has and is clearly telling us that the selling prices and value propositions for our models are what that needs to be today. As a consequence we are repositioning our pricing across the whole range to a level that the market is telling us is right for our brand.

"This is a strategy we are applying to the total Mitsubishi brand across all our products. One of the criticisms from our dealers and the media as well has been that Mitsubishi has a track record of not getting the product positioning right for the marketplace and then going into a discount war and screwing up the value of the product.

"These are market driven prices and will go a long way to getting rid of that Mitsubishi discount image as well as bolster the residual value integrity of our products," he said.

While the new lower prices were expected to increase volume overall, in April Mitsubishi also significantly downgraded its forecasts for sales of 380 to between 1500-1700 a month. However, despite the car being a more than competent and competitive package, it has never achieved even the reforecast targets and is still struggling to find its feet in a problematic local large car market.

Based on current running rates, the deal with Avis represents nearly 20 per cent of the entire 380 volume but according to Mitsubishi's general manager, national fleet and diamond services, David Conway, it offers a means of getting the 380 message out to potential buyers.

"Avis will take a mixture of 380 models continuously throughout the year, and customers renting from Avis will get an opportunity to see just how well the 380 performs on the road, and at the petrol pump," he said.

Typically, large rental fleet deals incorporate buy-back clauses which see the manufacturer guarantee a re-purchase price for the cars at the end of their rental ‘life’. It is not known whether Mitsubishi has entered into such an arrangement with Avis in this case.