Mitsubishi's Revolution

Mitsubishi has cut the price of its new locally built 380 sedan by up to $6500 or nearly 20 per cent from its $34,490 price at launch just six months ago.

The new recommended retail starting price for the 3.8-litre manual sedan is $27,990 and is part of a repricing strategy that affects a vast range of models across the company's entire lineup.

The price cuts are part of a complete overhaul of the company's sales and marketing strategy that aims to lift volume for its financial year (April to March) to a total of 64,000 cars or 6.9 per cent market share against last year's total of 55,000 vehicles.

The new pricing for the 380 also heralds in a Series II 380 range that sees a revised model lineup and some very minor cosmetic and equipment adjustments.

The entry level model is now dubbed 380 ES, there is a new starter sports model next up the range running under the SX tag, the two luxury models have been consolidated into a single LX version while the VRX and GT remain - the latter range topper having been reduced by $3000 to $44,990.

In addition to the price cuts on 380, the Outlander has also come in for a $2500 reduction and now starts at $29,990 while the Lancer sedan starts at $19,990 with a 2.4-litre engine where the previous sub-$20,000 price leader Lancer used the old 2.0-litre powerplant. All other Lancer models have had a $1000 price cut.

Mitsubishi CEO, Rob McEniry, says the repricing of the products, in particular the 380, 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. 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 says.

The new prices take effect on April 28 and any customers that have recently purchased a 380 at the higher price will be contacted and offered a mix of up to $2000 cash rebate and free servicing packages.

While the new lower prices are expected to increase volume overall, Mitsubishi has significantly downgraded its forecasts for sales of 380 as the large car market continues to decline.

In December last year, after McEniry had only been in the job about a month, he predicted that the car would be up to its 30,000 annual sales target running rate of about 2500 a month by March.

Now, however, he says the target for dealers is between 1500 and 1700 380 sales a month.

"We are all feeling a lot of pain and it is a segment issue rather than just a single model. We all know the drivers of the problem and that includes fuel prices," McEniry says.

"After many years of selling about 25,000 cars a year Mitsubishi volume dropped with the introduction of the TL Magna to about 15,000 units and has stayed in that general vicinity and nothing has moved it.

"Last December, we were thinking and hoping that the market conditions affecting 380 sales would be relatively short lived and by March we would be back on track. Well that is not going to happen.

"The market conditions haven't changed. Being realists we now therefore have to base our planning on about 15,000 to 20,000 units."

McEniry says this means a further production cut at the Tonsley Park manufacturing plant in Adelaide. In January 150 workers were laid off as production was cut from 150 cars a day to 95 and now that production is set to drop to about 75 cars a day by June or July but McEniry says this should not result in any significant job losses.

Whether the plant is actually viable as an individual entity at this extremely low production rate is debatable but McEniry says that Mitsubishi in Australia (MMAL) and its Japanese parent company MMC are prepared for the long haul and "get a corporate acceptable return on investment".

Apart from the pricing changes, Mitsubishi is also banking on a raft of new product due through the next eight months to help it regain a solid footing in the market. The main model arrivals are the new Triton light commercial 4x2 and 4x4 single and dual cab utes, three new Colt models - a cheaper manual price leader, Ralliart turbo hatch and cabriolet - and new Outlander and Pajero SUVs.

In addition to the repositioning of its products, Mitsubishi is also aiming to improve its branding and image and restructure its sales and marketing operations.

As far as branding goes, recent clinics in Melbourne and Sydney revealed that those non-Mitsubishi buyers associated the brand with images and words like old fashioned, basic, and ordinary.

The surveys also revealed that brand image was the most important consideration for buyers.

With this in mind a range of new advertising and promotional materials are being prepared that run under the tag "It's a revolution".

McEniry says the four pillars of its branding that the company would like to be known for are; technology, driver confidence - in ride and handling and security of purchase - presence, and value.

The restructuring of the sales and marketing operations will see more responsibility given to regional offices, particularly in Sydney and Melbourne where the company lags behind the national average market share. These two cities will also gain more dealers with McEniry hoping to appoint a further five dealers in each city.