More Problems Hit Mitsubishi’s Review

Last week started badly enough for Mitsubishi Motors North America, with key dealer-council members threatening to revolt over the decision to put the besieged car maker’s $200 million creative account into review. Then it got worse. The review’s leader, CEO Finbarr O’Neill, quit to join Reynolds and Reynolds, an auto consultancy. Manufacturing chief and COO Rich Gilligan was immediately installed as his replacement.

O’Neill’s departure, which took dealers by surprise, followed the resignations of svp of marketing Ian Beavis in November and director of advertising Diane Hong in December. O’Neill said he had been talking to Reynolds since November. Too busy to travel to New York for the first interview, he slipped into a Long Beach Kinko’s during a lunch hour to do it by video link. He had decided to leave by late December.

“It’s wrong to say that since I was an initiator of the review, that I blamed the problems on the agency,” said O’Neill, responding to one of the accusations by dealer-council members. “That would not be true, because there were a lot of missteps at a number of levels in the past that placed the brand in the position it was in. However, it would have been remiss if you didn’t look at all aspects, including an agency review.

“If you put your hat on and say, ‘If I owned this company, privately, what would I do?’ the answer is just absolutely clear,” he said. “You review the agency and see that you are getting the best services and best support that you need at a cost that is consistent with what you need.”

With the incumbent, Interpublic Group’s Deutsch, still uncommitted to defending the account and holding its cards close to the vest (with some dealers now suspecting a bluff), other shops returned RFIs to consultancy Select Resources International in Santa Monica, Calif. Sources said the group was a mix of first- and second-tier shops, and there was word of some unexpectedly cold feet.

“We kicked it around and decided not to go after it,” said Eric Webber, vp and marketing director at Omnicom Group’s GSD&M in Austin, Texas, which was sent an RFI but is still smarting from the Kia Motors America review. “Too many red flags,” Webber said. “Any time there are too many management changes, that’s certainly a cause for concern about the direction the company will take with their advertising.”

One dealer said the automaker’s retailers had been floating the idea of a review since the “seewhathappens” campaign of the 2004 Super Bowl (“Twenty-six million [Web] hits, and no sales,” the dealer griped). Another dealer noted that a Galant ad that aired just before Christmas, in which a buyer fails to see a $6,000-off sign hanging in a dealership, did move traffic in December, but that the buy came a week too late.

The review moves to chemistry checks next week, and the review team, lacking a CMO or equivalent, is expected to include dealers Chuck Barber and Ted Terp, representing the national advisory board and the retail marketing councils, respectively; Bob Martin, Mitsubishi’s director of brand marketing; Kevin Mayer, newly appointed director of advertising; and Hiroshi Taguchi, svp of corporate planning. Sources said likely members also would include Mike Tocci, svp of sales and distribution, and Kazuyuki Kikuchi, executive officer in charge of North America, who has been busy bridge-building with dealer-council members over the last few months. Gilligan will also be part of the decision-making team, the company said.

SRI’s RFI for Mitsubishi (said to be “at a challenging point in its history”) implies the company wants a return to Deutsch’s “Wake up and drive” days. It says “a recently completed … highly complex segmentation study” has identified the brand DNA as “fun to drive.” It lists the competitive set as Volkswagen, Mazda and Nissan. One source said Mitsubishi’s target buyers “aspire to own Acuras and BMWs. They enjoy driving, but they are not buying cars just because they are cheap.”

In the meantime, few people are buying Mitsubishis at all: The Cypress, Calif.-based company sold only 161,600 units in 2004, down 37 percent for the year, according to Car Concepts, Thousand Oaks, Calif. “That’s definitely the worst performance of the industry,” said Car Concepts principal Todd Turner. “Advertising is the least of Mitsubishi’s problems in the U.S.”

“They have uncompetitive products and a weakened, blurred image,” added Wes Brown, an analyst with Westwood, Calif., consultancy Iceology. “Three or four years ago, they had a strong image for people who liked to have fun and liked to think of themselves as youthful. People don’t know what Mitsubishi is supposed to stand for anymore.”