Though its sales and market share have been in decline since the early 2000’s, Mitsubishi once carried a robust lineup in the United States that included such iconic cars as the now discontinued Eclipse and 3000GT. With much of its sport and rally heritage left in its past, save for the Lancer Evolution, Mitsubishi is very much a shell of what it once was as the brand looks to create a new path toward prosperity. After trimming its product portfolio down, the only models currently offered by the Japanese automaker in America are the Lancer, which includes the Sportback and Evolution, Outlander, Outlander Sport, Mirage and i-MiEV. Despite its very limited portfolio, Mitsubishi has seen its sales begin to improve, but the question is what effect, if any, the brand’s positive momentum has had on the value retention of its vehicles.
Through the first five months of 2014, Mitsubishi’s 33,651 deliveries reflect a 37% increase over last year, which is a 0.1-percentage point gain in market share. Leading the charge are the brand’s bread-and-butter utility vehicles, the Outlander and Outlander Sport, which are up 51% and 35% year-to-date, respectively. The utilities combine to sell 56% of the automaker’s total U.S. output as they represent two of Mitsubishi’s best efforts recently and reviews have reflected their improved quality. Of course, the surge in new sales inevitably means there will be an influx of available used vehicles in the coming years, which raises concern over how much value they retain. While increasing new car sales is a good problem for Mitsubishi to have, it also serves as a potential danger unless its brand reputation rebounds enough to lift retention.
While sales have grown in recent years, trade-in values for Mitsubishi’s three main models, the Outlander, Outlander Sport and Lancer have actually decreased as much as 8%, 12% and 10%, respectively, since 2012. In concert with this trend is the decrease in retention values for 1-year-old Mitsubishis from the prior model year as retention for the Outlander and Outlander Sport has dropped by 8-percentage points for both while the Lancer is down 11-percentage points compared to two years ago.
The fall in trade-in values is at least partly attributed to the brand’s diminishing visibility, which has been exacerbated by the significant reduction of its U.S. dealership count. Without ample dealership locations, Mitsubishi has an inadequate market presence and consumer awareness of the brand has faded. Comparatively, with only 386 dealerships as of January 1, 2014, Mitsubishi greatly lags other small importers such as Volkswagen and Mazda which have around 640 dealerships each.
One positive for the Japanese automaker is that while its total dealership count remains relatively unchanged from a few years ago, it has begun the rebuilding of its dealer network to create a better foundation for its brand. In doing so, the percentage of exclusive Mitsubishi franchises has climbed from a low of 42% to 56%, currently, which has aided its recovery. By partnering with its dealers and committing to provide a stronger focus on its brand by means of establishing exclusive sales and service locations, Mitsubishi is not allowing itself to become overshadowed by competing brands within dealer groups. It still has a ways to go if it wants to reach the same status as the leading Japanese automakers, however, as Toyota, Honda and Nissan exclusives represent greater than 85% of all dealerships for those three brands.
A product lineup of only a handful of cars, one of which is the all-electric i-MiEV, and a small dealer network has not inhibited Mitsubishi’s ability to increase deliveries lately, but the automaker must work diligently to rebuild its reputation and image in order to keep its retention values from slipping further. Continually driving sales totals upward is vital to the viability of Mitsubishi’s business in America; however, the automaker must be wary of the potential for diminishing value retention as its vehicles become more prevalent in the used market. While Mitsubishi is doing well to shore up its brand integrity by increasing its number of exclusive dealerships, it will need to grow its dealer network and expand its product lineup if it is to become a household name again. Falling trade-in values and retention signal growing pains for the automaker, but if the brand’s new sales results can be taken as a leading indicator, better consumer awareness should put prices for its used models back on the right track again.