Mitsubishi Motors

Mitsubishi's automotive origins date back to 1917, when the Mitsubishi Shipbuilding Co., Ltd. introduced the Mitsubishi Model A, Japan's first series-production automobile. An entirely hand-built seven-seater sedan based on the Fiat Tipo 3, it proved expensive compared to its American and European mass-produced rivals, and was discontinued in 1921 after only 22 had been built.In 1934, Mitsubishi Shipbuilding was merged with the Mitsubishi Aircraft Co., a company established in 1920 to manufacture aircraft engines and other parts. The unified company was known as Mitsubishi Heavy Industries , and was the largest private company in Japan. MHI concentrated on manufacturing aircraft, ships, railroad cars and machinery, but in 1937 developed the PX33, a prototype sedan for military use. It was the first Japanese-built passenger car with full-time four-wheel drive, a technology the company would return to almost 50 years later in its quest for motorsport and sales success.

Post-war era

Immediately following the end of the Second World War, the company returned to manufacturing vehicles. Fuso bus production resumed, while a small three-wheeled cargo vehicle called the Mizushima and a scooter called the Silver Pigeon were also developed. However, the zaibatsu were ordered to be dismantled by the Allied powers in 1950, and Mitsubishi Heavy Industries was split into three regional companies, each with an involvement in motor-vehicle development: West Japan Heavy-Industries, Central Japan Heavy-Industries, and East Japan Heavy-Industries.

East Japan Heavy-Industries began importing the Henry J, an inexpensive American sedan built by Kaiser Motors, in knockdown kit form in 1951, and continued to bring them to Japan for the remainder of the car's three-year production run. The same year, Central Japan Heavy-Industries concluded a similar contract with Willys for CKD-assembled Jeep CJ-3Bs. This deal proved more durable, with licensed Mitsubishi Jeeps in production until 1998, 30 years after Willys had replaced the model.

By the beginning of the 1960s, Japan's economy was gearing up; wages were rising and the idea of family motoring was taking off. Central Japan Heavy-Industries, now known as Shin Mitsubishi Heavy-Industries, had already re-established an automotive department in its headquarters in 1953. Now, it was ready to introduce the Mitsubishi 500, a mass-market sedan, to meet the new demand from consumers. It followed this in 1962 with the Minica kei car and the Colt 1000, the first of its Colt line of family cars, in 1963. In 1964, Mitsubishi introduced its largest passenger sedan, the Mitsubishi Debonair as a luxury car primarily for the Japanese market, and was used by senior Mitsubishi executives as a company car.

West Japan Heavy-Industries and East Japan Heavy-Industries had also expanded their automotive departments in the 1950s, and the three were reintegrated as Mitsubishi Heavy Industries in 1964. Within three years, its output was over 75,000 vehicles annually. Following the successful introduction of the first Galant in 1969 and similar growth with its commercial-vehicle division, the company decided to create a single operation to focus on the automotive industry. Mitsubishi Motors Corporation was formed on 22 April 1970, as a wholly owned subsidiary of MHI under the leadership of Tomio Kubo, a successful engineer from the aircraft division.The logo of three red diamonds, shared with over 40 other companies within the keiretsu, antedates Mitsubishi Motors itself by almost a century. It was chosen by Iwasaki Yatar?, the founder of Mitsubishi, as it was suggestive of the emblem of the Tosa clan who first employed him, and because his own family crest was three rhombi stacked atop each other. The name Mitsubishi consists of two parts – mitsu meaning "three" and hishi meaning "water caltrop" , and hence "rhombus", which is reflected in the company's logo.

Chrysler connection

1970s

Part of Mr. Kubo's expansion strategy was to increase exports by forging alliances with well-established foreign companies. Therefore, in 1971, MHI sold U.S. automotive giant Chrysler a 15% share in the new company. Thanks to this deal, Chrysler began selling the Galant in the United States as the Dodge Colt , pushing MMC's annual production beyond 250,000 vehicles. In 1977, the Galant was sold as the Chrysler Sigma in Australia.

By 1977, a network of "Colt"-branded distribution and sales dealerships had been established across Europe, as Mitsubishi sought to begin selling vehicles directly. Annual production had by now grown from 500,000 vehicles in 1973 to 965,000 in 1978, when Chrysler began selling the Galant as the Dodge Challenger and the Plymouth Sapporo. However, this expansion was beginning to cause friction; Chrysler saw their overseas markets for subcompacts as being directly encroached by their Japanese partners, while MMC felt the Americans were demanding too much say in their corporate decisions.

1980s

Mitsubishi finally achieved annual production of a million cars in 1980, but by this time, its ally was not so healthy; as part of its battle to avoid bankruptcy, Chrysler was forced to sell its Australian manufacturing division to MMC that year. The new Japanese owners renamed it Mitsubishi Motors Australia Ltd .

In 1982, the Mitsubishi brand was introduced to the American market for the first time. The Tredia sedan, and the Cordia and Starion coupés were initially sold through 70 dealers in 22 states, with an allocation of 30,000 vehicles among them. This quota, restricted by mutual agreement between the two countries' governments, had to be included among the 120,000 cars earmarked for Chrysler. A restricting element of Mitsubishi's deal with Chrysler was that Chrysler had the right of first refusal of any Mitsubishi automobiles in the US market until 1990. Toward the end of the 1980s, as MMC initiated a major push to increase its U.S. presence, it aired its first national television advertising campaign and made plans to increase its network to 340 dealers.

In 1986 Mitsubishi reached an agreement with Liuzhou Automotive to assemble their Minicab kei van and truck there, making Mitsubishi the third Japanese manufacturer to begin assembly in China. Before receiving government approval for this project, Mitsubishi had to express contrition over "defective" Mitsubishi trucks imported to China in 1984 and 1985. By 1989, Mitsubishi's worldwide production, including its overseas affiliates, had reached 1.5 million units.

Diamond-Star Motors

Despite the ongoing tensions between Chrysler and Mitsubishi, they agreed to unite in a vehicle manufacturing operation in Normal, Illinois. The 50/50 venture provided a way to circumvent the voluntary import restrictions, while providing a new line of compact and subcompact cars for Chrysler. Diamond-Star Motors —from the parent companies' logos: three diamonds and a pentastar —was incorporated in October 1985, and in April 1986, ground was broken on a 1.9-million-square-foot production facility in Normal. In 1987, the company was selling 67,000 cars a year in the U.S., but when the plant was completed in March 1988, it offered an annual capacity of 240,000 vehicles. Initially, three platform-sharing compact 2+2 coupés were released, the Mitsubishi Eclipse, Eagle Talon, and Plymouth Laser, with other models being introduced in subsequent years.

1988 IPO

Mitsubishi Motors went public in 1988, ending its status as the only one of Japan's 11 auto manufacturers to be privately held. Mitsubishi Heavy Industries agreed to reduce its share to 25%, retaining its position as largest single stockholder. Chrysler, meanwhile, increased its holding to over 20%. The capital raised by this initial offering enabled Mitsubishi to pay off part of its debts, as well as to expand its investments throughout Southeast Asia, where it was by now operating in the Philippines, Malaysia, and Thailand.

1990s

Hirokazu Nakamura became president of Mitsubishi in 1989, and steered the company in some promising directions, with the advent of the Japanese asset price bubble "market correction" that led to the Lost Decade as a result of the Plaza Accord agreement signed in 1985. Sales of the company's new Pajero were bucking conventional wisdom by becoming popular even in the crowded streets of Japan.

Japanese media rumored in 1992 and 1993 that Mitsubishi Motors intended a hostile acquisition of Honda. While Mitsubishi was riding high off of profitable vehicles such as the Diamante and Pajero, Honda was caught off-guard with the SUV and truck boom, and was losing focus after the illness and later death of its founder. Honda CEO Nobuhiko Kawamoto took drastic steps, though, such as exiting Formula 1 and discontinuing unprofitable vehicles to avert a Mitsubishi takeover, which proved effective.Although sales of SUVs and light trucks were booming in the U.S., Japan's car manufacturers dismissed the idea that such a trend could occur in their own country. Nakamura, however, increased the budget for SUV product development, and his gamble paid off; Mitsubishi's wide line of four-wheel drive vehicles, from the Mitsubishi Pajero Mini kei car to the Delica Space Gear passenger van, rode the wave of SUV-buying in Japan in the early to mid-1990s, and Mitsubishi saw its overall domestic share rise to 11.6% in 1995.

Independence

In 1991, Chrysler sold its equity stake in Diamond-Star Motors to its partner Mitsubishi, and from then on the two companies continued to share components and manufacturing on a contractual basis only. Chrysler decreased its interest in Mitsubishi Motors to less than 3% in 1992, and announced its decision to divest itself of all its remaining shares on the open market in 1993. The two companies then terminated their close alliance, with Mitsubishi no longer supplying parts for engines and transmissions for Chrysler. After this period, Mitsubishi sought alliances with many other automotive manufacturers in different areas of the world, as described under "other alliances" below, with its most economically significant alliance being with Nissan to develop and manufacture kei cars.

2000s

Mitsubishi Heavy Industries participated in a ¥540-billion emergency rescue of Mitsubishi Motors in January 2005, in partnership with Mitsubishi Corporation and Mitsubishi Tokyo Financial Group. As part of the rescue, MHI acquired ¥50 billion of Mitsubishi Motors stock, increasing its ownership stake to 15% and making the automaker an affiliate again. The emergency rescue was carried out 4 years after a product recall scandal in Japan that was triggered by accusations of Mitsubishi Motors trying to systematically hide manufacturing defects to avoid recalls, and marketing problems in the US.

Renault-Nissan-Mitsubishi Alliance membership

In May 2016, in the wake of the fuel-efficiency scandal uncovered by Nissan , Nissan began the acquisition of a 34% stake in Mitsubishi Motors, with the aim of making Nissan the largest and controlling shareholder of Mitsubishi and turning Mitsubishi Motors into a member of the Renault–Nissan Alliance . Nissan has said that they plan to share some car platforms and jointly develop future vehicles with Mitsubishi Motors. Nissan's acquisition of the 34% controlling interest in Mitsubishi was completed in October 2016, when Carlos Ghosn, the chairman of Nissan, Renault, and the Alliance, also became chairman of Mitsubishi. Ghosn remained chairman of Mitsubishi until his dismissal following his arrest by the Japanese government in November 2018, when Mitsubishi CEO Osamu Masuko assumed the chairmanship.Mitsubishi Motors plans to stop developing car platforms for the Japanese market and instead use vehicle bases made by ally Nissan Motor beginning around 2026 as the auto industry requires huge investments in technology.