Mitsubishi Gets a Makeover

The carmaker is betting on a French designer to spiff up sales

When Frenchman Olivier Boulay was hired in May as design director of Mitsubishi Motors Corp., his first makeover had nothing to do with cars. He ordered a coat of tangerine-orange paint applied to the gritty smokers' room at Mitsubishi's chief research center in Okazaki, Japan, where the former Mercedes Benz styling ace now spends several days a week. The chain-smoking Boulay, 44, said he needed a more pleasant atmosphere in which to work his magic on Mitsubishi's dull designs--and keep himself plugged in to the latest company gossip.

Then he got down to the real work. Boulay tore up the company's plans for an exhibit at the Tokyo Motor Show beginning Oct. 27 and sketched out from scratch four concept cars incorporating his new vision. One model was assembled just hours before an Oct. 11 press briefing. Indeed, Boulay is on the move so much that he pulls two document-laden carry-on bags strapped to a luggage cart wherever he goes--even inside headquarters. "This is my office," he says.

Mitsubishi Motors badly needs a burst of that kind of energy. Sales at Japan's fourth-largest auto maker have dropped for 14 straight months, dipping by 3.6% to just 25,284 units in September from a year ago. One reason was last summer's disclosure that the company had covered up defects in millions of vehicles. But Mitsubishi has deeper problems: A dearth of products in hot segments and uninspired car designs. "Mitsubishi cars have tended to lack sophistication and grace," says Mamoru Aoki, a top designer at rival Nissan Motor Co. "But Boulay knows sedans, so that's a plus for them."

Boulay is certain he's up to the challenge. His last job, as head of DaimlerChrysler's advanced-design center in Stuttgart, focused on the new super-luxury Maybach sedan, a revival of a prewar German brand that will debut in 2003. A decade ago, he earned his spurs in Japan at Fuji Heavy Industries' slumping Subaru Division, which like Mitsubishi had a reputation for great engineering but dreary design. He led a team that remade the 1993 Legacy, a compact station wagon, into a model with snazzy aerodynamic styling. Today, the Legacy is the main reason Fuji Heavy expects record profits at Subaru this year. Says Boulay: "I have already proved myself in this country." Fuji Heavy CEO Takeshi Tanaka agrees. "He may be able to bring a fresh perspective to Mitsubishi Motors just like he did at Fuji Heavy," says Tanaka.

Still, a daunting task faces Boulay and other DaimlerChrysler veterans now comprising the Mitsubishi brain trust under Chief Operating Officer Rolf Eckrodt. They must pull Mitsubishi out of a slide at home, where its market share for passenger cars has dipped from 9.5% to 7.8% in the last year. They then must cope with weak U.S. demand. Plus, DaimlerChysler, which owns a controlling 37% stake in Mitsubishi, is battling to keep Chrysler from being overtaken by Toyota in the U.S. So "DaimlerChrysler may not be able to back up Mitsubishi as much as they had hoped," says Credit Suisse First Boston Securities auto analyst Koji Endo.

FLARED FENDERS. Boulay's role is vital because heavy cost-cutting by Eckrodt will only help the auto maker break even. To become healthy again, Mitsubishi must reverse the drop in market share. "We need to win back the confidence of customers," says CEO Takashi Sonobe.

The game plan is to reinvigorate the company with daring concepts in three crucial models: sport-utility vehicles, minivans, and subcompact sedans. Boulay wants to shed Mitsubishi's image of producing spartan vehicles popular with middle-aged men. That means it's time to get racy, at least by Mitsubishi's staid standards. While using Japanese touches, the vehicles will have European-style sharp lines on side panels, flared fenders over the wheels, and sloping windshields that accentuate airflow over the body.

The first new model slated to hit the streets is a subcompact called the CZ2, which should be out next year. Sharing the same so-called Z car platform as a line of upcoming DaimlerChrysler subcompacts, the CZ2 will feature a fuel-efficient 1.3- or 1.5-liter engine and sporty styling. To appeal to single females, a market Mitsubishi often ignored in the past, the CZ2 will have removable handbags built into the doors, a curvy dashboard, and higher seating to provide a clear field of vision for shorter women drivers.

A compact SUV called the S.U.P. is still in the concept phase, but it's clear the Jetsons would like it. Equipped with such features as waterproof sockets for laptop computers, it is aimed at twenty-something buyers. The body mimics the hard, clamshell-shaped plastic backpacks popular in Tokyo. Another concept, the Space Liner, is a cross between a minivan and luxury sedan and is targeted at retired couples.

While stressing German performance, Boulay wants the vehicles to have Japanese styling touches. The CZ2 has a bonsai-like cactus garden design in the dashboard. All concept cars were inspired by the 1959 Mitsubishi Leo, a three-wheeled vehicle that looked like a scooter with cargo space in the back. Boulay saw it in a museum in Okazaki.

HIGHER PROFILE. Putting greater emphasis on brand identity is part of Boulay's campaign to change Mitsubishi's mind-set. He is elevating the profile of designers, who in Japan traditionally have taken a back seat to engineers. "Designers weren't made to feel important in the past," says Hiroshi Mizutani, head of the Okazaki design department. "Boulay-san changed all that."

Mitsubishi staff must look to the future, because just now not much is going right. Recent models have disappointed. Sales of the AirTrek, a cross between an SUV and a sedan launched in June in Japan, are way below monthly targets of 5,000. Fewer than 3,000 were sold last month. Critics doubt Mitsubishi can reach its 10,000-per-month sales goal for the $8,000 eK miniwagon, introduced in October. Both vehicles were in the pipeline before Boulay arrived. "The damage to the image within Japan is bigger than we thought," says marketing senior vice-president Ulrich Walker.

Not everyone is convinced Boulay can work miracles. Patrick Pelata, executive vice-president of rival Nissan, which Renault took control of in 1999, scoffs at Boulay's claim that Mitsubishi can overtake Nissan. "There is a huge difference between what Nissan can do and what Mitsubishi can do," says Pelata. Nissan plans a slew of new models in coming months. Mitsubishi's first model under Boulay won't roll out for another year. Even Eckrodt isn't awarding Boulay top marks just yet. "I give him a B+," he says. "We're talking about show cars at the moment. We have to see them in production." But Boulay has one thing in his favor: Given Mitsubishi's problems, the only way to go is up.

By Chester Dawson in Tokyo

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