Photographer: Photographer: Dario Pignatelli/Bloomberg

For Mitsubishi, Cheap Is More Than Enough

The carmaker pulls off a bit of a strategic coup by undercutting a cluttered market.

In a Car and Driver ranking of SUVs with three rows of seats, Mitsubishi’s Outlander comes in dead last. Eleven vehicles offer a better combination of features, looks, and performance, according to the magazine.

None can match the big Mitsubishi on price. Dodge’s Durango, the top pick, requires almost $7,500 in additional cash. Even the humble and goofy Ford Flex has a sticker price about $6,000 higher.

In an industry whose companies continuously jockey for customers by offering standout features, carefully slicing the market according to socioeconomic strata, Mitsubishi has a simple approach: Aim for the bottom. Consumer Reports likens Mitsubishi to "the Walmart of car companies" as it undercuts even such no-frills brands as Honda and Hyundai. And cheap is paying off handsomely—at least in sales—for the tiny Tokyo carmaker, which posted its latest monthly results on Tuesday morning.

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Last month, Mitsubishi sold 7,426 vehicles in the U.S., a 20 percent increase from a year earlier and the brand’s 20th consecutive month of sales gains. So far this year, it has moved 25 percent more machines than a year earlier, led by its big SUV. More impressive, the brand’s U.S. business has consistently outpaced that of the auto industry at large for almost two years.

Mitsubishi’s second-most-sought-after vehicle is the tiny Mirage, a subcompact that comes in a range of garish colors and looks more or less like a cough drop. Car & Driver puts the Mirage last in its tiny-car class as well. Yet it’s at the front of the pack on price, with a starting sticker of $13,805. (Take note, prospective Tesla buyers: You can buy six of these instead!) The little Mirage gets 44 miles per gallon on the highway and has a nifty warranty. That's compensation for driving a leaf blower on wheels.

The new Mitsubishi Outlander, its bestseller, tilts into a corner.

The new Outlander, Mitsubishi's bestseller, tilts into a corner.

Source: Mitsubishi

This isn’t to say that Mitsubishi vehicles are bad. They're simply not as good as similar models, according to a lot of critics. They are nevertheless new cars. Like almost any new car, they are stocked with a lot of stuff that would have wowed drivers just five years ago.  In particular, the new Outlander, which started trickling into dealerships in July, is improved. It comes with LED headlights and shifting paddles and can be kitted out with adaptive cruise control, lane-departure warnings, and a power tailgate. As for design, well, it’s been designed. And the Lancer, a sedan, can be had with a furious spoiler.

Mitsubishi public relations people said none of their executives were available on Tuesday to talk about the sales results. In a recent statement, Don Swearingen, executive vice president of the brand in North America, said: "Our record sales streak is not based on gimmicks, but rather consumer demand for our vehicles."

The automaker is part of a giant, private conglomerate that deals in everything from farmed salmon to gummy bears, so it's hard to say what kind of profit margin Mitsubishi is realizing on its cars, or whether they're profitable at all. But the U.S. dollar buys 50 percent more yen today than it did five years ago, which gives Mitsubishi more room to explore the depths of the market.

Being the cheapest is certainly a risky strategy—some would say a race to the bottom. But if a company can’t be the best, it’s not a terrible market position. There’s a big, mushy middle with almost all consumer products these days, particularly in cars. And consumers can quickly be overwhelmed by choice. If you can’t afford a Volkswagen Golf, what’s better, the Hyundai Accent or the similarly priced Toyota Yaris? If an Escalade is out of reach, should you pick the Chevrolet Traverse or the Mazda CX-9? 

Who knows? But we do know which vehicle will cost the least. Lately the answer is Mitsubishi. Increasingly that’s answer enough for a lot of people.

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