Image from: Speeding Car / Shutterstock
The August 27th issue of Automotive News’ cover story read “Suzuki and Mitsubishi Left Behind?: With so little in the product pipeline for the next three years, Mitsubishi and Suzuki face a dismal US future.” That’s a bold headline. The article, found here, outlines sales drops, “anemic” model line ups, and few to no upcoming vehicle launches.
What’s the cause behind the Suzuki and Mitsubishi sales drop? Is it lack of demand, the competitive landscape, or is it difficult for these two OEMs to convert shoppers into buyers? The simple answer: all of the above.
This analysis leverages Compete’s proprietary in-market automotive shopper metrics, which are based on unique consumers (i.e., no double-counting of consumers doing the same activity more than once in the same month). Those metrics in turn leverage Compete’s patented normalization technology. Shopping behavior is based on lower funnel shopping activity (e.g., request a quote) on key shopping areas for any of the 40+ 3rd Party online automotive sites that Compete tracks.
Compete first looked at relative brand strength in the marketplace; to normalize for the recession’s impact, this analysis used Share of Market Interest (SMI), which measures a brand’s shoppers as a percentage of total in-market shoppers. This allowed insight into how the competitive landscape is affecting Mitsubishi and Suzuki’s demand and ultimately, sales. Another brand that faced similar challenges with a comparable line up to Mitsubishi and Suzuki is Saturn, which GM ultimately discontinued. Saturn was benchmarked against Mitsubishi and Suzuki to shed some light on SMI.
In January 2008, Mitsubishi SMI was 2.6%, Suzuki SMI was 1.7%, and Saturn was 6.2%. Each brand has steadily trended downward, with Saturn falling off the map in mid-2011. In July 2012 Suzuki SMI clocked in at 0.5% and Mitsubishi at 1.6%. These significant decreases are coincident with the rising share of shoppers considering Hyundai and Kia (whose SMI rose from 5.5% and 4.3% in January 2006 to 10% and 7.4% in July 2012, respectively; not shown).
Brand Deep Dive
Shoppers are only part of the equation. In order to drive sales, a brand must not only generate interest, but also effectively convert shoppers into buyers. For context, Saturn conversion was high on low demand, and averaged 11.8%, January 2006 through December 2009. Sales numbers are based on Total Sales from WardsAuto.
Since 2006, Mitsubishi conversion has trended almost flat, averaging between 10% and 12%, although the volatility in conversion is of note. Mitsubishi has averaged 7,216 units per month since January 2006, with the 2012 YTD average down to 5,243 vehicles sales per month. Since the conversion is steady, but sales are declining, Mitsubishi is ultimately faced with a demand challenge.
Since 2006, Suzuki conversion has trended lower, but recent spikes have partially compensated for low demand. Suzuki has averaged 4,951 sales per month since January 2006, with the 2012 YTD average down to 2,180 vehicle sales per month. Historically, when Suzuki demand increases, the brand has a tough time converting shoppers to buyers. There have been some recent high conversions this year, but they have not sustained.
Despite both brands’ confidence to remain competitive in the US market, Mitsubishi and Suzuki continue to decline in SMI, shoppers, conversion, and hence, sales. The main cause for decline for Mitsubsihi is a lack of shoppers; for Suzuki it’s a combination of shoppers and inconsistent conversion. With few to no upcoming launches, Suzuki and Mitsubishi continue to face challenges. Logical next steps for both brands include:
- Repeat analysis at model level to determine portfolio strengths and weaknesses
- Identify tactics used by brands that have grown SMI (Hyundai, Kia, VW) and how these brands have balanced both demand and conversion
- Identify shoppers and conversion patterns in Saturn’s wind-down
- Calculate ad spend and incentive spend – is it cost effective to stay in US market?
Leslie Griffin is a Client Services Associate in Compete's Automotive department, analyzing Compete data to provide marketing insights to the auto industry. Before Leslie joined Compete in 2012, she was in the digital ad sales department in the Motor Trend Automotive Group. Connect with Leslie on LinkedIn.