Lessons to learn from Mitsubishi Motors

Pony, a sedan first released by Hyundai Motor in January 1976, is considered the first Korean vehicle model. Its engine, however, was the Saturn (1,238 cc) of Mitsubishi Motors, its technology alliance partner. Back then, Korea was not capable of developing an engine, a key part of an automobile. Mitsubishi Motors supplied engines for Hyundai’s Stellar in 1982 and Excel in 1985. Without doubt, Mitsubishi had a superior technology and the upper hand over Hyundai.

Mitsubishi Motors started as a business unit of Mitsubishi Heavy Industries in 1917 and became an independent company in 1970. With the release of “Model A,” Japan’s first automobile series, the Japanese carmaker made automobile history in Japan. Although it overcame shocks from the collapse of the Japanese economic bubble in the early 1990s, it failed to innovate and was on a slippery slope. While Hyundai and Kia joined the world’s top five automakers, Mitsubishi with nearly 100 year old history was pushed down to the 16th place. The number of cars produced is less than one-eighth of that of Hyundai and Kia.

Mitsubishi, founded by Yataro Iwasaki in 1870, two years after the Meiji Restoration, was two leading Japanese companies with Mitsui until Japan’s defeat in the World War II. The two companies had different corporate cultures: Mitsubishi stressed organizational while Mitsui focused on people. After the end of the world war, the command of allied forces led by General Douglas MacArthur disintegrated Japanese business conglomerates, which held hands with the military during Japan’s invasions. As time passed by, former affiliates gathered again around their main banks.

Mitsubishi Motors, which generated a scandal over the manipulation of fuel mileage for 25 years, failed to survive only to be acquired by Nissan. Back in 2000, the “Friday club meeting,” a gathering of heads of the members of the Mitsubishi Group, supported the company to keep the brand when the automaker was cornered due to the attempt to hide recalls, but it gave up this time. The company eventually collapsed after deceiving customers like Volkswagen for not correcting its wrong doings. It has been trapped by a closed group thinking, while manipulating fuel mileages for almost 25 years.

권순활논설위원 shkwon@donga.com