The BusinessCar Interview: Lance Bradley, Mitsubishi
12 October 2016
Author: Debbie Wood
The fastest-growing brand in the UK for the past three years now, Mitsubishi took the hybrid world by storm in 2014 when the Outlander PHEV was launched.
It's phenomenal success has not only helped Mitsubishi's sales and presence grow here in the UK, it's also driven greater awareness around hybrid technology as a whole, becoming the biggest-selling battery-powered car in 2015.
Not one to sit back and enjoy the success, the Japanese carmaker has some ambitious future growth plans in place, including introducing five new SUVs by 2021 and increasing UK sales to around 45,000 a year - a growth of over 30% based on last year's figures.
The Outlander's success story
Mitsubishi's UK managing director Lance Bradley would be the first to admit that the Outlander was a key turning point for the firm here in the UK. Key to its sales success was the fact that it was priced the same as the diesel after the government plug-in car grant, which Bradley admits took a long time to persuade the factory back in Japan that it was the right thing to do.
"We were negotiating with the factory for 12 months to get that pricing and we fought for it because we knew the car was great," he tells BusinessCar. "When we launched the i-Miev in 2009, it didn't sell because it was too expensive, which is still an issue for pretty much all electric cars, and we just couldn't make the same mistake again. You don't have to compromise on anything with the Outlander - it's a perfectly ordinary car which can just do extraordinary things."
The agreement that Bradley made with the factory to get the pricing he wanted was that the UK team needed to sell 10,000 in 2015 - a steep challenge when you consider the plug-in hybrid market the year before had been just 980.
Mitsubishi finished the fiscal year on 10,037 sales - a huge achievement.
"The Outlander has changed everything about the company and let us do things which we have never done before," Bradley says. "Company car drivers would never have talked about us first two and a half years ago."
Five new SUVs by 2021
Five new SUVs are set to join the line-up by 2021, including a compact SUV to rival the Nissan Juke, a mid-sized SUV, and the next-generation Outlander and Shogun, with the latter available with seven seats.
"We're in a great position because our future products and all the cars in our range, bar the Mirage, are SUVs, and that's a great place to be when that's where the market is going," Bradley says.
Electric and plug-in hybrid technology will feature heavily in the future line-up, and Mitsubishi already has the battery capabilities for an electric car to travel 250 miles per charge. Today, the technology is too expensive, but in three years' time the firm is expecting a pure EV to be on sale in the UK. Until then, Bradley believes plug-in hybrids are the perfect stepping stone to the technology.
"Most people won't go from a petrol or diesel straight into an EV because it's too compromised and the cars are too expensive. A plug-in hybrid is a stepping stone, and that's a good thing and something which shouldn't be discouraged. This is a developing market and we need to help develop it together."
Brand awareness has always been a challenge for the firm, and now there's more competition for the Outlander PHEV with plug-in hybrid models from BMW, Volvo and Audi all entering the SUV sector.
"We had the market to ourselves for quite a long time, but now we have competition from some manufacturers which are very well-established in the fleet market already, which is a challenge," he tells BusinessCar.
Most people would agree that the electric car market still has a fair way to go before it becomes a mainstream player in the UK. Although awareness is building, Bradley believes there's still a lot more work to do, and initiatives like Mitsubishi's car loan programme has proved vital to help drive sales.
"There's no point giving people a 20-minute test drive. It's not just a new car, it's a new kind of car, so you have to lend it to people for longer, especially businesses as they want to know if the car will be able to fulfil everything it needs to do.
"The real growth in the electric market will come when people have owned one and then want another one."
Plug-in models already makes up 50% of Mitsubishi sales, significantly more than any other mainstream manufacturer - however, Bradley says it'll be a long time before the firm goes green only.
"If you look at our passenger car sales, over half are electric thanks to the Outlander, so we're already a long way towards green only, but there will always be people that want diesel or petrol. That said, there's never a debate about whether the technology will take off or not - it's a question of when it's coming."
The aftermath of the 'Brexit' vote and the drop in the value of the pound is currently making it very expensive for Mitsubishi to export cars into the UK; the firm has already delayed the launch of the new Shogun Sport as a result.
The exchange rate is based on confidence, and following periods of uncertainty, changes were, according to Bradley, inevitable. The UK's recently downgraded credit rating is going to have an effect on the international markets too, and Bradley doesn't believe the exchange rate will improve enough over the next six to 12 months to have a positive impact.
It's a problem facing many car manufacturers and is likely to result in many putting their prices up.
"I think the Government is doing what it can to get some positive stories and agreements to give confidence in the markets, but the credit downgrading is a big problem," says Bradley. "The exchange rate is making things difficult for us at the moment following Brexit - it's hard to justify bringing in new cars when the rate is so low. We really could do with it picking up a bit, but unfortunately I don't see this changing in the near future."
Tie up with Nissan
In May this year it was announced that Nissan had purchased a 34% stake in Mitsubishi. Still subject to regulatory approval, if it goes ahead, Nissan will be the largest shareholder of Mitsubishi Motors and the deal will involve sharing platforms, joint purchasing and carrying over technology.
Bradley is hoping all the paperwork will be completed by the end of the year and can only see the benefits for Mitsubishi that this tie-up will bring.
"I think there will be some big benefits for Mitsubishi. Nissan makes nine million cars a year where we make 1.2 million. To have access to that purchasing power will reduce the cost of the cars - I expect that next-generation engines will be used across all three brands and there's technology that Nissan has which Mitsubishi doesn't currently use, and vice versa. I can only see good things to come from our alliance," he tells BusinessCar. "The identity of Mitsubishi will remain protected. If you look at what Nissan has done for Renault, the brands are very separate - many customers do not even know that the two are aligned, and we expect the same for Mitsubishi once the partnership gets underway. There are literally no downsides to it."
Government grant cut too soon
Bradley is predicting that sales volumes for Mitsubishi in 2016 will be around 28,000 units, a decline on last year's 31,000 figure.
In March this year, the Government cut its plug-in car grant from £5000 to £2500 and Bradley says the impact on Outlander PHEV sales has been pretty severe as a result.
"We didn't do anything for a quarter because we wanted to see what the impact to the changes to the grant was, and it was pretty severe to be honest. It's still price-sensitive, and we knew that when we launched the car, which is why we worked so hard to get it at the same price as the diesel after the grant," he says.
Bradley predicts the grant cut is going to cost the firm around 2000 PHEV sales this year, and although he understands the reasons behind the change, a more staggered approach, in his opinion, would have worked better.
"One of the things we have always said to OLEV [the Office for Low Emission Vehicles] is to not change things too quickly. I understand it's expensive and the Government doesn't have excess money, but I did feel at the time that cutting it from £5000 to £2500 was too much and that, without question, proved to be the case," he says.
Some additional support has been put in place to make up the deficit. For retail customers there's currently a £2500 deposit contribution if you take out finance, and the UK team has also put some extra support into contract hire to try and get payments close to what they were 12 months ago.
"Hopefully, sales will creep back up, and it's a shame because the market is not established yet - it probably could have been done with another 12 months. We asked for a tapered approach rather than the dramatic drop we've seen in the grant."