Above: The Mitsubishi eK Wagon, one of the cars at the centre of the company’s latest scandal.
One thing about creating and running Autocade is that you gain an appreciation for corporate history. Recently, I blogged about Fiat, and the troubles the company is in; it wasn’t that long ago that Fiat was the designers’ darling, the company known for creating incredibly stylish vehicles for all its brands and showing how you could use Italian flair to generate sales.
That was the 1990s; by the turn of the century, Fiat had lost some of its mojo, and by the time I got to Milano in the early 2000s, the taxi ranks had plenty of German and French cars. Once upon a time, they would have been nearly exclusively Italian. Today, a lot of Fiat’s range is either made by, or on platforms shared with, Ford, GM, Chrysler (which it now owns), Peugeot, Mitsubishi and Mazda. Sharing platforms isn’t a sin, but a necessity, but Fiat seems to have taken it to a new level, looking like a OEM brand whose logo is freely slapped on others’ products.
Mitsubishi is the other car company to find itself in trouble in recent weeks. The company admitted that it had lied about the fuel economy figures for its kei cars, the micro-cars that it sells predominantly in Japan.
It wasn’t as troublesome as Volkswagen’s defeat device which fooled the US EPA, running differently when it knew the engine was being tested. Mitsubishi kept things simple, and overinflated tyre pressures.
It would have got away with it, too, if it weren’t for Nissan, a company to which Mitsubishi supplied, under an OEM deal, kei cars. The customer started to ask questions and tested the cars for itself.
Mitsubishi had supplied 468,000 cars to Nissan, all of which are affected. It had only sold 157,000 under its own marque. Production of the cars, from the eK range, and the OEM equivalent for Nissan, the Dayz, is now suspended, while Mitsubishi’s shares plunged 15 per cent on the news last week. Sankei, the Japanese newspaper, believes that Mitsubishi used the wrong test method on the I-MIEV electric car, RVR (ASX), Outlander, and Pajero, which are exported.
You have to wonder what the corporate culture must be like for these matters to recur so regularly. But then, collectively, people tend to forget very rapidly, and companies like Volkswagen and Mitsubishi must bank on these.
VW isn’t the first to cheat the EPA—US car makers have attempted less sophisticated defeat devices in the latter half of the 20th century—though it has had a chequered past. Just over 10 years ago, there was a scandal involving VW colluding with a union leader to keep wage demands down, and a few low-level employees took the rap. Go back to the 1980s and the company found itself in a foreign exchange scandal. But these were known mainly among specialist circles, principally those following car industry news.
Mitsubishi’s scandals, meanwhile, were more severe in terms of the headlines generated. Last decade, when the media called Mitsubishi Japan’s fourth-largest car maker—these days they call it the sixth—the company was implicated in a cover-up over the safety of its vehicles. Japanese authorities raided the company in 2004, and revealed that Mitsubishi Motors Corp. hid defects that affected 800,000 vehicles, and had done so since 1977. Nearly a million vehicles were recalled. Affected vehicles were sold domestically as well as in Europe and Asia. Top execs were arrested that time, including the company president, although it was hard under Japanese law to punish Mitsubishi severely. There was no disincentive to conducting business as usual. The company was ultimately bailed out by its parent, the giant Mitsubishi Group, when it found itself facing potential bankruptcy.
People were killed as a result of Mitsubishi’s cover-ups, and at the time it was considered one of the biggest corporate scandals in Japan.
Go back a bit further and Mitsubishi Materials Corp., a related company, had used slave labour in World War II, including US troops—something the company did not apologize for till 2015, even though the Japanese government itself had issued apologies in 2009 and 2010. While it was a first among Japanese corporations, and US POWs got what they had long awaited, descendants of Chinese slave labourers still have a lawsuit pending against a connected Mitsubishi subsidiary.
The other major difference between Volkswagen and Mitsubishi is that the Japanese marque is relatively weak in terms of covering its market segments. It’s SUV- and truck-heavy, and its kei cars had sold well (till now), but it has little in the passenger car segments, which it had once fielded strongly. The Mirage (and the booted Attrage) and the Galant Fortis (exported as the Lancer to many markets) are what’s left: the latter is now nine years old, though still fairly competitive, and in desperate need of replacement. Its only other car is its Taiwan-only Colt Plus, still selling there as an entry-level model despite having been withdrawn from every other market. In the big-car segments, Mitsubishi is actually supplied by Nissan in Japan, but doesn’t make its own any more. ‘Sixth-largest’ is shorthand for third-smallest, at least among the big Japanese car companies.
Mitsubishi looks set to quit the C-segment (Galant Fortis) since neither Renault nor Nissan, which it had approached, wanted a tie-up. And the company survives on tie-ups for economies of scale, and there’s now a big question mark over whether potential partners want to work with it. Automotive News’s Hans Greimel questions whether the Mitsubishi–Fiat truck deal will go ahead (though I had thought it was an inked fait accompli).
But, most seriously, Mitsubishi hasn’t completely recovered from its earlier scandal.
It is within living memory, and the timing and nature of the latest one, tying so closely to what rocked Volkswagen, ensured that it would get global press again, even if the bulk of the affected cars were only sold domestically. And when consumers see a pattern, they begin wondering if there’s a toxic corporate culture at play here.
We’re too connected in 2016 not to know, and while Mitsubishi is likely to be bailed out again, it will face the prospect of shrinking car sales—and sooner or later one will have to question whether the company will stay in the passenger-car business. Isuzu exited in the 1990s, focusing on SUVs, pick-ups and heavy trucks, forced by an economic downturn. Since Mitsubishi’s own portfolio is looking similarly weighted, it wouldn’t surprise me if it chose to follow suit, its brand too tarnished, with too little brand equity, to continue.
As one of HM the Queen’s loyal and humble servants, I wish her a happy 90th birthday and include this YouTube video of one of her most memorable moments of recent times. A bit of the ‘Dambusters March’ can’t go wrong, either. It shows the Queen to have a particularly good sense of humour.
Above: Facebook’s latest move: ensuring that notifications for messages go to its own app. If you choose not to install it, tough. (Actually, you can reach your messages if you had bookmarked your old message index, and through some digging you can still get there. However, your old habit of clicking on the number won’t work any more.)
I notice that Facebook has dropped to third in Alexa this week, but none of the tech press has covered it.
I know the usual arguments: Alexa isn’t the best way of measuring audience stats; everyone (including us) has dropped because of the way Firefox has changed its status bar, thereby omitting a lot of users from its sample; Facebook itself will have recorded no real drop in user numbers (though we also know a lot of these so-called active users are bots and spammers, as we see heaps each day); and that Alexa doesn’t capture mobile data, where people are spending far more time these days.
It does seem rather hypocritical, however, given that the same tech press applauded and wrote heaps of articles when Facebook overtook Google in Alexa. Some hailed it as the rise and rise of Facebook. There were tones of how unassailable it had become.
However, its number-one position was remarkably fleeting and it quickly dropped back to second, where it has been for years, apart from that one blip.
Facebook’s position has been usurped by Google’s YouTube. I make no predictions on whether this is fleeting or not, but it doesn’t look good for Facebook. I just don’t see any YouTube hate out there. If you dislike reading the comments from the world’s keyboard warriors sitting in their underwear at home, a few cookie settings will render them invisible. YouTube becomes a remarkably tolerable site.
Earlier this month, a report found by my friend William Shepherd showed that personal sharing on Facebook had dipped by 21 per cent.
I have said for years that ‘Facebook is the new Digg,’ a place where news is shared, not personal updates, though it appears it has taken a while for the company to realize this. Looking at some of the bugs on the site over the years, I’m not surprised Facebook missed it: for months it acted as though its entire user base was in California, with the website stuck at the end of each month till it got to the 1st in its home state. Now it is kicking users off over fake malware accusations when it’s more likely, and this is my guess based on how the site has behaved over the years, that its databases are dying. Liking, sharing and commenting fail from time to time.
Given this, and its many other problems—including the breach of policies outlined by some of the groups it participates in, impacting on user privacy—no wonder it’s experiencing this drop.
I see personal updates again that I saw a day before, because relatively few of my 2,300 friends write them any more. The trend has shifted, and a lot of users must have noticed what I did many years ago.
At Medinge Group we have long advocated transparency in brands, and Facebook’s actions run counter to a lot of what we have proposed.
We believe that sooner or later, people wise up—something we said about Enron at one of the first meetings I attended in 2002.
In fact, the way Facebook behaves tends to be combative, and for a 21st-century firm, its attitudes toward its user base is very 20th-century, a “them and us” model. It’s not alone in this: I’ve levelled similar accusations against Google and I stand by them. Since my own battle with them over malware, and a more recent one over intellectual property (where I was talking to a Facebook employee who eventually gave up when things got into the “too hard” basket), I’ve found dozens of other users via Twitter who have been kicked off the service, yet are running clean, malware-free machines. The blog post I wrote on the subject has been the most-read of the pieces I have authored in 2016, and certainly the most commented, as others face the same issue.
While both giants will claim that they could not possibly have the sort of one-to-one relationship with their user bases in the same way as a small business can, it’s clear to me that big issues aren’t being flagged and dealt with at Facebook. When I read the link Bill sent me, my first reaction was, ‘Why did it take so long for someone there to realize this?’
Let’s not even get started on the way both companies treat paying their fair share of tax.
It’s not about the number of people experiencing any given issue, it’s about the severity of the issue that a small number of people experience. By the time a larger vocal minority experiences it, the damage has gone a lot further.
Facebook does listen to some of these cases: I remember when it limited bot reports to 40–50 a day, at a time when it was not uncommon to find hundreds a day on the site. I complained, and after a few months, Facebook did indeed remove this limit.
But I regard that as an exception.
Its forced downloads of so-called malware scans that even its supplier refuses to answer for (could they have nefarious purposes?), and now the latest last week—ensuring that all message notifications in a mobile browser link to its Messenger app, resulting in a 404 for anyone who does not have it installed—are rendering the website less and less useful. In my case, I just use it less. We’re not going to download privacy-invading apps on our phone—we’re busy enough. We want to manage our time and if that means we only get to Facebook messages when we are at our desks, then so be it. Some might abandon it altogether.
Its other move is ceasing the forwarding from www.facebook.com to m.facebook.com on mobile devices, so if you had the former bookmarked, you’re not going to see anything any more. Some browsers (like Dolphin) came with the former bookmarked. Result: a few more legit users, who might not know the difference, gone. If there’s no trust, then regardless of the money you have, you’re not a top brand, nor one that people really wish to associate with.
Facebook, of course, knows some of this, which is why it has bought so many other firms where there’s still personal sharing, such as Instagram and Whatsapp.
It knows if there’s another site that comes along that gets public support, as it did when it first started, people will abandon Facebook en masse.
Curiously, even this past week alone, it seems intent to hurry them along. There must be some sort of corporate goal to see if it can reach fourth, just like Flight of the Conchords.
Well, that was a bit boring. It’s the New Plymouth District Council’s response to my earlier letter paying a parking fine. (Original Tumblr post here, if the graphic above does not show.)
What a fun project! In September, a class in a Québec school set its pupils a travel diary project. The idea: see how well travelled each pupil’s diary gets by passing it to a friend, then to their friend, and so on. The aim is educational: they want to learn about different cultures. The person who receives it nearest April 15 has to send it back to the origin. That was me: the diary arrived in my office on Friday. I’ve since written a four-page letter to the schoolgirl about my life in Wellington, my hobbies, and my family, in reply to her opening piece.
It has been over 25 years since I wrote in an exercise book. Prior to me, it went to the Netherlands, France, and Hong Kong. I hope she has the most well travelled journal in her class.
And yes, I chucked it on a courier. It would suck if it travelled all this way and got lost on the last leg. It left for Québec this afternoon.
As he has done so many other times since we encountered each other in 2001, Simon Anholt has articulated my thoughts on governance and politics much better than I can through his ventures. I think this puts a very good context on why I ran my mayoral campaigns the way I did, and for that matter, a good deal of my own businesses. The ideas here are in line with what we believe at Medinge Group, too—more on that in an upcoming post. We live in a connected, globalized planet—and the sooner our leaders wake up to this fact, and the positive potential it brings, the better.
How can we better organize ourselves as seven thousand million people? My belief has been: if we can start at a city level, we can bring about change.
Head to Simon’s website at good.country to find out more.
Above: The current Fiat 500. A year shy of its 10th anniversary, is it still cool in 2016?
The Detroit News reports that Fiat has been having trouble Stateside, with dealers now permitted to sell the cars alongside Chrysler, Jeep, Dodge and Ram instead of at stand-alone showrooms.
It’s been worrying seeing Fiat’s plans unfold since it decided to take control of Chrysler, a firm that was once the darling of the US car industry, with its industry-leading R&D times, to one that was starved of investment in the 2000s.
Those initial plans, sold as a long-term strategy, turned out to be a short-term Band-Aid. With hindsight, maybe it wasn’t too much of a surprise, since Fiat was still grappling with understanding just what it was taking on.
Fiat needed to do something given that things at home weren’t looking too good, with a model range that wasn’t very cohesive, and with its entries into the Chinese market having faltered a few times. To the casual observer, Fiat saved Chrysler, but there’s some truth in saying that having the company that controls the Jeep brand was a lifeline to Fiat itself.
What we’ve seen since those days was the failure of the strategy of twinning Chrysler and Lancia. While this was a marriage of convenience, I could see this having some long-term gains with Lancia focusing on smaller cars and Chrysler on larger ones, but the result in 2016 is that Lancia has been reduced to an Italy-only marque, the equivalent of what Autobianchi was a few decades ago. Once the Ypsilon is deleted, then Lancia is consigned to the history books.
The winner has been Alfa Romeo. It has only just returned to the junior executive segment with the new Giulia, after an absence of several years, and its 4C is a cracking sports car. Things are looking up, and rumours that Alfa and Dodge would be paired up in the same way Lancia and Chrysler were mercifully haven’t come true. The Giulia platform could be used for future models. Jeep has benefited from Fiat platforms, and Ram has gained some Fiat vans.
But the parent brand, Fiat, has looked very uncertain for a while.
For a start, there’s little uniformity globally. Fiat has the opportunity to offer the Viaggio and Ottimo in more places than China, slotting above the Ægea, for example. While having unique models for South America makes some sense, because of Fiat’s strength there, there’s an opportunity to globalize, with the Toro pick-up truck looking very appealing.
Without having more of its self-developed products, the Fiat range in Europe doesn’t inspire too much confidence. While most manufacturers have one or two joint-venture models, Fiat’s range is almost exclusively made up of vehicles that have shared tech. The famous 500 and Panda are on a Fiat platform which has Chrysler input (before the takeover), and is shared with Ford for its B420 Ka. The Punto, 500X and 500L are on another platform shared with GM. The Doblò is also offered to GM. The Qubo is the product of a joint venture with Peugeot. The Freemont is a rebadged Dodge Journey from México, which Fiat gained after the takeover. The 124 Spider is based on the Mazda MX-5, and built in Japan by that firm. The Fullback pick-up is a Mitsubishi Triton twin and made in Thailand by that Japanese firm.
Fiat, in other words, is holding down more relationships than Casanova.
As a casual observer, there’s an opportunity for a massive streamlining of platforms, and offer more in-house models. That may well be happening, and let’s hope its current strategy is more long-term than its last.
Secondly, as mentioned earlier, Fiat hasn’t had a great reputation of being able to carry out long-term sales’ strategies in many of its markets. Take New Zealand, for example, where Fiat was offering its (Grande) Punto and Bravo models, before it decided to pull everything and offer only the 500.
The Punto has returned after a hiatus, this time as a budget model, along with the Tipo 139 Panda, but those who bought Puntos in the 2000s might think twice about returning to a company that abandoned them and offered no direct replacement for their car when it came to trading up.
That lack of continuity could have some buyers worried, and Fiat needs to regain their trust in a big way.
Being the Five Hundred Car Company, which Fiat certainly was in the US, cannot help, if buyers expect Fiat to offer more. We’ve seen it fail here, and Fiat’s had to back-track. Even in Hong Kong, where Fiat had also been reduced to flogging only the 500, it has had to add the Freemont.
Fiat will argue that as it had been absent from North America for so long, it could re-enter the market-place with a single, fashionable model: after all, Mini and Smart have done.
The trouble is that Fiat isn’t known as a niche brand: there was enough in the US media to indicate that this was an Italian giant, and the perception of such a large company didn’t gel with it offering a niche range anywhere. It lacked the cachet of a brand that was created to be fashionable and funky from the outset. You just can’t do it when that’s the name of the owner (think: can you sell “cool” cars with GM as the brand—that had been tried in New Zealand and failed dismally; or, going back a generation, Leyland? Volkswagen surely is the sole exception with its Beetle), and FCA, which the parent company is called, isn’t a consumer-facing brand. It’s just a company name with no brand equity.
In the same vein, average punters might not know of BMW’s connection with Mini, or Daimler AG’s connection with Smart. They stand alone with plenty of brand equity, helped by identifiable products, and, in Mini’s case, even helped by its image outside North America.
I also question whether the 500X and 500L are cute cars in the same vein as the original 500. Getting Ben Stiller’s Derek Zoolander character to advertise the 500X seemed good in theory—till it dawned on the public that the new Zoolander film was a bit naff, cashing in on last-decade nostalgia. I’m not a fan of retro design, either, and I would have hoped that Fiat would have renewed its 500 by now, since we’re on to newer versions of the Beetle, Mini, and Smart. It’s no surprise that Fiat sales are down 14·6 per cent so far this year.
If Toyota could not sustain Scion with all its muscle, then Fiat retail really should be integrated into dealerships selling Chrysler, Dodge, Jeep and Ram Stateside. And I’d argue that Scion couldn’t remain because the brand had lost its coolness among the college kids who bought the XB in the first place. Buyers in this consumerist game, and at the fashion end it is more a game than in any other, are notoriously fickle.
I don’t know how it’s going to play out. Fiat’s a brand I’ve grown up with, and I’ve been visiting their dealerships since I was two years old. Back in the 1970s the showroom in Homantin, Kowloon had everything from 127s to 130s. Fiat was doing a brisk trade on 124s. I came close to buying various Fiat Group cars over the years, including a Tipo and a Lancia Delta, and more recently I had considered Alfa Romeo Mitos and Giuliettas. I briefly toyed with importing a Tipo 844 Lancia Delta from the UK badged as a Chrysler, but decided having a $75 1:43-scale one was enough.
To see Lancia decimated and now on life support as Fiat concentrated on making Chrysler and Dodge work, to see the home brand filled with other people’s products in the interim, and to receive news that US buyers weren’t flocking to its showrooms in the same numbers any more, all make me concerned. Go to Italy and the taxi ranks no longer are dominated by Fiat Group cars: the cabbies have gone French and German. It’s all very well Maserati and Ferrari doing well but the former’s volumes won’t have a huge impact, while the latter has been separated and now has a different parent. The only continent where I think Fiat is making a decent bash of things is South America. I don’t want to paint a doom-and-gloom picture, not least because I have fondness for all the brands that now fall under the Fiat umbrella. But the weaknesses, at least to an outsider looking in, outnumber the strengths. My gut says Fiat will work through it all, but will it do it in a fast enough fashion, or is there more pain to come?
