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Mitsubishi to sell only SUVs, utes and vans in Australia

Weak demand for conventional passenger cars will see Mirage and Lancer dropped from local showrooms once supply runs out.
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Australia’s seismic shift away from passenger cars – and towards SUVs and utes, not unlike North America – is about to claim its first casualty.

Japanese company Mitsubishi – the fourth most popular brand behind Toyota, Mazda and Hyundai – will not replace its Mirage and Lancer small cars once they sell out in local showrooms.

While Mitsubishi will continue to offer passenger cars overseas, its Australian showrooms will soon have only a range of SUVs, utes and Renault-sourced vans.

“This is not the result of Mitsubishi’s strategy, this is the result of customer evolution, what the customer is looking for,” said Ashwani Gupta, the global chief operating officer of Mitsubishi Motors, during a visit to Australia this week.

“We want to focus and improve … our core strength (of SUVs and utes). Looking at Australia I do believe SUV and (utes) will flourish,” he said.

Data compiled by the Federal Chamber of Automotive Industries shows the majority of Australians have dramatically changed the type of car they drive in just three years.

Australians narrowly bought more SUVs than passenger cars for the first time ever in 2017 – where buyer tastes were almost evenly split between passenger cars and SUVs – but the gap has widened since then.

So far this year, traditional passenger cars represent less than one-third (32 per cent) of new vehicle sales while SUVs, utes and vans account for the remainder.

“The driving force for this massive shift is the fact that most new-car buyers today have the ability to choose a car that suits their needs or their image, rather than simply choosing which colour your Holden or Ford company car is going to be,” says David Chalke, a social analyst and principal of Strategy Planning Group, which monitors consumer behaviour.

“Novated leases have allowed fleet drivers to behave like private buyers by choosing pretty much whatever car they like, as long as it fits in their budget,” he said.

Industry insiders believe other brands could follow the lead of Mitsubishi and vacate the passenger-car market where investment costs are high and profits are slim.

For example, it costs car companies about the same amount of money to design, engineer and manufacture a small hatchback as it does a small SUV.

However, car companies on average charge a 25 per cent premium for the SUV equivalent because buyers are a prepared to pay for a slightly taller driving position and added convenience.

In some cases, however, SUVs have less cabin room and boot space than the hatchbacks on which they are based – despite their bulky appearance – giving car companies the last laugh as they bank the extra profit.

Mr Chalke says the perception of being able to escape the concrete jungle – even when stuck in traffic with everyone else – is part of the appeal of SUVs and utes.

“The car you choose is the most powerful demonstration of your personality to the outside world,” says Chalke.

“SUVs and utes appeal to our sense of adventure and the Aussie outdoor spirit,” he said. “We buy them in the belief that one day we will go and see the outback even though most of the time they are on the school run or taking the kids to weekend sports.”

Mr Chalke said modern utes were more like SUVs in terms of comfort and safety features.

“They are increasingly becoming more like family cars and less like workhorses,” says Mr Chalke.

However, traditional passenger cars may not be dead forever.

Fellow Japanese company Nissan experimented with dropping the Micra hatch, Pulsar small car and Altima mid-size sedan two years ago – leaving it with a pair of sports-cars and a range of SUVs and utes – but has since made a U-turn and will reintroduce passenger cars in the coming years.

“The sedan in general has a finite life left in. There is dying niche market of older drivers who like a proper sedan,” says Chalke.

“But the city hatchback has a great future, especially as our cities become more congested. The ideal city vehicle would be a small electric car for under $20,000, it just doesn’t exist yet.”