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Emerging Trends and Dynamics in the Global Automotive Industry: A Focus on Mitsubishi and the Rise of Electrification

GOOVER DAILY REPORT August 10, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Mitsubishi's Strategic Changes for 2025
  3. Collaborative Efforts in the Japanese Automotive Industry
  4. Market Trends and Consumer Preferences
  5. Impact of AI and Technology on the Automotive Industry
  6. Historical and Cultural Perspectives
  7. Conclusion

1. Summary

  • This report explores the evolving dynamics of the global automotive industry with a focus on Mitsubishi and the increasing adoption of electric vehicles (EVs). Key highlights include Mitsubishi’s shift in product strategy for 2025, such as discontinuing the Mitsubishi Mirage, and updating models like the Eclipse Cross and Outlander to appeal to budget-conscious consumers. The report also discusses the strategic alliance among Honda, Nissan, and Mitsubishi aimed at enhancing their positions in the competitive EV market through collaborations in software development and battery technology. Additionally, the report examines trends in consumer preferences towards EVs and hybrids, driven by government policies and incentives globally. These analyses are supported by data on market trends, financial performance of key players, and the impact of AI technologies on the automotive sector, as well as historical and cultural insights into consumer nostalgia and its influence on market trends.

2. Mitsubishi's Strategic Changes for 2025

  • 2-1. Discontinuation of the Mitsubishi Mirage

  • Mitsubishi Canada has announced that the Mirage will be discontinued after the 2024 model year. This move marks the end of one of the last remaining new cars with a starting price under $20,000. The 2024 Mirage, priced at $16,998 (with an all-inclusive price of $19,480.50), offered a 1.2-liter triple-cylinder engine producing 78 horsepower and 74 lb-ft of torque. Despite being one of the most affordable and cost-effective vehicles in the country, with a fuel consumption rating of 6.2 L/100 km, Mitsubishi has decided not to include it in their 2025 lineup.

  • 2-2. Introduction of Updated Models: Eclipse Cross and Outlander

  • The Eclipse Cross and Outlander will see updates in 2025. The Eclipse Cross will include new standard features such as a Rear Seat Alert, and the popular NOIR Edition will return, adding many features from the SEL trim plus a panoramic sunroof and upgraded seats. The Outlander, Mitsubishi's best-selling model, is due for a mid-cycle refresh with cosmetic revisions and improved interior materials. Detailed information will be available closer to its launch in early 2025. The Outlander PHEV will offer a new SE trim with enhanced features, including silver skid plate styling, LED fog lights, a power panoramic sunroof, and smartphone wireless charging.

  • 2-3. Focus on Crossover SUVs

  • With the discontinuation of the Mirage, Mitsubishi will focus on its lineup of crossover SUVs to appeal to budget-conscious shoppers. The three remaining crossover models—Outlander, Outlander PHEV, and Eclipse Cross—will continue to be the backbone of Mitsubishi's offerings. The manufacturer plans to attract customers through new and improved features in these models, such as heated front seats for the Outlander PHEV and standard all-wheel drive for the Eclipse Cross.

  • 2-4. Impact on Mitsubishi's Market Positioning

  • The strategic focus on crossover SUVs is expected to help Mitsubishi strengthen its position in the market. By discontinuing the Mirage and redirecting resources towards enhancing its SUV lineup, Mitsubishi aims to capture a larger share of the growing demand for crossover vehicles. The updates to the Outlander and Eclipse Cross models are designed to meet evolving consumer preferences for safety features, advanced technology, and overall vehicle quality.

3. Collaborative Efforts in the Japanese Automotive Industry

  • 3-1. Honda-Nissan-Mitsubishi Alliance

  • The alliance between Honda, Nissan, and Mitsubishi signifies a significant consolidation in the Japanese automotive industry, aiming to adapt to the new automotive age defined by battery technology and software. This collaboration is marked by a strategic incorporation to fortify their positions against global competitors and aligns with a Japan government-driven initiative. Honda Motor Co., Nissan Motor Co., and Mitsubishi Motors Corp. agreed to expand their cooperation, covering areas such as software development, batteries, EV charging, and energy services. Although not yet a capital alliance, the collaboration aims to generate synergies while overcoming cultural differences.

  • 3-2. Joint development in EV technologies

  • The joint efforts include collaboration on software-defined vehicles, automated driving, connectivity, artificial intelligence, and sharing battery specifications. Both companies might share battery-powered and combustion-engine vehicle designs while focusing on leveraging their respective strengths: Honda's significant investment in electrification, Nissan's experience with the Leaf, the first modern fully electric car, and Mitsubishi's prowess in plug-in hybrid technology and strong market presence in Southeast Asia. This joint venture aims to reverse their declining market shares in China by increasing EV production.

  • 3-3. Government support and strategic implications

  • The Japanese government's backing is pivotal to this alliance as it seeks to enhance the competitiveness of its domestic automakers. This collaboration is seen as a response to China's rise as the world's leading car exporter. The alliance’s formation follows a model similar to the coordinated efforts seen in the United States and Germany, where major automotive players have historically collaborated to secure market dominance. The government recently set an ambitious target for Japanese companies to capture 30% of the software-defined vehicle market by 2030.

  • 3-4. Challenges and opportunities in the EV market

  • Despite the promising aspects of their alliance, the companies face significant challenges, including overcoming their historical lack of progress in software-defined vehicle technologies, differences in corporate cultures, and declining sales in China. However, this also presents opportunities, such as pooling their resources and expertise to accelerate the development of EV technologies, potentially increasing their market shares globally. As Honda and Nissan adjust their strategies to expand their EV offerings and cooperate more closely, their alliances are expected to create a more robust and competitive position in the global automotive market.

4. Market Trends and Consumer Preferences

  • 4-1. Increasing adoption of EVs and hybrids in various regions

  • In Kenya, electric vehicle (EV) adoption surged by 600% to 3,700 EVs in December 2023, as reported by the Energy and Petroleum Regulatory Authority (EPRA). The adoption of hybrid vehicles is also on the rise, with models such as the Toyota Prius, Honda Insight, and Mitsubishi Outlander PHEV becoming popular due to their fuel efficiency. Hybrid cars in Kenya offer significant mileage ranging from 20 to 35 km per liter, making them appealing amid high and unpredictable fuel prices. The government’s efforts to reduce carbon emissions and the introduction of charging infrastructure by Kenya Power are further boosting the hybrid car market.

  • 4-2. Influence of government policies and incentives

  • Government policies and incentives play a critical role in the adoption of EVs and hybrids. In Kenya, for instance, EPRA's Tusonge na EVs campaign is aimed at raising awareness and encouraging the adoption of electric vehicles. These policy initiatives are essential for the growth of greener mobility solutions. Additionally, global car manufacturers are pushing towards electrification, which is likely to introduce more affordable and advanced hybrid models into the Kenyan market.

  • 4-3. Detailed comparison of budget-friendly vehicles

  • The 2024 Mitsubishi Mirage and Nissan Versa are two budget-friendly subcompact cars with a starting price around $17,000. The Mirage is known for its excellent warranty, offering a 5-year/60,000-mile bumper-to-bumper and 10-year/100,000 miles powertrain coverage, as well as a class-leading fuel economy of 39 mpg combined. The Versa, on the other hand, boasts better driving refinement, cabin quality, and additional features like adaptive cruise control in the SR trim. Despite the Mirage's superior warranty and fuel economy, the Versa's performance and overall value make it the preferred choice among budget-conscious buyers.

  • 4-4. Impact of safety assessments on consumer choices

  • Safety assessments significantly influence consumer choices in the automotive industry. Vehicles like the Mitsubishi Mirage and Dodge Challenger have been identified by the Insurance Institute for Highway Safety (IIHS) as having the highest driver death rates, with 205 and 154 deaths per million registered vehicles respectively. The lack of advanced safety features and poor crash test ratings contribute to these high fatality rates. Conversely, vehicles with ample safety features and better crash protection tend to be favored by consumers seeking safer driving options.

5. Impact of AI and Technology on the Automotive Industry

  • 5-1. Integration of AI and its challenges

  • The integration of AI into the automotive industry has introduced notable benefits and challenges. Various AI technologies, such as generative AI copilots, are being utilized in diverse professional fields including automotive manufacturing and customer services. Despite advancements, these AI tools face limitations, such as inaccuracies and hallucinations (i.e., the generation of incorrect or fabricated information). As highlighted by research from Stanford University’s Human-Centered AI Institute, even Retrieval Augmented Generation (RAG), which aims to improve AI accuracy, could not fully eliminate hallucinations. Such challenges underscore the need for ongoing refinement and rigorous testing to ensure AI's reliability in critical applications within the automotive sector.

  • 5-2. Market dynamics and financial performance of key players

  • The automotive industry is influenced significantly by market dynamics and the financial performance of key players. For instance, Tesla Inc. has exhibited notable stock performance fluctuations influenced by short-selling dynamics. According to data from S3 Partners, short interest in Tesla reached substantial levels, impacting investor behaviors and resulting in significant financial outcomes. On a similar note, Castle Automotive Group has expanded its market presence through strategic acquisitions. By acquiring Naperville Chrysler Dodge Jeep Ram and Gary Lang Auto Group, Castle Automotive Group now operates 14 locations with 26 new car franchises, enhancing its market position in Illinois and Northwest Indiana.

  • 5-3. Sustainability initiatives and their industry impact

  • Sustainability initiatives are becoming increasingly critical within the automotive industry. Several key players are focusing on reducing their carbon footprints and incorporating greener technologies. For example, major tech corporations like Microsoft and Google are taking significant steps towards sustainability, which is also mirrored in the automotive sector. Microsoft's purchase of carbon removal credits and initiatives like the Symbiosis Coalition, aimed at fostering high-quality carbon removal credits, set an example for the automotive industry. This reflects a growing recognition that emissions reduction will require comprehensive strategies combining both technological advancements and environmental commitments. These efforts highlight the industry's balance between achieving sustainable growth and navigating the challenges posed by increased energy demands, especially from AI implementations.

6. Historical and Cultural Perspectives

  • 6-1. Revival and nostalgia in the automotive industry

  • The revival and nostalgia within the automotive industry are apparent through events and trends such as the 'Festival of the Unexceptional' held in Grimsthorpe Castle in Lincolnshire. This festival, now celebrating its 10th anniversary, honors once-neglected cars from the '70s and '80s like the Morris Marina, Austin Maxi, Allegro, and others. These cars, considered ordinary and even subpar back in their day, have now captured public interest, showcasing how nostalgia drives a newfound appreciation for vehicles that were once overlooked.

  • 6-2. Cultural significance of classic cars

  • Classic cars hold a significant cultural value as they embody memories and historical elements from past decades. For instance, the Festival of the Unexceptional illustrates how cars like the Datsun Cherry, Lada Riva, and Austin Allegro resonate with the public due to their everyday presence in the lives of past generations. These vehicles are celebrated not for their excellence but for their presence in ordinary life, invoking memories of family trips, first driving experiences, and more.

  • 6-3. Consumer nostalgia and its influence on market trends

  • Consumer nostalgia has a substantial impact on market trends within the automotive industry. This is evidenced by events that celebrate 'unexceptional' cars and the resurgence in popularity of models from previous decades. For example, models like the 1984 Nissan Cherry GTi and the 1982 Toyota Hilux pickup are now prize winners at such festivals, reflecting a broader trend where mundane cars of the past gain new-found respect and love. The rise in nostalgic sentiment is further indicated by the preservation and showcasing of these once-common vehicles, highlighting how nostalgia can influence both market trends and cultural heritage within the automobile sector.

7. Conclusion

  • The transformative shifts in the automotive industry highlighted in this report underscore a pivotal moment marked by technological advancements and a strong consumer shift towards sustainable mobility solutions. The strategic realignment by Mitsubishi, particularly the discontinuation of the Mitsubishi Mirage and the enhancements to models like the Eclipse Cross and Outlander, signifies an adaption to meet evolving consumer demands. The Honda-Nissan-Mitsubishi Alliance showcases the collective effort needed to stay competitive, addressing technological gaps and leveraging each brand's strengths. The rise in EV and hybrid vehicle adoption, driven by governmental support and consumer interest in greener technologies, reflects significant progress towards a more sustainable future. Despite the advances, challenges such as software-defined vehicle development and integration of AI technologies remain. Future industry prospects look promising as collaborations and technological innovations continue to shape automotive trends, guiding the sector towards a balanced growth in sustainability and performance. As these developments unfold, practical applications of these findings can bolster industry practices and consumer choices, steering the global automotive market towards a greener, more efficient future.

8. Glossary

  • 8-1. Mitsubishi Mirage [Car Model]

  • The Mitsubishi Mirage, once the most affordable new vehicle in Canada, has been discontinued in the 2025 lineup. It featured a 1.2-liter engine and was known for its fuel efficiency. Its removal marks a shift in Mitsubishi's focus towards crossover SUVs.

  • 8-2. Honda-Nissan-Mitsubishi Alliance [Strategic Partnership]

  • A collaboration among Honda, Nissan, and Mitsubishi to bolster their positions in the competitive EV market. The partnership aims to leverage synergies in software development, battery production, and EV infrastructure, supported by the Japanese government.

  • 8-3. Electric Vehicles (EVs) [Technology]

  • Electric vehicles are witnessing significant growth globally, driven by increased consumer demand, government incentives, and advancements in battery technology. They represent a major shift towards sustainable mobility.

  • 8-4. Toyota RAV4 [Car Model]

  • The Toyota RAV4 emerged as the best-selling vehicle in Australia in July 2024, largely attributed to its hybrid model's popularity. This trend indicates a growing consumer preference for hybrid vehicles.

  • 8-5. Insurance Institute for Highway Safety (IIHS) [Organization]

  • An independent, non-profit organization dedicated to reducing deaths, injuries, and property damage from motor vehicle crashes. The IIHS conducts vehicle safety tests and publishes ratings, influencing consumer choices and automaker safety features.

9. Source Documents