Industry Report Part 2: Mitsubishi Faces Unprecedented Challenges in Canadian Market

Warranties Play a Stronger Roll in a New Car Purchase than Ever Before

Long, comprehensive warranties are becoming deal closers, especially for brands that have a history of reliability problems or are relatively unknown. Being that Mitsubishi Motors North America president and CEO Finbarr O'Neill recently moved over from Hyundai Auto, which offers a 10 year powertrain warranty in the U.S. just like its Kia

Mitsubishi Motors North America president and CEO Finbarr O'Neill (center) made it known that Mitsubishi was dedicated to the Canadian market, and wouldn't be going anywhere. (Photo: Mitsubishi Motors North America)

subsidiary, one of his first acts as president was to enact a similar strategy. But ironically, in the market that needs it more than its well-established U.S. operations, Canada, it's not part of the new vehicle deal. Longer transferable warranties not only reduce the cost of ownership, but increase a given model's pre-owned value. While this doesn't affect an automaker that is new to a market initially, in the long term it will increase a car's residual value resulting in lower monthly payments and in the end, more sales. Its dealer

Although Mitsubishi has a strong Canadian lineup, the lack of a subcompact model is hurting its bottom line. (Photo: Trevor Hofmann, Canadian Auto Press)

body will also be able to make more money from trade-in and lease buy-back sales. Mitsubishi would be smart to offer at least the same warranty coverage in Canada as it does in the United States.

Any concerns Canadian consumers might have about the brand pulling up stakes and leaving the market were quickly quelled by Mitsubishi's top man, stating a "need to proceed" in the "ninth largest automotive market in the world."

But O'Neill's dedication, and the long hours and hard work Canadian president Randy Sears and his relatively small team put in day in and day out won't completely compensate for the lack of an entry in what is quickly becoming a core category in Canada, the subcompact class.