Mitsubishi nearly off road in u-turn

By PAULA OLIVER

In business and politics it is not nice to be accused of performing a u-turn.

Ironically it was a car manufacturer, Mitsubishi, who made this week's biggest u-turn as it wrestled with an avalanche of negative publicity over its decision not to fully fund repair work on defective imported cars, trucks and buses.

Mitsubishi New Zealand's problems began last Friday when 843 used imported Mitsubishi Fuso trucks and buses were recalled for safety inspections.

A design flaw in the wheel hub could cause a wheel to come off.

To make matters worse, that had actually happened in Japan two years earlier when a wheel flew off a truck and killed a woman and injured two children.

As with any other recall, Mitsubishi's marketing and service staff immediately got involved. So, too, did its lawyers.

The company's legal situation was clear - laws in New Zealand did not require it to be responsible for fixing cars it did not import.

Mitsubishi said it had leaned on its Japanese parent to pay for the parts needed to fix the trucks and buses, but it did not intend to pay for labour costs.

That left owners with a bill of $90 to $200 for inspections.

The fact that some of the buses worked school routes was not lost on the media.

For the next five days Mitsubishi would stick to its stance of paying for only the cost of parts.

During that time other recalls would also surface - a clutch problem with trucks, and a brake problem with 1996/1997 Galant VR4s.

Ironically the brake fault became obvious when an Auckland Mitsubishi dealer hurtled through a red light with failed brakes on Monday.

The public relations job was getting harder.

Its media relations were being handled by Philip Dinniss, a veteran public relations contractor.

Dinniss and the company's managing director, John Leighton, attacked independent importers for not being prepared to stand by the cars they sold.

Behind the scenes the company met the Consumers Institute and the Government to explain its position. But the wave of bad publicity continued.

"Inside the company people were starting to hurt," Dinniss told the Weekend Herald yesterday.

"People were passionate about the business. It was a tight-knit group."

As the storm raged, Mitsubishi's directors and senior staff huddled together on Wednesday for what would prove to be a direction-changing meeting.

Somebody in the room asked what on earth the company was doing. It had a strong brand, and it was risking serious damage.

If the cars had been in Japan they would have been fixed, another pointed out.

Why not bite the bullet, pay to get the cars fixed, and try to avoid the long-term damage that might come from sticking to the existing stance?

In a decision that would be hailed as a positive turnaround by consumer groups and the Government, the group agreed to change tack.

The next day it ran full-page newspaper ads saying it would fund both parts and labour costs for owners of imported Mitsubishi cars, trucks and buses which had manufacturing defects.

The decision came six days after the recall drama had become public - and many questioned why it had taken so long.

"We were trying to get an acceptable outcome for everyone involved," Dinniss said. The decision was made only three hours after the company met Associate Transport Minister Harry Duynhoven.

Duynhoven made it clear at the meeting that he felt that while Mitsubishi did not have a legal obligation to foot the repair bill, it did have a moral responsibility to do so. He has since heaped praise on Mitsubishi for its change of tack.

Mitsubishi says Duynhoven was not the reason it changed its mind. But he did play a part, as did comments from Consumers Institute boss David Russell and the general wave of public sentiment.

It is now watching closely to assess what, if any, long-term brand damage the saga will inflict on Mitsubishi.

Dinniss is of the opinion that the company's problems in Japan have exacerbated the backlash in New Zealand.

There, its public relations staff have faced a Herculean task.

Mitsubishi Motors Corporation has been embroiled in a scandal of cover-ups and confessions.

Several executives of Mitsubishi Fuso Truck and Bus Corporation have been arrested on suspicion of professional negligence resulting in death in relation to a fatal accident involving an apparently faulty vehicle.

A former president of Mitsubishi Motors was also arrested last week and faces the same charge.

Mitsubishi tackled the Japanese PR disaster by reversing its self-confessed "culture of concealment" and embarking on a series of mea culpa press conferences.

It has detailed a business revitalisation plan that chairman Yoichiro Okazaki says "is our last chance for survival as an automaker".

Vehicles have been recalled and the company has repeatedly apologised for damaging consumer trust in Japan's recall laws.

It has offered free inspections and oil changes for all of its vehicles in Japan as part of an effort to rebuild confidence in its brand.

The company has said it intends to run seminars on business ethics for all executives and employees. All employees will be asked to sign a compliance pledge next month.