Mitsubishi Motors
Corporate History & Strategy

In the late 1960s, Mitsubishi Heavy Industries' automotive division handled a wide range of passenger cars, trucks, and buses, but was at a disadvantage in passenger car sales volume compared to Toyota and Nissan. Expanding the automotive business required massive capital investment and sales network development, and operating as a division within Mitsubishi Heavy Industries had limitations in terms of rapid decision-making and raising external capital.

Meanwhile, the major U.S. automaker Chrysler was exploring entry into the Japanese market. In the 1960s, GM of the U.S. had partnered with Isuzu Motors and Ford of the U.S. with Mazda (Toyo Kogyo), making it a priority for Chrysler as well to expand its business through a partnership with a Japanese manufacturer. The interests of both parties aligned, and in May 1969, Mitsubishi Heavy Industries and Chrysler agreed on a joint venture partnership in the automotive business.

In April 1970, 'Mitsubishi Motors Corporation' was established as a subsidiary of Mitsubishi Heavy Industries. In June of the same year, the company received the automotive divisions (Mizushima, Nagoya, Kyoto, and Kawasaki plants) from Mitsubishi Heavy Industries and commenced operations. In 1971, Chrysler acquired 15% of Mitsubishi Motors shares, and the management structure was established as a joint venture between Mitsubishi Heavy Industries and Chrysler.

In fiscal year 1972, immediately after its founding, domestic sales shares were 6.6% for passenger cars, 11.4% for trucks, and 22.2% for buses, with strengths in large commercial vehicles (34.6% for heavy-duty trucks, 37.3% for large buses). In the passenger car market, the company was far behind Toyota and Nissan, and overseas expansion leveraging the sales network of joint venture partner Chrysler was positioned as the key to growth.

However, the joint venture framework contained serious constraints for Mitsubishi Motors. Under the 'U.S. Distribution Agreement' concluded with Chrysler, Mitsubishi Motors accepted indefinite conditions of 'sales of two-door vehicles only' and 'exclusive distribution by Chrysler' in the U.S. market. Exports of its mainstay four-door compact cars were blocked, and the company was unable to build its own sales network.

For Chrysler, it was a rational contract that used Mitsubishi Motors as a foothold for entering Japan while ensuring the Japanese company would not compete in the North American market. For Mitsubishi Motors, however, it was a constraint described as an 'unequal treaty' that became a barrier to business expansion in North America. This contract continued until its revision in 1981 and was a factor in the deterioration of relations with Chrysler from the outset of the alliance. President Kubo Tomio stated, 'We should abandon alliances that tie us down too much,' and the structural problem of management being constrained by the power dynamics with a joint venture partner would be repeated in the later alliance with DaimlerChrysler.