Osamu Masuko Dies; Guided Mitsubishi Turnaound

Osamu Masuko, good guy and friend, rest in peace.

My friend “Masuko-san,” former chairman and CEO of Mitsubishi Motors Corp., died Aug. 27. He was 71.

Mitsubishi Motors made the announcement three weeks after Masuko suddenly retired from the board for unspecified health reasons. I learned later he suffered from heart failure.

I last saw him in October on a trip to Japan.  We usually only saw each other once a year. Then again, Masuko-san and I have had a special relationship dating back to March 11, 2011, the day of the killer earthquake and tsunami off the northeast coast of Japan, when I walked to his office for a 4 p.m. appointment.

I spent a little over two hours with him, talking about Mitsubishi Motors’ business –  Mitsubishi and other Japanese automakers would shut down their operations for several weeks following the earthquake – while he was making calls around the country trying to ascertain damage to Mitsubishi facilities and the safety of employees and their families, as well as checking in on his own family.

This became a conversation-starter every time we met while I tried to chronicle Mitsubishi’s business fortunes and misfortunes. It had been mostly a positive story since Masuko’s 2004 arrival, that changing with a mileage-cheating scandal in spring 2016, then being collateral damage in Nissan’s ongoing financial scandal triggered by the arrest of Carlos Ghosn in November 2018.

Masuko’s first job with the automaker was managing director in charge of its overseas operations, a position he assumed in June 2004. A year later, Masuko assumed the presidency with the secondary title of chief business ethics officer, which should hint at the sort of problems he faced at the outset.

Between 2000 and 2004 Mitsubishi’s brand suffered from three recalls, one of which involved concealing records by the automaker’s former truck-making subsidiary, Mitsubishi Fuso Truck and Bus.

Osamu Masuko Roger Schreffler

Among Masuko’s early decisions was not to rush out and seek a new automotive partner but to try to restructure from within. This did not preclude working with other automakers on certain projects – building cars jointly with Groupe PSA in Russia, badging and selling electric cars through Peugeot and Citroen in Europe and tying up with Nissan to produce 0.66L minicars in Japan.

The next step was for Mitsubishi to focus on its strengths and live within its means – SUVs, all-wheel drive and Southeast Asia – and to shutter or divest itself of unprofitable production facilities in Australia, the Netherlands and the U.S. By fiscal 2015, Mitsubishi was on track to announce the largest profit in its then 45-year history.

Then the bottom fell out with the mileage-cheating scandal. The automaker never was at risk of going bankrupt, but Masuko’s plan of operating independently as a David in an industry of Goliaths was over.

Mitsubishi would not have enough money to invest in new technologies, including batteries, electric cars and automated driving. It would need a big partner.

Ghosn, Nissan’s former chairman and CEO, offered Masuko a financial lifeline. By the end of 2016, Nissan would take a 34% equity stake in the automaker.

Always the pragmatist, Masuko moved in concert with Ghosn to make the Renault-Nissan-Mitsubishi “alliance” a success. It would be the center of excellence for SUVs, all-wheel drive and plug-in hybrids. Its Outlander PHEV, one of the world’s best sellers in the segment, was designated as the main model for the alliance.

At our October meeting, Masuko would not discuss the Nissan scandal, although shortly after Ghosn’s arrest he indicated Ghosn would be difficult to replace. We did discuss a range of other issues, and he gave a somewhat pessimistic view about the future of the Japanese auto industry.

“The population is declining,” he said. “It is also aging. Total demand of automobiles will go down,” noting, however, that the aging issue is not unique to Japan but also is a market factor in South Korea, China and Southeast Asia.

“But a new issue, particularly facing Japan, is that there is much less excitement about cars in general than in the past,” he reflected. “Fifty years ago, if you owned a car your life’s dream became fulfilled. Cars are now transforming to mobility services. I am not sure if that will work out as a business model.”

He added: “Right now, we know we can make profits with conventional powerplants, gasoline and diesel, but it is not clear if we can be profitable with newer powertrain technologies. The industry is clearly moving in the direction of EVs. But whether we can achieve high profitability is questionable.”

Ghosn.jpg

At the time, he didn’t realize the effect COVID-19 would have on the industry or, from the standpoint of the alliance, that Ghosn (above, left) would escape from Japan by the end of the year, creating all sorts of uncertainty for the three partners. Nor could he have foreseen a ¥140 billion ($1.3 billion) operating loss Mitsubishi is projecting for fiscal 2020.

But Masuko did leave the following thought: “Eventually, we will have to rely on the next generation, and we can’t live alone” – that is, Mitsubishi will have to work through some sort of alliance moving forward.

We ended our talk with a big bear hug and a promise to meet again on my next trip to Tokyo.

To bring this story full circle, several years ago I underwent major heart surgery. Unbeknownst to me at the time, Masuko-san had a staffer phone my wife in Rhode Island to check on how I was doing.

That's all you need to know about him. Rest in peace.