One of the most important automobile industry figures in Asia, Osamu Masuko, died August 27 at 71. As chairman, CEO and president, he had kept Mitsubishi Motors Corporation relevant, first by restructuring its operations and then by steering it into the alliance with Renault and Nissan.
He had also built a solid base in Southeast Asia.
Mitsubishi Motors made the announcement three weeks after Masuko suddenly retired from the board for unspecified health reasons. It was learned later that he’d suffered from heart failure.
Masuko came from an affiliated trading company where he had little direct experience with automobile manufacturing. But the Mitsubishi group is a big family, bearing one of the grand names in Japanese industry. The conglomerate’s business dates back to the 1860s when Japan was just opening to the West. Its iconic “three diamond” emblem is known around the world.
To put Masuko into a historical context, he is one of the three prominent “fixit” specialists brought in from outside over the past 25 years to restructure and save major Japanese automakers.
The first was Henry Wallace, the Ford Motor Co executive who was dispatched to Hiroshima in the mid-1990s to turn around the fortunes of Mazda Motor Corp. The second was Carlos Ghosn, who is widely regarded as having saved Nissan through the alliance with Renault SA.
And then there was Masuko, who joined Mitsubishi Motors to pick up the pieces after DaimlerChrysler AG failed in its efforts to restructure the ailing automaker.
It was mostly a positive story after Masuko’s 2004 arrival, the story’s ending changing with a relatively minor mileage-cheating scandal in spring 2016 and then, potentially more damaging, Mitsubishi becoming collateral damage in Nissan’s ongoing financial scandal triggered by the arrest of Carlos Ghosn in November 2018.
Born into a middle-class family in a suburb of Yokohama, Masuko spent his 1960s formative years during the Japanese “economic miracle.” When it was time to enter a university, he chose one of the best, Waseda University, and was admitted to the school’s prestigious political science and economics department.
He joined Mitsubishi Corp in April 1972, having turned down offers from several big banks. He said he didn’t like banking, although one must wonder what might have been considering how easily he discussed forex rates, moving back and forth from euros and dollars (US and Australian) to rupiahs, baht, rubles and yen.
Unlike most of his contemporaries having an affinity for languages, he became fluent in Korean and English and was able to converse in Indonesian.
Young Masuko had hoped to join Mitsubishi Corp’s energy and steel product divisions. Instead, he was assigned to machinery and rolling stock, which, in layman’s terms, includes trains and cars.
In that capacity he was dispatched to Seoul in 1975 for his first overseas assignment. He lived there for more than a decade, long enough to learn Korean. He returned to Japan for several years before taking up his second overseas posting – to Jakarta to provide managerial support to PT Krama Yudha Tiga Berlian Motors.
Ups and downs
Masuko’s first job with the automaker was managing director in charge of its overseas operations, a position he assumed in June 2004.
He had risen to the executive ranks of Mitsubishi Corp, Japan’s largest trading house and one of the automaker’s main shareholders, then volunteered for the job when DaimlerChrysler appointee Rolf Eckrodt resigned as president in April 2004 and revealed that the German-American partnership intended to withdraw all financial and management support.
“Somebody had to do it. We had 250 people in our group. If Mitsubishi Motors were to collapse, our group would effectively disappear. We all understood that it would be difficult.”
Did he think that Mitsubishi Motors would go under? “No. But we knew it wouldn’t be easy.”
At the time, DaimlerChrysler held a controlling 37% equity stake in the Japanese automaker, itself born out of an amalgamation of the automotive units of three regional heavy-industries companies.
A year later, in 2005, Masuko assumed the presidency with the secondary title of chief business ethics officer, which should give a hint about the sort of problems he faced at the outset.
Between 2000 and 2004, the automaker’s three-diamonds brand suffered from three recalls, one of which involved records concealed by its former truck making subsidiary, Mitsubishi Fuso Truck and Bus Corp, in which a driver was killed.
Among Masuko’s early decisions was not to rush out and seek a new automotive partner but to try to restructure from within.
“Daimler tended to do what was best for them,” he revealed in an earlier interview. “And ultimately this was the cause of the breakup. But it also served as the impetus for our turnaround as we were forced to focus on our needs, not theirs.”
This did not preclude working with other automakers on a project basis – building cars jointly with Groupe PSA in Russia, badging and selling electric cars as Peugeots and Citroens in Europe, and tying up with Nissan to produce 660cc minicars in Japan.
Southeast Asian footprint
But it did mean shuttering and divesting unprofitable production facilities in Australia, the US and the Netherlands while expanding its footprint in Southeast Asia, where the automaker had been one of the early entrants in the 1960s, in Thailand, and still ranks among the leaders.
Against this backdrop, Masuko steered Mitsubishi toward its strengths, which included SUVs, dating back to the iconic Pajero model; all-wheel-drive technology, in which Mitsubishi is an industry leader; and Southeast Asia. He also set about the task of rebuilding the automaker’s balance sheet.
“Focus is absolutely critical, especially when you’re our size,” he declared at one of our sushi lunch meetings several months before announcing the alliance with Nissan. “We were one of only five automakers in the world operating plants in Europe, North America and Australia. We weren’t big enough to do that. We had gone past our ability to do business, which is why we had so many management crises.”
And his decade-long effort was beginning to pay dividends. By fiscal 2015, Mitsubishi was on track to announce the largest profit in its then 45-year history. And, Masuko confided: “For the first time in our history, we can operate independently.”
Then the bottom fell out with the mileage-cheating scandal, which came to light in April 2016.
Masuko, in his first interview following the April disclosures that involved more than two dozen Mitsubishi models, but mostly on 660cc minicars sold in Japan, admitted that the revelation “left me speechless. We had just begun preparations for our next medium-term business plan.”
Wanted: big partner
Contrary to several media reports, the automaker was never at risk of going bankrupt. But nevertheless, Masuko’s plan of operating independently as a David in an industry of Gloiaths was over.
Mitsubishi would not have enough resources to invest in new technologies such as batteries, electric cars and automated driving. It would need a big partner.
Ghosn offered Masuko a financial lifeline. And by the end of October 2016, Nissan would take a 34% equity stake in the automaker.
Always the pragmatist, a characteristic of people who work for trading houses, Masuko quickly moved in concert with Ghosn to make the Renault-Nissan-Mitsubishi “alliance” a success – with the automaker’s Southeast Asia footprint having expanded from Thailand to include the Philippines, Indonesia and Vietnam.
Ghosn made it a condition of Nissan support that Masuko not resign to accept responsibility for the scandal, as is customary in Japan. The pair seemed to have a genuinely respectful relationship.
On my last trip to Japan in October 2019, Masuko-san took 30 minutes from his busy schedule to meet me. As usual, he greeted me with a deep-throated hello and asked questions about my family.
During that meeting, Masuko would not discuss the Nissan scandal, although shortly after Ghosn’s arrest he indicated that Ghosn would be difficult to replace.
Friends and allies
As an automotive journalist I don’t use the word “friend” lightly when talking about corporate CEOs. Basically, we mingle in different circles. Masuko-san and I usually only saw each other once a year, often over a sushi lunch.
But he and I 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 – all trains and subways stopped and taxis filled – I walked more than two miles to his office for a scheduled 4 pm appointment.
I arrived 10 minutes early. He wondered why I had come, under the circumstances. I told him, half tongue-in-cheek, that I’d been scared waiting on the 20th floor of a downtown Tokyo office building, which had shaken like jelly for three solid minutes, and I’d felt his fifth-floor office would be safer. Which probably wasn’t true, considering that his building was older.
Anyway, I spent a little over two hours with him that afternoon, talking about Mitsubishi Motors business while he was making calls around the country trying to ascertain damage to Mitsubishi facilities and the safety of Mitsubishi employees and their families as well as checking in on his own family.
Mitsubishi and other Japanese automakers would shut down their operations for several weeks following of the earthquake.
To bring this part of the story full circle, several years after “311,” as the earthquake and tsumani are called in Japan, I had to undergo major heart surgery. Unbeknownst to me at the time, since I was heavily sedated, Masuko-san had one of his staff phone my wife in Rhode Island to check on how I was doing.
That gesture right there tells you all you need to know about him.
Memories of 311, of course, became a conversation starter every time we met while I tried to chronicle Mitsubishi’s business fortunes – and misfortunes.
We did discuss a range of other issues, and he gave a somewhat pessimistic view about the future of the Japanese auto industry.
“Japan’s population is declining and aging,” he said. “Total demand for automobiles will go down.” Then he added that the aging issue is not unique to Japan, but is also a market factor in South Korea, China and Southeast Asia.
Masuko raised another issue, which, given his 1960s upbringing when the auto industry was just taking off in Japan, was all the more ironic – and problematic.
“Truth be told,” he admitted, “there is much less excitement about cars than in the past.”
“Fifty years ago,” he reflected, at a time when he was still a student, “if you owned a car your life’s dream became fulfilled.” However, “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 be profitable is still in question.”
Speaking about consumer preferences, Masuko noted that “people living in big cities can live without cars. One can live in cities like Tokyo, Paris, New York, London and Amsterdam without owning a car. We can’t live without a mobile phone,” he added with a smile.
On the issue of Mitsubishi’s future after his retirement, a question that had to be asked when I met him last October, Masuko explained that he had come to a company “on the verge of collapse. We were able to restructure to our current level through a concerted effort by our employees.”
At the time we were talking, we didn’t know about Covid-19 and the effect it would have on the industry or, from the standpoint of the “alliance,” that Carlos Ghosn would escape from Japan by the end of the year, creating all sorts of uncertainty for the three partners.
Thus, Masuko couldn’t have foreseen a Y140 billion ($1.3 billion) operating loss Mitsubishi is now projecting for fiscal 2020. It won’t stay there forever, of course.
But Masuko did leave the following parting thought: “Eventually, we will have to rely on the next generation and we can’t live alone.” He meant that 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.
His shoes are going to be difficult to fill.
Roger Schreffler is a veteran Japan correspondent for Ward’s Automotive, where a version of this article orignally appeared.