Mitsubishi Motors Raided by Police on Truck Accident

Tokyo May 6, 2004; Bloomberg reported that Mitsubishi Motors Corp. and affiliate Mitsubishi Fuso Truck & Bus Corp. were raided by police investigating whether the automakers falsified reports on faults blamed for 50 accidents and one death, police said. Mitsubishi Motors stock fell 7 percent.

The raid on the companies' head offices in Tokyo was part of a probe into possible false reports to the transport ministry about design flaws in the wheel hubs of Fuso trucks and buses, the Kanagawa police said.

The raid is the latest sign Japan's fourth-largest carmaker, 37 percent owned by DaimlerChrysler AG, failed to improve quality procedures after the discovery of 20 years of hidden customer complaints prompted a 2 million vehicle recall in 2000 and 2001. DaimlerChrysler, which has refused to spend more on Mitsubishi Motors, raised its stake in Fuso to 65 percent in March.

``This raises fresh safety and quality concerns at Mitsubishi Motors,'' said Yasuhiro Matsumoto, a credit analyst at BNP Paribas Securities (Japan) Ltd. in Tokyo. ``The bad image may be passed on to Mitsubishi Motors,'' because the problems arose while Fuso was still part of the automaker and the two companies still share the Mitsubishi brand.

Shares of Mitsubishi Motors fell as low as 254 yen and traded at 257 yen as of 1:14 p.m. in Tokyo. Shares of Fuso, which separated from Mitsubishi Motors in January 2003, aren't publicly traded.

Truck Recall

Fuso, controlled by DaimlerChrysler since last year, recalled 112,000 trucks and buses in March to fix wheel-hub faults, which have been blamed for the accidents, including the one where a woman was killed and her two children hurt when they were hit by a wheel which broke off a truck. The truckmaker previously said the accidents may have been caused by poor maintenance.

``Because these investigations are still ongoing, we cannot comment on the specifics,'' Fuso said in a statement. Mitsubishi Motors spokesman Fumio Nishizaki declined to comment on the reason for the raid.

Mitsubishi Motors is trying to raise money to rescue its businesses after DaimlerChrysler refused to provide any more financing for Japan's only unprofitable passenger-car maker.

The Japanese automaker has $10 billion of debt and has been hurt by slumping sales in the U.S., its biggest overseas market. Mitsubishi Motors' U.S. sales fell 26 percent in 2003 after it tightened loan policies in response to a surge in defaults.

Fatal Accident

Police are also investigating seven former executives of Fuso, including former Chairman Takashi Usami. The seven are suspected of submitting false reports to the transportation ministry prior to the company's March recall, public broadcaster NHK reported.

The police have started questioning the company executives, the Kyodo news agency reported.

Usami, who was in charge of the truck division at the time of the fatal accident, resigned on April 16 to take responsibility for the company's problems. The truckmaker is 65 percent owned by DaimlerChrysler, the world's fifth-largest automaker, and a fifth owned by Mitsubishi Motors.

Japan's transport ministry previously said it will investigate whether Fuso tried to cover up the hub faults.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net.