Mitsubishi Motors in Talks With DaimlerChrysler Over Compensation Settlement

TOKYO January 21, 2005; The AP reported that Mitsubishi Motors is in talks with DaimlerChrysler AG to compensate the German automaker for damages related to recall scandals at the Japanese automaker's truck unit, the company said Friday.

The talks on possible compensation are continuing, although Mitsubishi Motors has not received an official demand for restitution from DaimlerChrysler, the Japanese automaker said in a statement.

DaimlerChrysler was a key partner for the Tokyo-based automaker before deciding last year to end cash infusions to bail out the troubled company.

DaimlerChrysler is miffed that scandals about a systematic cover-up of auto defects emerged after it took a stake in both Mitsubishi Motors and its truck unit. The scandals have recurred despite promises by Mitsubishi Motors to come clean after the wrongdoing was first disclosed in 2000.

Sales of Mitsubishi cars and trucks have been plunging not only in Japan but also in the United States, where the automaker is suffering deep losses.

Mitsubishi Motors said the compensation was still undecided. It denied a report Friday in the major business newspaper Nihon Keizai Shimbun that the settlement may be between 50 billion yen (US$484 million; euro374 million) and 80 billion yen (US$774.5 billion; euro599 billion).

Mitsubishi Motors has announced one revival plan after another over the last several years and is set to disclose another this month.

The company says the latest restructuring plan involves a fresh cash injection from the Mitsubishi group of companies, which has already doled out nearly 500 billion yen (US$4.8 billion; euro3.7 billion) since last year. The Mitsubishi group includes a major bank, trading company and electronics maker.

Mitsubishi Motors needs more money just to survive, including to pay the settlement with DaimlerChrysler.