Mitsubishi Motors Reports Massive Losses on Plunging Sales

TOKYO Feb 8, 2005; Yuri Kageyama writing for the AP reported that losses at Japanese automaker Mitsubishi Motors Corp. more than doubled in the nine months through Dec. 31 from the same period a year earlier, as a recurring recall cover-up scandal sent sales nose-diving.

Tokyo-based Mitsubishi Motors reported on Tuesday a 228 billion yen (US$2 billion; euro1.6 billion) loss for the April-December period, worse than the 103 billion yen loss it racked up in the same period the previous year.

Sales dropped 12 percent to 1.6 trillion yen (US$15 billion; euro12 billion) for the three quarters, down from 1.8 trillion yen the previous year.

Mitsubishi Motors has been struggling for a decade to boost sales and fight recurring scandals. It appeared to be on a turnaround under an alliance with DaimlerChrysler AG for a few years, but has been back in deep financial trouble after the German automaker withdrew additional financing last year.

Also Tuesday, Mitsubishi Motors said a preliminary agreement was reached with DaimlerChrysler on a compensation settlement, although the company refused to say how much it would pay. DaimlerChrysler has been demanding compensation for financial damages from the repeated scandals.

Under the deal, set to be finalized next month, Mitsubishi Motors will transfer the remaining 20 percent stake it owns in Mitsubishi Fuso Truck and Bus Corp., raising DaimlerChrysler's stake in the Tokyo-based truck maker to 85 percent.

In Frankfurt, a source close to DaimlerChrysler told Dow Jones Newswires that the compensation will be about euro200 million (US$255 million) to euro250 million (US$319 million). DaimlerChrysler said it was "very satisfied" with the deal.

Mitsubishi Motors, which did not break down quarterly earnings figures, kept unchanged its forecast for the full fiscal year ending March 31 of a 472 billion yen (US$4.5 billion; euro3.5 billion) loss on 2.04 trillion yen (US$19.5 billion; euro15 billion) in sales.

Mitsubishi sold 146,000 vehicles in Japan during the nine months, down 41 percent from the same period the previous year, and 131,000 vehicles in North America, down 37 percent.

Last month, Mitsubishi Motors announced the latest in series of revival plans, which included a fresh cash infusion from Mitsubishi group companies. The group includes a heavy machinery maker, a bank and a trading company.

Five years ago, Mitsubishi Motors acknowledged it had been systematically hiding auto defects from authorities for more than two decades. A cover-up scandal and a spate of recalls resurfaced last year, although the company promised to come clean in 2000.

Mitsubishi Motors has recently announced minor deals with other companies to help its new recovery plan, including a deal to supply sport utility vehicles for French automaker PSA Peugeot Citroen, and another to supply small cars for Nissan Motor Co., a Japanese rival.