Losses balloon at scandal-hit Japanese automaker Mitsubishi Motors
Wednesday, August 4th 2004, 9:33 am
By: News On 6
TOKYO (AP) _ Losses at scandal-plagued Japanese automaker Mitsubishi Motors Corp. ballooned for the latest quarter as sales nose-dived in Japan and North America.
Tokyo-based Mitsubishi Motors reported Wednesday that it lost 54.7 billion yen ($492 million) in the April-June quarter compared with a loss of 51 billion yen a year ago. Sales shrank 8 percent to 557.6 billion yen ($5 billion) from 607.1 billion yen.
Its vehicle sales in Japan were down 38 percent to 49,000 vehicles, while sales in North America tumbled by a third to 53,000 vehicles from the same period a year ago.
European vehicles sales rose 5,000 to 58,000 and sales were solid in China and South America, the company said.
Sales of Mitsubishi Motors vehicles in Japan have suffered after the automaker said earlier this year it had continued to hide auto defects in an effort to avert recalls, although it had promised to end a systematic cover-up when a similar scandal surfaced four years ago.
Several Mitsubishi officials have been criminally charged in two fatal 2002 accidents suspected of being linked to major defects, in wheels and clutch systems. Mitsubishi Motors and its truck unit, spun off in 2003, have both announced massive recalls this year.
``There is no medicine to fix corporate culture overnight,'' said Vice Chairman Koji Furukawa, who took office recently to promote ethics at the company.
The company has said it plans to trim nearly a quarter of its global work force over the next three years under a revival plan announced in May. It is closing an auto assembly plant in Japan.
Last month, Mitsubishi Motors announced it is planning to cut about 1,200 employees from its only U.S. plant this fall. The plant in Normal, Ill., employs more than 3,100 workers.
DaimlerChrysler AG of Germany, which owns a 24.7 percent stake, has said it will not invest more money into the automaker.
But Mitsubishi Motors is getting funding from its affiliated Mitsubishi group companies and other investors, gathering 496 billion yen ($4.5 billion) in new capital recently from issued shares. Debts were reduced to 734 billion yen ($6.6 billion) from more than 1 trillion yen a year ago.
The automaker has repeatedly said it wants to speed up its revival plan, including trimming jobs, streamlining models and slashing paychecks. The company has also promised to strengthen corporate ethics to win back customer trust.
Mitsubishi Motors reported a loss for the fiscal year ended March 31 and expects to have a loss this fiscal year.
It is conducting an internal investigation into the cover-up, which had gone on for decades. Stacks of hidden defect reports were found in an office locker room after a whistle-blower alerted the authorities several years ago.
Mitsubishi Motors had kept a double-tiered compilation of driver complaints and other reported problems, carrying out recalls only on some of the defects, company officials say.
Furukawa told reporters Wednesday that when the cover-up surfaced in July 2000, an internal investigation only covered reported defects from as far back as April 1998. A more thorough investigation was now being carried out, he said.
Embroiled in scandal after scandal, Mitsubishi Motors has had seven presidents in the last eight years.
``MMC is steadily progressing toward self-revitalization,'' President Hideyasu Tagaya told reporters at Mitsubishi's Tokyo headquarters, referring to his company by its acronym. ``I will take the lead in all our operations to deliver cars our customers can drive without worries.''
Mitsubishi Motors shares, which have tumbled by about 70 percent in the last three months, finished down nearly 4 percent at 76 yen (68 cents) on the Tokyo Stock Exchange shortly before earnings were announced.