Japanese automaker Mitsubishi Motors loses $4.4 billion in latest fiscal year

TOKYO (AP) _ Mitsubishi Motors Corp.'s loss widened to $4.4 billion and sales tumbled 16 percent for the latest fiscal year as the Japanese automaker struggles to regain customer trust in the wake

Monday, May 23rd 2005, 9:43 am

By: News On 6

TOKYO (AP) _ Mitsubishi Motors Corp.'s loss widened to $4.4 billion and sales tumbled 16 percent for the latest fiscal year as the Japanese automaker struggles to regain customer trust in the wake of a defect coverup scandal in Japan. It expects to post a smaller loss for this year as sales pick up in Japan as well as overseas.

The Tokyo-based company's loss of 474.8 billion yen for the fiscal year ended March 31 was its second straight year in the red and its loss was more than more than twice as large as its loss of 215 billion yen ($2 billion) the previous fiscal year.

The loss reported Monday was slightly larger than it had forecast in January.

Sales fell to 2.1 trillion yen ($19 billion) from 2.5 trillion yen a year earlier. Global vehicle sales fell to 1.31 million from 1.5 million the previous year.

Mitsubishi Motors has seen its Japan sales plunge after acknowledging five years ago that it had systematically hidden auto defects to avoid recalls. Despite one revival plan after another, the scandals have recurred, tarnishing its brand image in Japan. It has also been battered by overly extending loans to buyers with bad credit in the United States.

Mitsubishi Motors foresees more tough times ahead. It forecast a loss of 64 billion yen ($592 million) for the fiscal year through March 2006 on sales of 2.2 trillion yen ($20 billion).

But President Osamu Masuko said sales in Japan were picking up _ on target for fiscal 2004 at 227,000 vehicles and were expected to rise to 253,000 in fiscal 2005.

``It's a small step, but we are confident it's a definite step,'' he told reporters at the company's Tokyo headquarters.

Vehicle sales were also expected to grow in North America, Europe and Asia with global sales rising to 1.37 million vehicles in fiscal 2005, according to Mitsubishi Motors. North American vehicle sales are expected to edge up to 184,000 in fiscal 2005 from 174,000 in the latest fiscal year.

Although vehicle sales have dropped in North America, Rich Gilligan, head of Mitsubishi Motors' U.S. operations, said the Eclipse coupe going on sale in May was expected to reverse that as showroom traffic recovers.

The new Raider pickup is also set to be introduced later this year, and other models are also in the works, Gilligan said.

The plant in Normal, Ill., will begin producing vehicles for export to the Middle East and Russia next year, and Gilligan said he's considering producing vehicles for export to South America. The U.S. business is expected to become profitable in fiscal 2006, he said.

``The new strategy is going to be about the car as the star. It will be a much heavier focus on the product. As we rebuild the brand, it will be one product at a time,'' he said while visiting Tokyo.

Adding to Mitsubishi's recent losses were costs of free vehicle inspections it gave to woo back buyers, totaling 25 billion yen ($231 million), as well as compensation paid to DaimlerChrysler AG of Germany, its former alliance partner, totaling 75 billion yen ($693 million).

DaimlerChrysler, which still owns an 85 percent stake in Mitsubishi Motors' former truck unit, demanded compensation for the costly defect cover-up and recall scandal. They settled earlier this year.

Last year, DaimlerChrysler dealt a blow to Mitsubishi Motors by refusing to extend more monetary help.

Earlier this year, Mitsubishi announced another plan centered around a fresh cash infusion from Mitsubishi group companies.