Word: mitsubishis
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...Safety and reliability issues aren't confined to the truckmaker. In early June, Mitsubishi Motors dropped a new bombshell, announcing it would recall 155,000 cars in Japan to repair 26 mechanical defects it had failed to report since 1993, despite its obligation to do so under Japanese law. The bugs ranged from defective air bags to faulty hoses that caused breakdowns and included a glitch linked to at least two vehicle fires. Management also admitted issuing memos to dealers asking them to quietly fix these flaws if customers brought their cars in for other repairs. Shortly after the disclosures...
...says, "but I like the car. At least the tires haven't come off." Others are less forgiving. Shoichi Nakagawa, Japan's Minister of Economy, Trade and Industry, recently said he was "speechless from disgust" over the company's "malicious" behavior. Public goodwill is dissipating at a critical juncture: Mitsubishi lost $1.9 billion in its 2003 fiscal year, and management is forecasting similarly dismal results for 2004 due to plummeting sales. Since April, its stock has fallen...
...make matters worse, the company's international partner, DaimlerChrysler, has refused to provide it with new financial support. In April, DaimlerChrysler Chairman Jurgen Schrempp asked banks linked to Mitsubishi to forgive some of its $9 billion in debt as a precondition for the German-U.S. auto giant's participation in any bailout. But he was turned down. Soon after, Rolf Eckrodt, the DaimlerChrysler-appointed president of Mitsubishi Motors, resigned. DaimlerChrysler, which has already invested $3.5 billion in Mitsubishi's auto and truck businesses, says it has no intention of selling its 37% stake in Mitsubishi Motors?but, warns Standard...
...beleaguered automaker has instead turned for help to sister companies within the Mitsubishi Group, one of Japan's most powerful business conglomerates. Mitsubishi affiliates have agreed to provide $2.5 billion by buying new stock and converting some debt to equity. Another $1.6 billion is coming from investment bank J.P. Morgan and Japan-based private equity fund Phoenix Capital, which will become Mitsubishi Motors' largest shareholder when the investment is complete...
...Meanwhile, in April, the Mitsubishi Group dispatched a new CEO, Yoichiro Okazaki, from Mitsubishi Heavy Industries. He quickly announced a restructuring plan that includes cutting 22% of Mitsubishi Motors' 49,000 employees, the closure of a factory in Japan, a revitalized car line with 44 new models to be introduced over the next three years, and a focus on boosting sales in China. Okazaki has also promised to overhaul the corporate culture by forming a business-ethics committee consisting of lawyers, academics and other outsiders to monitor senior management...