tiggerlee

Big losses and slumping sales spells big problems for Mitsubishi.

By Associated Press

TOKYO -- 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 $4.4 billion 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 $2 billion the previous fiscal year.

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

Sales fell to $19 billion from $22.6 billion 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 $592 million for the fiscal year through March 2006 on sales of $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 model is built at the company's plant in Normal.

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

The company 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 $231 million, as well as compensation paid to DaimlerChrysler AG of Germany, its former alliance partner, totaling $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.

Mugatu

iTrader: (1)

I think the new Eclipse will be the deciding factor for whether it lives or dies.

RX8-CARL

Dead in the water.

JeRKy 8 Owner

Personally, I don't think the new Eclipse is going to do **** for them. That car is targetted for a specific audience. They need to make big changes all across the board. They need something like a Mazda3.

Smoke Honda

iTrader: (1)

They did, and sorta failed. It was called the lancer.

Steiner

I wonder what would happen with Mitsubishi owner's warranties if they go belly up in the US.

REMillers

Nothing for awhile, it is doubtful they will just disappear overnight. Chances are someone may buy them up. (GM, ford, Dodge or another Japanese company)

Ike

There would be some sort of deal made for another source to take care of them most likely.

Tirminyl

If that is the case then they are dead. All their cars are just getting uglier and uglier.

Socr8tes

I dunno, I kinda like the new Eclipse. It looks more like a natural successor to the moniker than the previous model did. And with 265(?) HP and a 6 speed... I just hope the interior is FAR better than what it has been.

Elara

I agree- I think it's their last ditch effort to save themselves, and if it doesn't sell they'r screwed. BUT, if the reports about the new eclipse are correct, maybe it WILL pull them out of the gutter.

DreRX8

The new Eclipse will definately sell better than the previous one--and it is a solid car/package but it is just not enough. The bread and butter Galant (which I think is lackluster) just doesn't cut it in the marketplace. The older generations did far better.

Ellar

Nissan was in a similar situation only a few years ago, and I believe they brought in a designer who did a makeover on the entire line. Along with the new, slicker commercials they started running, the changes made their finances do a 180.

Mitsubishi's best bet would be to bring in a new key-designer. Maybe one with the sense of sight this time.

missinmahseven

Nissan's turnaround was down to the bone, not just stylistically. Carlos Ghosn of Renault personally took charge, he is ruthless, utterly so. He even strong-armed Nissan's suppliers into doing business with him *his* way. And suceeded. That alone is eyebrow-rising, because he shattered the 'it's been done like this for decades' good ole boy club which was in place.

Now Nissan makes more dough for Renault and Ghosn than Renault does!

What Mitsubishi needs is a similar nuke. Just blow everything away and start fresh.

rotten42

In that case....time to put on my black suit.


just as well....less ugly cars on the road.

DreRX8

I just took the time to sit down and think about their current lineup--its garbage from a business point of view. You have the EVO which doesn't make Mitsu money, the Endeavor, Montero, Montero Sport, upcoming Raider pickup, regular Lancer, the Eclipse, and Galant. The Galant should be the money maker as well as the Lancer--the Galant offers decent performance but it is unattractive--and not selling well.

KC_Prelude

Mitsu has done nothing to set themselves apart, they just copy honda and toyota and nissan and sell it for slightly cheaper. Honda and Toyota have quality, economy, and resale. Nissan has power. What does mitsu have? The eclipse had potential but it should have been 4wd (and/or turbo) and less awkward looking. As is its still a fwd pig. Nobody really wants to buy a mitsu excluding the evo, they just can't afford anything better, and mitsu will finance pretty much anyone. Who knows, maybe the teenage girls of america will prove me wrong on the eclipse.

shelleys_man_06

I saw the 2006 Eclipse at the Hyundai dealership down the street. It's a good looking car, and it'll probably sell well during its honeymoon period. However, I believe the Eclipse, as well as the rest of the lineup are junk. MMC needs to evaluate its options in case future and current models don't sell. It'll be a sad day when this company goes belly up. $4.4 billion. That's a spicy meatball.

JanSolo

The car that should be doing the best - the Gallant, is an eyesore. Like everyone else has said, they need to assess the competition and not try to be a "me too" company. I think what Mitsu wants to be known for is a company that creates good performing vehicles for a modest price. While their vehicles may be that (fast and cheap!), they certainly don't look appealing and that is, unfortunately, the first thing that most people notice.