More Bad News About Mitsu...

[theveed]

Road Trucking Vehicle Law violations II

July 2, 2004. [Financial Times] DaimlerChrysler is set to reclassify its investment in Mitsubishi Motors (MMC) as "non-strategic and available for sale" later this year. Kurt Sanger, analyst at ING, said that as well as clearing the way for an eventual sale, the dilution of DaimlerChrysler's stake to less than 20 per cent would enable it to treat its share of MMC's forecast net loss of Y230bn for the year to March 2005 as a balance sheet item, removing it from its profit and loss account. It is understood negotiations are under way to dissolve a range of "alliance projects" in transmissions and engines that had not yet been announced publicly.

July 2, 2004. Yokohama (Kyodo). (Kyodo, Japan Times) Former Mitsubibishi Motors President Katsuhiko Kawasoe, former director Yuzo Murata, Takashi Usami, former vice president and former chairman of Mitsubishi Fuso Truck & Bus, Tatsuro Nakagami, former executive director, were all charged with negligence resulting in a fatal accident in 2002 involving a truck built by the automaker. These four were arrested on June 10.

Accoding to the prosecutors, MMC was aware of the clutch defect in its trucks as early as 1996 but didn't issue a recall. During 2000, when another scandal had erupted at MMC, authorities ordered MMC to come clean but it didn't happen.

On October 19, 2002 a truck's drive shaft fell off while it was on a highway in Yamaguchi Prefecture, disabling the brake. The 9-ton truck passed through an expressway tollgate and slammed into a building, killing the 39-year-old driver.

Usami has already been charged with Road Trucking Vehicle Law violations and professional negligence resulting in death and injury in connection with a fatal accident in Yokohama in 2002. In the Yokohama incident, a 29-year-old woman, Shiho Okamoto, died after being struck down by a tire that had come off a Mitsubishi-made truck. She had been walking along a street with her two sons, who were also injured.

Some of the Major Events Affecting Mitsubishi Motors' Share Price

June 8, 2004. DaimlerChrysler revealed that it might sue MMC to recover part of its investment of over $1 billion in Mitsubishi Fuso Truck and Bus, in light of its hiding its truck problems for eight years. In other news, while the trouble automaker announced that it has raised slight more (15 billion yens) from its group companies than was planned for, Phoenix Fund's CEO Yasushi Ando said in an interview, that while it has committed 20 billion yen of its own money, and 50 billion yen of unidentified foreign investors, its current shortfall is 30 billion yen, and it is looking difficult to raise that because potential investors are skeptical about the company's future after hearing about the lastest recalls.

[Bloomberg]

June 18, 2004. Tokyo. MMC's share prices reached all-time low. A second Fuso truck caught fire during the night, suddenly bursting into flames in a parking lot, for unknown reasons, sparking fear among investors that more fire accidents might follow. "There was a smell like burning rubber coming from under the passenger seat. Then I heard a shuddering noise followed by a loud bang," the driver told the investigators. Mitsubishi Fuso previously had said that some of its trucks' wheel bearings are faulty, which may cause smoke and fire. In the case of the previous truck, the front part of the truck began burning while it was being driven. Out of the 13 analysts that follow MMC, one has a "hold" rating, rest 12 have "sell" ratings.

June 20, 2004. Tokyo. Daily Yomiuri reported that 4 nonlife insurance companies - Sompo Japan Insurance, Mitsui Sumitomo Insurance, Aioi Insurance and Nipponkoa Insurance, are reviewing accident cases involving MMC vehicle to determine whether auto defects played roles in those accidents, and if so, how much to demand MMC for compensation. The only other nonlife insurance company - Tokio Marine and Fire Insurance - belongs to Mitsubishi group and was more refrained in its statement. If a defect is partly to blame, then the company will reduce the rate of the driver's burden or exempt the driver entirely, and review the premium raise.

June 21, 2004. Tokyo. Channel News Asia reported that ratings agency Standard and Poor's lowered its rating on Mitsubishi Motors's senior unsecured bonds from a speculative B-minus to CCC-plus, implying the debt issue is vulnerable to default. It quoted SP as stating "recent disclosure of additional safety defects -- which have led to further damage to MMC's already-weak brand image and plummeting domestic sales -- call into question MMC's viability." It also added that "Particularly given the damage that has occurred to its brand image, plus increasingly fierce competition in key global vehicle markets, it is increasingly unclear whether pending operational and financial restructuring measures will be sufficient to ensure MMC's survival."

June 21, 2004. Foollow up on June 20 story. Yomiuri Shimbun reported that Aioi Insurance Co., a major causalty insurer, is asking Mitsubishi Motors to pay it about 30 million yen it paid to a victim of a traffic accident.In that accident, that happened in the northern Kanto region in December 1999, a tire that came off an MMC vehicle, hit a passenger car and seriously injured the driver. At that time fractured hub was not detected. Recently Aioi reexamined past accidents resulting in casualties and property damage involving large vehicles made by MMC in view of Mitsubishi Fuso admitting that it hid product defects and found MMC's defective part to be responsible. MMC is maintaining that there was a problem in maintenance.

June 28, 2004. Frankfurt. In an interview with German newspaper Tagesspiegel, DaimlerChrysler board member Eckhard Cordes said his company plans to take legal action after determining the amount of losses on the investment. (Kyodo News)

June 28, 2004. Standard & Poor's on Monday cut its corporate-credit rating for Mitsubishi Motors to SD, meaning the car company could selectively default on debt.

Advertising Hall Of Shame...

Mitsubishi
After years as an also ran to Toyota and Honda, in 2001, Mitsubishi launched an urban-flavored, music-driven advertising campaign, aimed at "slacker type" 20-somethings in the market for "cool", sporty cars. "We were aiming at customers interested in products which are lifestyle oriented and emotional and cool, as we wanted to be as a brand," explained an executive at the company. Mitsubushi refused to let the often $20K+ price tag of its cars and SUVs get in the way of getting its not necessarily financially endowed young target into showrooms, offering easy credit terms including no down payment, no payment for six months, and 0% financing.

The campaign and pricing structure worked! Young customers were buying up Mitsubishi cars like crazy and after years of steep losses, Mitsubishi was back in the black. In 2002, Mitsubishi happily reported it had the youngest buyers in the industry, with 42% of its buyers under 35. Said Pierre Gagnon, president and CEO of Mitsubishi Motors at the time, "four million Gen Ys are reaching driver's age every year. They're going to be the next big demographic."

So why is Mitsubishi in the Counterintuitive Marketing Hall of Shame instead of the Hall of Fame? Well, it seems the company didn't account adequately for the financial risk represented by "slacker type" young buyers, many of whom do not have jobs or steady incomes and subsequently defaulted on loans to the tune of $469 million. To stem the loss, the company tightened credit rules, so sales plummeted. Mitsubishi's market share rapidly eroded and demand for its cars shrank. Eventually, it had to spend $432 million to clear out inventories. Plans for a new plant were canceled and an operating loss announced. "I never expected a situation like this," said Rolf Eckrodt the company's new CEO. "You could call it a U.S. business accident."

As a recent Wall Street Journal article proclaimed, "Mitsubishi Motors Corp. used to push its cars as the perfect vehicles for young party animals. Now, Japan's fourth largest car maker is struggling to overcome a wicked hangover."

[theveed]

Mitsubishi had 78 lemon complaints, Toyota/Lexus had 75. Seems decent till one realizes that while MItsubishi had 65 thousand vehicles registered, Toyota had over 5 times that number registered. Complaints per registered cars is the proper number for comparison and Mitsubishi was left behind by most except Hyundai and Chrysler. Chrysler, the worst of all known brands (category named Miscellaneous did worse) was 10 times as bad as the best manufacturers. Wonder, if Mitsubishi supplying parts and cars to Chrysler during that period has something to do with such miserable performance. It seems likely to some extent.

REFERENCE: The document is based on New Jersey Lemon Law Report linked from the parent file (Consumer Study link on top).

[ssaloon]

damn... i wonder what they'll do with the $4 billion given to them by parent company mitsubishi corp....?

[pajerokid]

let me guess..... this was lifted off Mitsubishisucks.com? hehehe

[theveed]

PK: Yup, got it sa email hehe... pero to be honest, after having 3 Mitsus dati parents ko, I don't think I'll get one if I had the money, lahat ng Mitsu namin na bnew sigurado may prob within the first month na di na naresolve hehe... Mirage namin dati 2 weeks new, overheat agad, sira water pump... less than a year palit carb... buti nasa warranty... Galant namin (we had 2, 89 SS and GTi) power windows, A/T, at rust problems... Yung box type Lancer lang ata yung medyo tumagal na walang major defect.

[wrecker]

matibay yung mga mitsu nung 70's and 80's. from thereon medyo nag decline na yung quality

[theveed]

parang Benz hehe.

[mbt]

does this mean Mitsubishi motors will be closing up shop, or will its mammoth parent firm bail it out?

[yamyam]

buti na lang hindi truck ang Mitsu ko heheheeee...

[pajerokid]

Originally posted by mbt
does this mean Mitsubishi motors will be closing up shop, or will its mammoth parent firm bail it out?

I dont think so Marv. Mega-Debt restructuring lang yan.