Scandal-Hit Mitsubishi Motors Corp. Warns Of Even Bigger Losses

ByBridgeNews Japan's Mitsubishi Motors Corp., reeling from a vehicle recall scandal, yesterday slashed its earnings forecasts and unveiled a management cull. Japan's fourth-biggest automaker says it is now targeting a net loss for the fiscal year ending Mar. 31 of 270 billion yen (US$2.2 billion), far more than the 140 billion yen loss it predicted in November. Sales will reach 3,300 billion yen, from the earlier forecast of 3,400 billion, Mitsubishi reports. The company also doubled its pre-tax loss prediction to 90 billion yen. The drastically worse forecasts for sales and pre-tax income were "mainly because of a decrease in domestic passenger-car sales volume," the company says. Japanese drivers deserted Mitsubishi after it confessed in August to covering up at least 64,000 complaints over faulty vehicles since 1977, repairing the vehicles instead of issuing costly model-wide recalls. Japanese sales at Mitsubishi, which is undergoing drastic restructuring by its German-U.S. partner DaimlerChrysler AG, slumped 15.1% in February, with its output down 8.6% at 94,826 vehicles. Now driven by chief operating officer Rolf Eckrodt, a former DaimlerChrysler group executive, Mitsubishi also says it will cut the number of executive officers to 29 from 38. The leaner leadership will yield "faster decision-making and a framework which largely surpasses the existing human-resources management," the company says.