Mitsubishi sales fall as negative news hits home

TOKYO - Hit by plunging sales in the United States and Japan, Mitsubishi Motors sank deeper into the red last year and projected another year of loss yesterday as it struggles to patch up its brand image.

While other Japanese auto-makers are cruising past the competition overseas, Mitsubishi is battling a tattered reputation from a series of recalls and arrests of former executives after it concealed safety-related defects from authorities.

The decades-long practice first came to light in 2000 and resurfaced last year when at least two road deaths were linked to hidden defects in trucks made by its then-unit Mitsubishi Fuso Truck and Bus.

Group net loss for the year to March 31 more than doubled to 474.79 billion ($6.2 billion) from 215.42 billion as restructuring costs and provisions for asset impairment charges rose. That was basically in line with its forecast of 472 billion and market estimates of 475 billion.

Operating loss widened to 128.54 billion from 96.85 billion, slightly better than a mean estimate of 135 billion in a survey of nine analysts by Reuters Estimates.

President Osamu Masuko, appointed since Mitsubishi's $5.2 billion financial bailout in January, has been trying to repair the carmaker's reputation, develop new models and improve sales. The company, which makes the Pajero sports-utility vehicle, plans to release three models in the next 12 months in the US, the world's largest car market, where its sales fell 53 per cent.

Mitsubishi, owned 13 per cent by DaimlerChrysler, is alone among its Japanese rivals in posting a loss. Toyota, Nissan, Honda and Mazda, all reported record-high earnings for 2004/05.

Revenues shrank 16 per cent to 2.123 trillion as slight growth in Europe, helped by the new Colt compact car, and Southeast Asia were overwhelmed by a drop nearly everywhere else.

Global sales fell 14 per cent last year to 1.313 million vehicles, with volumes in Japan plunging 37 per cent to 227,000 units.

"We want to recover the 300,000-unit level [for domestic sales] during the 2006/07 business year," Hiizu Ichikawa, managing director in charge of finances, said.

For the current business year, Mitsubishi expects a net loss of 64 billion and an operating loss of 14 billion - unchanged from projections made under its revitalisation plan announced in late January.

It has projected a return to profit in the financial year ending in March 2007.

- REUTERS, BLOOMBERG