Mitsubishi cuts salaries, jobs and car plant

Shaken by a cover-up scandal and several recalls, Mitsubishi Motors Corporation will slash salaries and reduce other costs to make up for an expected plunge in car sales.

Chief executive Yoichiro Okazaki said the series of recalls since a corporate turnaround plan was announced last month will likely reduce domestic sales for the fiscal year ending March 31, 2005, to 220,000 vehicles.

That's a 40 per cent drop from the previous year and down from the initial target of 300,000.

The Tokyo-based carmaker expects a similar sales decline in the next fiscal year, trimming 60 billion yen ($US548 million) from the company's operating profit this year and next.

Executives' salaries will be cut by a quarter to a half, while rank-and-file workers' wages will be cut by 5 per cent for the next two years as part of a plan to trim costs by 72.6 billion yen ($US663 million) this fiscal year and next, the company said.

These moves are in addition to the cost-cutting efforts announced last month that included cutting nearly 11,000 jobs, or a quarter of its worldwide workforce, over three years and closing a Japanese plant.

The reputation of Mitsubishi Motors was already tarnished by a recall cover-up scandal spanning decades that emerged in 2000.

But in recent weeks, it has admitted it continued to hide defects in recent years and announced recall after recall, affecting 370,000 vehicles and most of its models.

Its truck affiliate, Mitsubishi Fuso Truck and Bus, is recalling 450,000 trucks and buses for dozens of defects it had concealed for years.

"We are confident we have now come clean," Okazaki said, reiterating that he saw the turnaround plan announced on May 21 as the last chance for Mitsubishi Motors' survival.

Under the new revisions, the company will forgo retirement allowances for directors and the year-end bonus for employees.

Suffering from deep losses and debts of more than 1 trillion yen ($9 billion), MMC announced the plan to restructure and said it would receive a cash injection of 450 billion yen ($US4 billion) from several investors including conglomerate Mitsubishi, one of the carmaker's owners.

The Mitsubishi group of companies includes Mitsubishi Heavy Industries, trading company Mitsubishi Corp. and Bank of Tokyo-Mitsubishi.

In April, partner DaimlerChrysler, which owns 37 per cent of Mitsubishi Motors, said it was no longer willing to pump cash into the carmaker.

MMC will also reduce running costs in Japan and overseas.