MMC News Japan
Mitsubishi! > News > Japan > Mitsubishi Motors News
Recall scandals of MMC and Mitsubishi Fuso Truck and Bus in Japan
Mitsubishi Motors Japan's Declining 2004 Sales Figure
2004 Mitsubishi Motors Japan News re Restructuring
July 29. A physician in Tokyo reported that many of his patients seeking help with male menopause are Mitsubishi Motors workers.
SPECIAL: July 28, 2004. MMC closed at 98 yens, the first time in its history to close below 100 yens. ADDED: On July 29, the stock ended trading at 92 yens after briefly being down to 90 yens. On August 3, it closed at 79 yens. On August 4, it dropped to 72 yesn in early trading.
July 17, 2004. MMC has decided on its outside experts for its Business Ethics Committee. They are Konoe Kawagishi, former vice chairman of the editorial committee at the Yomiuri Shimbun newspaper; Takahiro Fujimoto, professor of the University of Tokyo; Kazuko Miyamoto, head of consumer research at the Nippon Association of Consumer Specialists; and lawyer Kazuo Mura. (Kyodo News)
July 16, 2004. MMC indicated that Normal plant's production may be cut to 120,000 a year in view of lower demand for its vehicles in the USA. Nihon Keizai Shimbun reported that 600 to 700 could their jobs at the manufacturing plant.
In other news Ministry of Economy, Trade and Industry is allowing it to use Industrial Revitalisation Law designed to help struggling companies rehabilitate to lower its taxes by about 5 million dollars. Chief Executive Yoichiro Okazaki said MMC would also consider asking state-backed Development Bank of Japan for low-interest loans, permitted for firms covered by the law.
July 16. Tokyo. MMC's share are in free fall touching 104 yens today. Yesterday it dropped by 14 percent to close at 137.
July 14. Phoenix Capital had earlier promised 100 billion yen. Well, today it paid 74 billion yen. JP Morgan Chase had promised Y150 billion, but it paid only Y126 billion. Against the original promised total funding of Y546 billion, Mitsubishi Motors received Y496 billion, Y50 billion short of its target. Its stock price fell by 23, a 14 percent drop, to all-time new low of 137.
July 14, 2004. While Mitsubishi Fuso had said that the fired manager acted alone in compiling the misleading report, the ministry was investigating whether more people may have been involved. Four transport ministry officials raided and began inspecting a Mitsubishi Fuso factory in Kawasaki city for that purpose.
July 13, 2004. Mitsubishi Fuso Truck & Bus fired a quality-control manager today for falsifying information on the seriousness of fractured clutch housings in two of its large trucks by stating that they were partial cracks. A few days ago (see news below), the transport ministry had shown its displeasure with the truck maker over this.
July 12, 2004. [Asahi Shimbun] Japanese tranport ministry is going to ask Mitsubishi Fuso trucks with defective clutch housing to keep their rigs off the road until emergency inspections can be completed. Out of 74,000 vehicles recalled, only 9,000 have been inspected. In June 2 of the recalled vehicles incurred major breakdowns and the ministry fears that there could be a widespread risk to public safety unless these vehicles are inspected and repaired as soon as possible.
It seems like Mitsubishi Fuso lied again to the government by maintaining that the two major breakdown defects were discoved during inspections. Government has warned Mitsubishi Fuso and stated that "the predisposition of Mitsubishi Fuso to conceal troublesome information has not changed. This is an emergency situation, with there being a high possibility that, if things continue in this way, further major accidents will occur."
July 6, 2004. Nihon Keizai newspaper reported that the company said in its fiscal 2003 securities report for investors that its common shares may be delisted. Its shares fell on this news. Yasuhiro Matsumoto, a credit analyst at BNP Paribas Securities (Japan) said: "When Mitsubishi Motors shares are delisted, it makes it difficult for the automaker to raise money from the market. Their shareholders will also lose the market to buy and sell shares and lack liquidity." Matsumoto said that if the Tokyo-based automaker sells as much as 546 billion yen of preferred and common shares to companies such as Phoenix Capital Co., stock market regulations may require the company to delist its shares. [Bloomberg]
July 6, 2004. Tokyo. [Bloomberg] Japan's government is looking into ways to help save Mitsubishi Motors Corp from the impact of slumping sales and deteriorating brand name, Shoichi Nakagawa, Japan's Trade Minister, said in Tokyo.
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.
Mitsubishi's Default and Bankruptcy Chances High: 50%+ in 2 Years
June 28, 2004. Meeting is scheduled for tomorrow announcing investment plans of Phoenix Capital (CEO Yasushi Ando), J.P. Morgan Chase bank and Mitsubishi group companies. MMC's Altman Z-Score, which measures the probability of a company entering bankruptcy within the next two years, is 0.6, according to Bloomberg data. An Altman Z-Score of less than 1.8 shows that bankruptcy is possible while a score above three indicates bankruptcy is unlikely. "The possibility for Mitsubishi Motors to go bankrupt in the next two years is more than 50 percent," said Yasuhiro Matsumoto, a credit analyst at BNP Paribas Securities in Tokyo, reported Bloomberg.
Standard & Poor's last week cut the credit rating of Mitsubishi Motors' unsecured bonds to CCC+ from B-, citing the carmaker's viability. The level is seven notches below S&P's lowest investment-grade rating.
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."
Government & Consumer Boycott of Mitsubishi Fuso Trucks and Autos
June 15, 2004. Asahi Shimbun found that Mitsubishi brand is boycotted by 38 prefectures and 10 cities. The bans last from 3 months to 18 months and are extendable. Kawasaki municipality has banned it indefinitely. Transport minitry banned Mitsubishi Motors and Fuso vehicles; out of 13 major cities in Japan, only 2 - Sapporo and Saitama - haven't banned Mitsubishi brand - yet. Nagasaki prefecture, where the main factory of Mitsubishi Heavy Industries is located, has banned MMC and Fuso. Kyoto prefecture, where MMC plans to move and has already a Mitsubishi engine plant, is leaning towards a ban. Saitama city, home to the Urawa Reds J.League soccer team closely associated with Mitsubishi Motors' soccer team hasn't banned it but the Saitama prefecture has done so.
June 20, 2004. Now the number of prefectures and major cities boycotting Mitsubishi products has risen to 42 out of 47 prefectures and 12 out of 13 cities. Among the reasons given by officials for dropping the vehicles were: product is not reliable and credible, local consumers wouldn't approve of the procurement, and not wanting to spend taxpayers' money on products made by companies who act counter to the public interest.
History of Making Unsafe products Goes Far Back
Special on the history of making unsafe prducts. More than 70 years ago, Mitsubishi made the Nell, a twin-engine aircraft used in war against China. It had a superior range because of its light weight achieved by removing guns and armor. According to www.centennialofflight.gov "pilots were told that a desire for armor was a sign of cowardice." A couple of years later Mitsubishi introduced Betty, Japan's standard twin-engine bomber. It too achieved superior range by eliminating armor and fire-resistant fuel tanks to save weight. If all of the above is true, Mitsubishi didn't seem to have much regard for the pilots' safety and if that mindset of its parent company has continued at Mitsubishi Motors, one can understand why product safety and consumer concerns were not that big an issue with it.
A few selected stories
Truck Clutch Recall Scandal of Mitsubishi Fuso and MMC: One killedHub problem causing truck wheels to fall off: Recall Scandal of Mitsubishi Motors and Fuso killed Shiho Okamoto
Daimler Chrysler Decides to Quit Mitsubishi Motors' Rescue/restructuring Plan: MMC in Crisis