Mitsubishi Motors Corp said on Friday it had secured $4 billion in emergency rescue funds to shore up its balance sheet and fix its operations, hit hard by a dismal performance in the crucial US market.
Japan's fourth-largest car maker vowed a return to profit by the business year starting next April through a restructuring that will see it close a plant in Japan and cut its non-factory workforce by 30 percent, or 7,600 people, in three years.
"This plan is our last chance for survival as an auto maker," Chief Executive Yoichiro Okazaki told a news conference.
Despite the plan, delayed for three weeks after major shareholder DaimlerChrysler backed out, MMC's future remains uncertain as it struggles to repair its battered brand image and convince people to buy its cars.
Having tried to clean up its act after a recall scandal in 2000, MMC suffered another setback on Thursday when its truck affiliate admitted to concealing information about potentially dangerous defects in some trucks.
Analysts said that while further cost cuts were obvious steps, the outlook for the auto maker was difficult to assess.
"At the end of the day, this is a car company with a terrible reputation in terms of quality, a dissatisfied dealer base especially in the US, and it lacks a coherent strategy," said Marc Desmidt, head of Japanese equities at Merrill Lynch Investment Managers.
"It remains to be seen if they can put one together."
In the year that ended in March - meant to be the final year of restructuring under DaimlerChrysler's guidance - MMC posted a net loss of 215 billion yen ($1.9 billion), much worse than the 72 billion yen forecast in February, due to big losses caused by a policy of handing out easy car loans in the United States.
The loss ballooned because MMC wrote down falls in the value of its assets before the law requires it to do so in 2005.
It forecast another big loss of 230 billion yen this year, but vowed to turn a small profit next year. Last year, it booked a record net profit of 37.4 billion yen.
MMC's fate contrasts sharply with the fortunes of domestic rival Nissan Motor Co, which began a revival process around the same time four years ago under France's Renault Nissan is now the world's most profitable car maker, having eliminated its debt and built a strong brand.
MMC Chief Financial Officer Keiichiro Hashimoto, who resigns in June as part of a planned overhaul of management, said the 450 billion yen rescue package would be enough for its revitalisation plan. But others were less sure.
"The question that needs to be asked now is that if DaimlerChrysler thought they needed 700 to 800 billion yen just a month ago and this plan calls for 450 billion, then where's the difference in opinion?" said Kurt Sanger, auto analyst at ING.
Much of the 450 billion yen bailout will be paid for by its main shareholders in the Mitsubishi group - Mitsubishi Heavy Industries, Mitsubishi Corp and the Bank of Tokyo-Mitsubishi (BTM) - which will buy a combined 120 billion yen in preferred shares.
Comments
Comments are closed.