Car giant settles defect cover-up case

SALES of new cars have slumped, losses are up and the public is losing faith with its products. It could be Rover, but it isn't.

The Japanese car giant, Mitsubishi, is struggling under the weight of mammoth losses, scandals over its cover-up of car defects and a slump in sales in a crisis that is unparalleled in the history of the country's automotive industry.

Mitsubishi Motors says it actually made a 178.8bn yen (£934m) loss in the first half of the year, more than the 146.2bn yen it originally announced just a month ago.

The drop was due to a restructuring of its US sales finance business and an asset impairment loss.

As if all this wasn't bad enough, the Tokyo-based car group and its commercial vehicles offshoot, Mitsubishi Fuso Truck and Bus Corporation, have been forced to admit that they had hushed up details of problems with their vehicles in 2000.

The admission is particularly damaging for the group because that was when it issued a public apology for previous cover-ups.

The revelation that the company had not come clean stunned buyers in Japan and sent Mitsubishi vehicle sales into a tailspin.

In the last few months, investigations have now uncovered systematic cover-ups going back at least 25 years. Mitsubishi has announced more than 40 recalls of its vehicles.

And this week the company reached a legal settlement with the family of a man who died in a crash caused by a design flaw.

The agreement was reached with relatives of a 39-year-old driver killed in an accident triggered by a clutch-design defect in a Mitsubishi truck he drove. The truck crashed into a concrete embankment in western Japan two years ago after its brakes failed.

'We keenly feel our responsibility for causing a painful accident like this,' Mitsubishi Motors President Hideyasu Tagaya said.

Two of four former Mitsubishi Motors officials charged with professional negligence in the same crash also reached settlements with the family members, the company added.

Two other Mitsubishi Motors officials have been charged with professional negligence over another fatal accident in which a wheel flew off a truck and crushed a pedestrian in January 2002.

Mitsubishi Motors is 24% owned by DaimlerChrysler of Germany. Comparative figures for November show the Japanese company's vehicle output down 13.7% to 53,668, car output down 17.5% to 43,209, vehicle exports from Japan down 30% to 25,714 and global output down 4.2% to 112,877.