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Also, check out the back page of the current Autoweek, as well as today's Business section in your local newspaper. Mine starts with "DCX decides it won't bail out struggling Mitsubishi".
 

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I was told that Mitsu pulled out here stateside because they are not where the Hondas and Toyotas are for sales. Mitsu is trying concentrate on sales here stateside, evos are not the top seller.
 

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Yeah - AUTOWEEK quotes Finnbar O'Neill as saying "unfortunately at a rally in this country it's you and three bears" although I'd be surprised if he really thinks that marketing is about the people who are actually there. Recall that he pulled Hyundai from US rally too.

Also Automotive News reported yesterday that DaimlerChrysler is pulling out of their 37% stake in Mitsu, and have written it down as closed business. This is very serious. Of course Mitsu has value and someone will buy this stake, but at a serious discount and it will modify Mitsu's corporate financing parameters hugely.

Part of the difficulty with Mitsubishi as a car manufacturer is related to it's culture as an involuble member of the Mitsubishi group. This is the card they've always felt they can rely on, and now they may have to rely on it.

ACP
Flirting with the laws of physics.
 

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Here's today's report:

Reuters / April 23, 2004

STUTTGART/TOKYO - DaimlerChrysler AG will no longer bankroll Mitsubishi Motors and may sell its stake, leaving the German auto giant's global strategy in disarray and the future of the ailing Japanese firm in doubt.

CFO Manfred Gentz said on Friday that the Stuttgart-based company failed to agree with other Mitsubishi group shareholders on a bailout plan for Mitsubishi Motors Corp. and would not provide any new funds.

DaimlerChrysler shares shot higher as investors expressed relief at what appeared to be the end of its costly entanglement with Japan's only unprofitable carmaker.

Several brokers upgraded the stock.

"It's a great news that they've stopped pumping money into Mitsubishi. They are fighting on so many fronts already, and it was never an important focus," said Gerald Roessel, a fund manager at Invesco Asset Management in Frankfurt. "It was high time that they stepped on the emergency brakes."

Gentz said DaimlerChrysler would not decide on the fate of its 37 percent stake until the details of a restructuring plan led by three other Mitsubishi group firms -- who own 23 percent of Mitsubishi Motors -- were clear, but a sale was possible.

"We may reclassify our participation from at equity to available for sale," he said in a conference call held to explain the strategy U-turn agreed by management and supervisory boards late on Thursday.

Anticipation of a bailout had lifted Mitsubishi Motors' shares by 34 percent this month.

DaimlerChrysler bought the Mitsubishi stake for 405 yen per share in 2000, with a view to expanding in Asia. The deal was engineered by Chief Executive Juergen Schrempp, who dreamt of building a global automaker.

Schrempp, who has presided over the loss of some 37 billion euros ($43.97 billion) in market capitalization since Daimler merged with Chrysler in 1998 and faced calls to resign at a shareholder meeting two weeks ago, was not available to comment.

ASIA STRATEGY UNDER REVIEW

His finance chief said he saw no reason for an immediate writedown of the Mitsubishi stake, whose market value is roughly equivalent to book value at the end of 2003, but could not specify the decision's impact on 2004 results.

Group strategy in Asia would be reviewed, he added, but cooperation between Mitsubishi and the group's U.S. Chrysler unit on new vehicle development and production would continue.

"As far as our Asian strategy is concerned -- in which MMC was a major cornerstone -- we'll reconsider what has to be changed and what can or cannot be adjusted," he said.

"Chrysler can continue with its product plans and also with its production facilities as before. There is no reason why we should change that."

DaimlerChrysler sources played down suggestions of a boardroom rebellion against Schrempp, saying he had initiated the move to walk away from Mitsubishi Motors after failing to win enough support from fellow shareholders for a capital hike.

The news took the three main Mitsubishi group firms -- Mitsubishi Corp., Mitsubishi Heavy Industries and Mitsubishi Tokyo Financial Group -- by surprise but they vowed to continue their support for Mitsubishi Motors, the main flagbearer of the group's 120-year-old three-diamond logo.

NEW BUSINESS PLAN

Mitsubishi Motors and the three group companies said they would create a restructuring team under the automaker's newly appointed chairman, Yoichiro Okazaki, to craft a new medium-term business plan over the next month.

"They may be able to scrape together enough aid money to see Mitsubishi Motors through the next year or two, but the automaker will need more capital from outside," said Tatsuo Yoshida, a Tokyo-based auto analyst at Deutsche Securities.

"It would be very difficult for Mitsubishi Motors to survive on its own."

Japanese government officials also expressed concern.

Ratings agency Standard and Poor's added to Mitsubishi Motors' woes, slashing its long-term credit rating by three notches to CCC-, or three notches above default status. Moody's put the firm's senior debt on review for possible downgrade.

The automaker had been expected to seek shareholder approval on April 30, for a 700 billion yen ($6.4 billion) bailout.

Sources and media reports had said DaimlerChrysler would fund more than half of that, with plans to consolidate the Japanese company in its books within a few years. Mitsubishi group firms were expected to provide more than 100 billion yen.

Reeling from losses on a sales campaign in which it offered easy credit to U.S. car buyers, the maker of the Pajero sport utility expects a net loss of 72 billion yen for the 12 months to March 31. It had profit of 37.36 billion the previous year.

Its net automotive debt stood at 726 billion yen six months ago, while total interest-bearing debt was 1.141 trillion yen.
 

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>Reeling from losses on a sales campaign in which it offered
>easy credit to U.S. car buyers, the maker of the Pajero
>sport utility expects a net loss of 72 billion yen for the
>12 months to March 31. It had profit of 37.36 billion the
>previous year.

So they had a bad year lending money to unworthy credit risks, it looks like 2002 wasn't so bad...until you read this:

>Its net automotive debt stood at 726 billion yen six months
>ago, while total interest-bearing debt was 1.141 trillion
>yen.

1.141 trillion yen = 10,424,826,596.51 USD
726 billion yen = 862,852,043,197.40 USD

862 MILLION automotive debt!
10.424 BILLION in corporate parent debt!

Who would want to touch that kind of liability?

The Mitsu party's over unless the government steps up.

Bill Westhead
 

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Yes Bill, the numbers are large and scary but, I think you have the decimal point for the US dollars too far to the right, see correction below.


>>Reeling from losses on a sales campaign in which it offered
>>easy credit to U.S. car buyers, the maker of the Pajero
>>sport utility expects a net loss of 72 billion yen for the
>>12 months to March 31. It had profit of 37.36 billion the
>>previous year.
>
>So they had a bad year lending money to unworthy credit
>risks, it looks like 2002 wasn't so bad...until you read
>this:
>
>>Its net automotive debt stood at 726 billion yen six months
>>ago, while total interest-bearing debt was 1.141 trillion
>>yen.
>
>1.141 trillion yen = 10,424,826,596.51 USD
> 726 billion yen = 862,852,043,197.40 USD

1.141 trillion yen = 10,424,826596.51 USD correct
726 billion yen = 6,660,550,487.72 USD now correct


862 million no, 6.661 Billion automotive debt! now correct
10.424 BILLION in corporate parent debt! correct
>
>Who would want to touch that kind of liability?
>
>The Mitsu party's over unless the government steps up.
>
>Bill Westhead

David Weiman
[email protected]
 
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