Mitsubishi drives into gridlock of problems

Mitsubishi Motors Corporation's (MMC) recent woes are a perfect example of how a strong brand can spiral into disaster. Much of its troubles appear self-inflicted, and point to an organisation out of touch with its key stakeholders. The facts themselves do not make for pretty reading. At press time, police had arrested ex-MMC chief Katsuhiko Kawazoe on suspicion of professional negligence. The suspicions stem from a fatal accident in 2002, when a Mitsubishi truck defect caused the death of a 39-year-old driver. Authorities believe that Kawazoe and other executives at the car company were aware some Mitsubishi trucks had clutch problems that could cause serious accidents. Instead of recalling the trucks, however, MMC tried to cover up the defects. Police had earlier visited the offices of Mitsubishi Fuso Truck & Bus (MFTB), an MMC subsidiary, in which DaimlerChrysler owns the majority share of 37 per cent. Police were hunting for evidence that MFTB knowingly made false statements about defective wheel hubs, alleging a cover-up that caused another fatal crash. Six MFTB executives were arrested, including ex-chairman Takashi Usami. MFTB responded by announcing 93 structural defects in its vehicles, dating back to 1992. That led to a global recall of its vehicles, including 112,000 in Japan alone. This is not the first time that MMC has become embroiled in this kind of trouble -- in 2000, the company was successfully prosecuted for filing false reports, after an ex-employee revealed that MMC had illegally failed to disclose customer complaints for over two decades. Over two million vehicles were recalled. On the financial front, meanwhile, matters have reached crisis levels. MMC sales have plunged 56 per cent from a year earlier, and its stock price is in freefall. MMC reported a loss of US$2 billion for 2003, and is expected to lose the same amount this year. DaimlerChrysler, in addition, refused to participate in any financial rescue package -- effectively signalling a damning vote of 'no confidence'. The German carmaker is also believed to be considering legal action for the decline in value of its MFTB stake.