DaimlerChrysler Won't Bail Out Struggling Mitsubishi

[ragingfish]

http://www.detnews.com/2004/au...8.htmQuote »DaimlerChrysler won't bail out struggling MitsubishiDaimlerChrysler boards reject raising firm's 37% stake in Japanese automakerDaimlerChrysler AG will not invest more money in Mitsubishi Motors Corp., ending speculation that the German automaker would bail out the troubled Japanese company. The move raises questions about the future of DaimlerChrysler CEO Juergen Schrempp’s vision for a global auto empire. Mitsubishi’s failure to “establish a solid financial structure” kept DaimlerChrysler from raising its 37 percent stake, DaimlerChrysler said in a statement released Thursday after the decision was made by its management and supervisory boards. Reports this month suggested that the German company would invest about $3.8 billion in Mitsubishi and increase its ownership stake to 50 percent. Last week, Mitsubishi, which has about $9 billion in debt, said it would raise cash by issuing new shares and appoint a DaimlerChrysler executive as part of a turnaround plan. The German automaker was expected to appoint Andreas Renschler, head of its smart brand, to lead Mitsubishi after he helped craft the recovery strategy, set to be presented to shareholders April 30. DaimlerChrysler said Thursday it has “decided not to participate in a capital increase” and will “cease further financial support for (Mitsubishi).” The future of DaimlerChrysler’s controlling stake in Mitsubishi is not clear. Officials of both companies in Germany and Japan could not be reached for comment. The pull-back at Mitsubishi could impact DaimlerChrysler’s Chrysler unit, which is jointly developing products with Mitsubishi. “It’s just too early to tell,” said Chrysler spokesman Jason Vines. Mitsubishi’s been battered by falling U.S. sales and quality problems in Japan that have led to steep losses. The red ink helped cut DaimlerChrysler’s profits by $360 million in 2003. DaimlerChrysler paid about $2 billion for its stake in Mitsubishi in 2000 for a presence in the growing Asian auto market after buying Chrysler in 1998 to expand its U.S. reach. With both companies struggling, Schrempp has been criticized for taking on too much too fast in his haste to establish a global auto company. Hmm...could Mitsubishi join the ranks of Plymouth and Geo in the next few years?Could be!

[JustinVGT]

I always used to wonder about those financing programs Mitsubishi offered, 0% down, 0% interest, and 0 payments for a year. I used to sell them new and Mitsubishi would accept people with little to no credit and worse than average credit a lot more often than other banks. This probably lead to more repos which has probably contributed to lots of there problems.

[Fformula88]

Giving credit to underqualified buyers has been cited as one of their big problems! I wonder which overpaid executive at Mitsu headquarters decided to allow anyone with a pulse to be able to get a no-down payment loan, so when they defaulted, Mitsu ended up having to pay the depreciation! They were also hurt when they disclosed that they had purposely hidden vehicle defects instead of fixing them for years. When that comes out, you can forget about anyone believing you build a reliable product. DCX doesn't need to dump anymore money down money losing brands. Chrysler and Dodge (cars anyway) lose enough cash for the company are already dragging down Mercedes.

[ColonelPanic]

I wonder what is in store for the Sebring/Stratus, since they are built on the Galant platform... It looks like they plan on continuing their partnership somewhat, but who knows. I'm not a fan of either Chrysler or Mitsubishi products, but I think this will be quite interesting to watch. Mitsubishi's CEO just resigned as well... http://www.detnews.com/2004/au...9.htm

[ALi3N]

You know, this really sucks for me. My girl friend just bought a Lancer and when i did my walkaround of her new car i could tell immediatly that the build quality was sub-standard. I just hope Mitsu doesn't go Chapter 13 on us.

[slbpsi63]

Poor mitsu. It looks like a decent brand will go bye-bye very soon. The ceo for Hyundai-America left them after building a great rep for hyundai to become the CEO for Mitsu_ America. Looks like a bad decision now. He had a blossoming flower now hes got a wilted flower bed. LOL

[ColonelPanic]

I was wondering why ol' Finbarr left HMA in the first place, I didn't hear anything about it until I saw something about Mitsubishi in a car mag and he was there... He did a good job over at Hyundai, I always thought...IMHO, if Mitsubishi can get some cash toghether and use all of their resources to turn things around, they may be able to survive. I think of what Hyundai was able to accomplish as a good example - a decade ago, things were pretty bad. Bad cars, and the reputation of the brand was less than spectacular. But, in the late 90's, they started making significantly better products, sales started picking up, then in '99 came that groundbreaking, unheard of (at the time) warranty, and sales skyrocketed. Slowly the brand image is improving. Hyundai was in far worse shape (maybe not financially, however) than Mitsu is now, so I don't see why Mitsubishi couldn't pull it off if they tried hard enough. First step is finding the cash, that will be the challenge. Maybe there is someone out there other than DCX interested in buying into them... I figured Daewoo was a goner for sure, but they're still kicking - and selling us "Chevrolets" and "Suzukis."

[ragingfish]

Quote, originally posted by ColonelPanic »Maybe there is someone out there other than DCX interested in buying into them... I figured Daewoo was a goner for sure, but they're still kicking - and selling us "Chevrolets" and "Suzukis."See that's the thing though, I see Daewoo as a parts source, not much else...don't really see them on the roads anymore...at least not new ones...Mitsu, if absorbed into GM let's say, would likely just become another powertrain or platform for another performance car...I don't see it coexisting as it's current brand.But hey, who knows. Nissan was hurting big time and they did an amazing, and what originally was deemed impossible, turnaround. They went from near extinction to head of class in just a few short years...

[Fformula88]

Quote, originally posted by ragingfish »See that's the thing though, I see Daewoo as a parts source, not much else...don't really see them on the roads anymore...at least not new ones...Mitsu, if absorbed into GM let's say, would likely just become another powertrain or platform for another performance car...I don't see it coexisting as it's current brand.But hey, who knows. Nissan was hurting big time and they did an amazing, and what originally was deemed impossible, turnaround. They went from near extinction to head of class in just a few short years...Daewoo's are still on the roads, but not in America. GM decided to get some extra mileage out of the cars here in America by selling them as the Aveo for an entry level Chevy, and rebadging some as Suzuki. However, one of the major reasons they bought Daewoo was to have an Asian nameplate to sell in growing Asian markets such as Korea, and especially China. Mitsu would be another story since it is a brand that is more establilshed and respected than Daewoo. You have the WRC following, and the Evo and Eclipse nameplates still have some value. Looks like Mitsu needs to be sold to someone, but whoever gets it is likely to keep the name around and get it going again. Instead of inventing a new brand for the "youth market", Toyota should just buy Mitsubishi and teach them about build quality and reliability!

[kgenthe]

I think Mitsu's major problem is they don't sell appealing products.I mean, besides the EVO they whave nothing. The Eclipse is a joke, the Lancer is unexciting, there SUV is ugly, the Galant is awkward, etc etc. They just don't make cars people want to buy.Take a look at Nissan, 3 years ago they were going under, now they are rolling in the dough. Why? They decided to start making products people wanted to buy. I would buy any car Nissan makes, Sentra, Altima, Maxima, 350z, you name it. I wouldn't buy anything Mitsu makes, except the EVO. And that is a problem.

[russ257]

they were also giving out a hundred dollars a while back if test drove a car and then bought someone elses car. I went and did this with not even the slightest intention of gettting one i was already set on the vibe. I did the test drvie thought their lil suv thing sucked. for as big as it was it lacked interior space

[Reynoma]

My wife and I owned a Mitsu Galant a few years back (1995). I really liked that car. It was roomy and drove very sporty. When shopping around for the Vibe, I was considering a Lancer OZ, but the dealer didn't have one with a manual transmission...so, as somebody said...they need to build cars that the people want.

[kostby]

The only experience I had with a Mitsu dealer (trying to buy a used VibeGT) was extremely unpleasant. If the dealer network is full of 'snakes' like the guy I dealt with, there's no hope, even if they have world-class products at 10% lower price than everybody else!

[ColonelPanic]

Just saw a commercial for Mitsubishi's new promotion, buy a Galant and free scheduled maintenance for 45,000 miles or something. Good idea, but I wonder if the sales they get from running that promotion will cover all of the expenses caused by it...