Reuters / April 22, 2004

STUTTGART, Germany -- DaimlerChrysler AG said on Thursday it was pulling out of Mitsubishi Motors, leaving its bid to become a global carmaker in disarray and throwing the future of the ailing Japanese firm into doubt.

The group said that it had decided not to participate in a rescue capital increase planned by Mitsubishi Motors Corp. because it could not agree on an acceptable deal with other shareholders in the loss-making company.

It also said it would not provide any further financial support to Mitsubishi, Japan's only unprofitable carmaker.

"This clearly means separation," a DaimlerChrysler spokesman said, adding that the 37 percent stake would be booked as discontinued business until a buyer could be found.

Mitsubishi representatives could not immediately be reached for comment.

The decision came after an extraordinary meeting of the DaimlerChrysler supervisory and management boards on Thursday.

Supervisory board sources said earlier that the company had discussed selling its 10 percent stake in South Korea's largest carmaker Hyundai Motor Co. Ltd., worth about 850 million euros ($1 billion), to help fund the Mitsubishi rescue.

Mitsubishi, Japan's fourth largest and only unprofitable carmaker, had been planning to present details of a 700 billion yen ($6.39 billion) bailout to shareholders on April 30.

Reeling from losses generated by a disastrous strategy of offering cheap car loans in the U.S., Mitsubishi is expecting a net loss of 72 billion yen for the 12 months to March 31. It had a profit of 37.36 billion yen the previous year.

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

"This could be the end for Mitsubishi if nobody else injects fresh capital," said one industry source.

DaimlerChrysler bought the stake in Mitsubishi over three years ago with a view to expanding its presence in Asia. It has since worked to establish closer production ties between the Japanese firm and its other problem child, U.S. automaker Chrysler, to cut costs.

 

When do the close-out specials on Evos start?

 

But their commercials are so cool...

c'mon start the commotion...

 

doh!

 

Mitsu offered those loans to attract more "young" buyers & lower it's median buyer age. Guess this ends all discussion of GM (or anyone) offering cars for "kids" once and for all.... finally!

There's a difference in offering cars "kids" want and can afford, versus actually making money.


Anyone know how all this affects the next Neon, Stratus, and PT Cruiser? ALL future FWD Chryslers (save maybe the minivans) were to be based on Mitsubishis.

 

That is a big question?????

But this may not necessarilly spell the end of of the DCX-Mitsubishi relationship. This may end up being a bargaining ploy to take control of Mitsu motors from it's parent company, for less money.

 

Well, mitsubishi doesn't just make cars. They are involved in;
Im sure Mitsubishi along with the Japanese gov't will bail out Mitsubishi motors.
Mitsubishi group united to help Mitsubishi Motors

Also, mitsubishi motors seems to be doing rather well everywhere except the U.S.
sales rise in all regions except North America

Most importantly to me, the next evo will NOT be related to the Neon

 

I wonder if the new 10yr/100,000 warranties will come back to haunt them too.

 

What warranty, they don't honor it anyways.

 

 

Yeah, I know EXACTLY how it affects them.
Tooling is auctioned off on the cheap when nothing is being made with it. DCX could easily own the Neon line at a cut-rate cost if things go their way.
I see it all the time in my business.

 

have the stock holders found out yet, cause their on a mad run this week
http://finance.yahoo.com/q/bc?s=DCX&...=on&z=m&q=l&c=

 

5% gain....in 1 day!!

Looks like Guy's gonna make himself a few more dollars today!

(30 shares, bubba! )

 

i remember someone saying how the next neon would be based off of the lancer. i also remember telling them how mad it would suck (and some dissagreed). but the good news for me is that hopefully it won't be based off of the laner, unless they already designed it.

 

Couldn't hang.

Take 'em out back and put a bullet right between the running lights.

Corvettes vs. 3000 GT's = Corsairs vs. Zeros

Sure, the Zero looked nice, but the "spontaneously bursting into flames" quirk was a small issue...