April 23, 2004

"DaimlerChrysler to pull plug on Mitsubishi?

DaimlerChrysler AG said Thursday it will not proceed with a $6 billion-plus bailout of Mitsubishi Motors, leaving the future of the struggling Japanese automaker in doubt. The announcement is an about-face from reports last week that the German automaker would increase its stake from 37 percent to more than 50 percent by 2007 at a cost of $3.8 billion by buying up more stock as part of a broader bailout that involved Japanese creditors.

"In an extraordinary meeting on April 22, 2004, the Board of Management and the Supervisory Board of DaimlerChrysler have decided not to participate in a capital increase planned by Mitsubishi Motors Corporation (MMC) and to cease further financial support for MMC," said an official statement from DaimlerChrysler.

"This clearly means separation," a DaimlerChrysler spokesman told Reuters, adding that the 37-percent stake would be booked as discontinued business until a buyer could be found. The decision will be explained by DaimlerChrysler chairman Juergen Schrempp today.

On the minds of many in the U.S. is how a pull-out from Mitsubishi will impact a joint four-cylinder "world engine" development program between Chrysler and Mitsubishi, as well as development of small and mid-size cars between the two companies. Chrysler executives have boasted about how much money they are saving in development and purchasing by combining with Mitsubishi. Wolfgang Bernhard, outgoing Chrysler chief operating officer who is about to take over as chief of Mercedes-Benz, said earlier this month that no action regarding Mitsubishi would derail those programs. But analysts have doubted that Mitsubishi can survive independently without DaimlerChrysler, and no other buyers have surfaced.

David Healy, an auto industry analyst with Burnham Securities, said that in "pulling the plug" on Mitsubishi it looked as if group board members had "finally rebelled against Schrempp's pouring money down that financial black hole." Shareholders have called for Schrempp's replacement. But the supervisory board has continued to back him despite acquisitions of Chrysler and Mitsubishi draining more than $40 billion in shareholder value since 1998. Mitsubishi expects to post a loss of $686 million for the year ended March 31. That would bring the company's losses over seven years to $3 billion. Mitsubishi sales in the USA, down 26 percet last year, have slid 19 percent so far this year.

DaimlerChrysler recently dispatched Andreas Renschler, former head of its Smart minicar division, to Mitsubishi to assemble a rescue plan. Renschler was expected to replace Mitsubishi CEO Rolf Eckrodt as early as this month. -Jim Burt "

 

Can't blame Schrempp for not wanting to participate in a Y700bn ($6.7bn) bailout of a failing company. Next step will to be to drop their 10% stake in Hyundai.

 

Are they actually investing in Hyundai?! I would LOVE to see them collapse!

 

Investing in Mitsubishi was Schrempp's idea. The divestiture was not.

 

It was the supervisory and management boards that voted against it, if you want to get picky. Fair enough?

 

Yes, those boards voted to cut off Mitsubishi, against the wishes of Schrempp

 

Mitsubishi CEO Eckrodt resigns


By James B. Treece
Automotive News / April 26, 2004

TOKYO -- Rolf Eckrodt resigned as Mitsubishi Motors Corp.'s president and chief executive officer effective immediately.

Mitsubishi Chief Financial Officer Keiichiro Hashimoto will step in as interim acting president, pending the appointment of a new president, which the company said would happen "soon."

Mitsubishi said that Eckrodt would remain available to provide support to the carmaker, in line with the wishes of Mitsubishi Group companies.

Eckrodt said the timing of his resignation was related to the April 22 decision of the DaimlerChrysler AG supervisory board not to grant further financial support to Mitsubishi.

"I strongly welcome the quick decision of Mitsubishi Heavy Industries, Mitsubishi Corp. and Bank of Tokyo-Mitsubishi not only to offer financial support but also to actively work with Mitsubishi Motors Corp. on a new mid-term business plan," Eckrodt said in a statement. "Based on my sense of responsibility, I therefore decided to make way for the new team around future chairman Okazaki."

Yoichiro Okazaki, a Mitsubishi Heavy Industries senior managing director who is slated to become Mitsubishi's new chairman at an extraordinary shareholders' meeting on April 30, is in charge of drafting a new restructuring plan for the carmaker within the next month.

Eckrodt's resignation ends a 38-year career in the automotive business. He joined Daimler-Benz AG in the passenger cars quality assurance section, and rose through the ranks until joining Mitsubishi in January 2001 as chief operating officer in charge of passenger-car operations.

He immediately stepped into a maelstrom. DaimlerChrysler AG had agreed to form an alliance with Mitsubishi in March 2000. In August 2000, Mitsubishi admitted to a nearly 30-year history of hiding quality problems from government regulators rather than issuing embarrassing recalls. The recall scandal that erupted hit Mitsubishi hard, slashing its sales over the following three years.

DaimlerChrysler went ahead and purchased a 34-percent stake in Mitsubishi that September, later raising its stake to 37.3 percent at a total cost of about $2.2 billion.

 

Jurgen Schrempp is quickly running out of time. Mitsubishi is a disaster & Hyundai is a joke, MB should sell both of them off immediately. Unfortunately, this is going to have repercussions for Chrysler, who was/is planning on sharing platforms with Mitsubishi.

If Chrysler doesn't turn a profit within the next two years, MB should dump them too, but IMHO before they do anything they should dump the source of ALL of DaimlerChryslers problems: Jurgen Schrempp himself!

 

And go back to Daimler-Benz!