The trouble-struck Mitsubishi Motors recently unveiled its bailout package to get the company back on track. After receiving a jolt from its strategic partner DaimlerChrysler’s withdrawal, Mitsubishi Motors is banking on its own group of companies.

Spirited cars for spirited people—that is how Mitsubishi Motor Company (MMC) boasts about its cars, but incidentally, the spirit of the carmaker itself seems to be in a state of doldrums. The leading Japanese carmaker which today holds the fourth position in the industry, also has the tag of being the only ‘unprofitable carmaker’ in Japan. Escalating debts, plunging sales, locked-out manufacturing units, nose-diving share prices and the inflating losses—this is how, the once car industry major—Mitsubishi can be better defined today. Mitsubishi, which posted a profit of $300 mn in 2003, has posted a massive loss of ¥215 bn ($1.9 bn) for the fiscal 2004, against its estimated loss of ¥72 bn during the beginning of 2004. Stepping down of the President and Chief Executive, Rolf Eckrodt, after Daimler- Chrysler’s denial to provide any further financial support, veered the Japanese automaker towards the acute fiscal crisis.

Crisis in the Japanese auto industry is not new, however, the causal factors for such crises are subject to analysis. Mitsubishi posted its first ever loss of ¥101.85 bn in the fiscal end of 1998. However, that loss was attributed to the economic crisis in Asia and the industry slump in Japan. Nevertheless, the company-specific causes were realized in 1999. Mitsubishi started getting engulfed in the cobweb of troubles from the beginning of 1999. The troubles, to an extent, can be attributed to the Japanese corporate culture which generally has a tendency of avoiding unpleasant truths. The defensive, complacent and squelching nature of Mitsubishi Motors’ company managers prevented them from disclosing the serious defects that the vehicles were suffering from.

These concealments have also resulted in several fatal, life-claiming accidents. In January 2002, a wheel came off a Mitsubishi trailer truck which hit and killed a 29-year-old woman and injured her two young children. This tendency of avoiding the unfriendly information about vehicles and resulting accidents has dragged Mitsubishi into criminal investigations in Japan, which resulted in the arrest of Mitsubishi Motor’s executives including Takashi Usami, former chairman of Mitsubishi Fuso Truck & Bus Corp., who was vicepresident of MMC at the time of the accident, and Akio Hanawa, former managing director of Mitsubishi Motors.