Daimler wants compensation from Mitsubishi

21st January 2005, Comments 0 comments

21 January 2005 , TOKYO - Ailing Mitsubishi Motors Corp. and DaimlerChrysler AG have been working on a multi-million dollar settlement to address the German-American giant automaker's request for compensation, a Japanese financial daily reported on Friday. DaimlerChrysler has been demanding compensation believed to be between YEN 50-80 billion (EUR 374.2 million and EUR 598 million) from Mitsubishi for damages resulting from defect cover-ups and recalls at Mitsubishi Fuso Truck & Bus Corp. According

21 January 2005  

TOKYO - Ailing Mitsubishi Motors Corp. and DaimlerChrysler AG have been working on a multi-million dollar settlement  to address the German-American giant automaker's request for compensation, a Japanese financial daily reported on Friday.

DaimlerChrysler has been demanding compensation believed to be between YEN 50-80 billion (EUR 374.2 million and EUR 598 million) from Mitsubishi for damages resulting from defect cover-ups and recalls at Mitsubishi Fuso Truck & Bus Corp.

According to the Nihon Keizai Shimbun, the two companies are expected to reach a final decision on the proposed settlement as early as this month.

DaimlerChrysler acquired a 65 percent stake in Mitsubishi Fuso from Mitsubishi Motors for about YEN 140 billion in March last year.

However, after the acquisition, Mitsubishi's past defect cover-up attempts on Fuso vehicles came to light. The firm allegedly hid parts' defects systematically for many years in order to avoid costly recalls.

Six Mitsubishi executives have been arrested in connection with the cover up, and the company's sales have fallen off sharply.

DaimlerChrysler officially notified Mitsubishi Motors last June that it was considering demanding compensation claiming that these improprieties have greatly eroded the stock's value.

Mitsubishi Motors has been struggling to survive after its sales fell dramatically following the cover-up scandal.

DaimlerChrysler also discontinued its financial assistance to the scandal-plagued automaker, further damaging its position.

The resolution of the compensation issue is vital, however, to Mitsubishi Motors' pursuit of maintaining business cooperation with DaimlerChrysler, experts say.

DaimlerChrysler currently owns about 20 percent of Mitsubishi Motors shares. In addition, the two firms continue to conduct joint production in Europe and share development of platforms in North America.

DPA

Subject: German news

0 Comments To This Article