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New recall hits Mitsubishi
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February 15, 2001: 1:23 p.m. ET
Steering problem could hit nearly 1M cars; Chrysler, Dodge, Eagle affected
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NEW YORK (CNNfn) - Japanese automaker Mitsubishi Motors, struggling to emerge from a quality-control scandal that cost its top executives their jobs, must recall nearly a million U.S. vehicles and another 401,000 in Japan, the company said Thursday.
The vehicles involved in the U.S. recall have a problem that could lead to loss of steering in extreme cases. There have been reports of accidents but no report of serious injury, said Gael O'Brien, spokeswoman for Mitsubishi. She could not say how many accidents have resulted from the problem.
 Many of the vehicles involved in both recalls had been recalled previously. And nearly 400,000 of the recalled vehicles in the United States are sold by DaimlerChrysler's Chrysler group, which itself is struggling with falling sales and market share and mounting losses. DaimlerChrysler took a controlling minority stake in troubled Mitsubishi last year.
The Mitsubishi recall will affect 961,000 U.S. vehicles, of which 360,000 were recalled for similar problems in 1999.
The affected Mitsubishi models in the current recall are the 1994 to 1998 Galant sedan, the 1995 to 1999 Eclipse coupe, and the 1996 to 1999 Eclipse Spyder convertible. The affected Chrysler models that were built by Mitsubishi include the 1995 to 1999 Chrysler Sebring and Dodge Avenger and the 1995 to 1998 Eagle Talon, which shared a platform with the Eclipse.
Under the U.S. recall, the vehicles will be examined for wear in a front suspension ball joint. The same ball joints were inspected in the 1999 recall for possible damage to the a rubber boot covering the joint, but subsequently the company discovered problems with the joint could exist even if the boot was not damaged.
 The recalls in Japan are due to faulty airbags, leaky fuel tanks and loose suspension parts. Last year it recalled or checked nearly one million vehicles in Japan after it was learned that it had covered up customer complaints in Japan to avoid costly recalls.
Mitsubishi is the fourth-largest Japanese car maker, and it has been making a major marketing push in the U.S. market. Last year its U.S. sales increased 20.3 percent to 314,417 vehicles.
Mitsubishi Motors' shares slid 8.3 percent on Thursday to close at ¥364, a new low for the month.
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Mitsubishi's shares were trading at just under ¥500 last summer before news broke that the company had systematically covered up customer complaints for more than 20 years rather than reporting them to the authorities for possible recalls, as the law required.
The company has said it would post an ¥11.5 billion ($99 million) special loss for this business year to March to cover subsequent recalls and checks of nearly one million vehicles.
Analysts expected the additional recall to rub salt into the automaker's wounds.
"At this point, I can't suggest buying their stock. They need to complete a drastic overhaul of their operations under the close watch of Daimler," said Yoshinobu Muraoka, fund manager at DLIBJ Asset Management.
"If you look at their domestic sales numbers, it's clear they are in a tough bind. This will weigh heavily on their stock price. At the same time, it's hard to say they can be sold much lower than the current level." The company's sales volume in Japan has been sliding in recent months, dropping at double-digit rates from year-earlier levels in four of the last five months.
Mitsubishi Motors President Takashi Sonobe estimated the total cost of the recalls at ¥17 billion ($146.3 million). But O'Brien could not give a break-down on the U.S. recall cost.
"We must again apologize to the public for diminishing their trust in us," Sonobe told a news conference. "We will take various steps to make sure that this never occurs again."
-- from staff and wire reports 
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