Mitsubishi group companies vowed yesterday to stick by struggling Mitsubishi Motors after Daimler-Chrysler said it had given up on the auto maker and would try to sell its 37 percent stake.
The decision by the German-American company, which took even Mitsubishi Motors by sur-prise, left its strategy to become a global car maker in disarray and threw the future of the money-losing Japanese firm into doubt.
PHOTO: AFP
DaimlerChyrsler said on Thursday it would not participate in a rescue capital increase planned by Mitsubishi Motors Corp (MMC) because it could not agree on an acceptable deal with other shareholders in the Mitsubishi group.
It also said it would not provide any further financial support to Mitsubishi, the only unprofitable carmaker in Japan.
But three Mitsubishi group firms -- Mitsubishi Heavy Industries, Mitsubishi Corp and Bank of Tokyo-Mitsubishi -- said they would continue to support the company.
The three hold a combined 23 percent stake in MMC.
A DaimlerChrysler spokesman in Germany said the company's stake in Mitsubishi Motors would be booked as discontinued business until a buyer could be found.
"This clearly means separation," the spokesman said.
The decision was reached at an extraordinary meeting of the DaimlerChrysler supervisory and management boards on Thursday and just two weeks after chief executive Juergen Schrempp defended his global strategy in front of angry shareholders.
Mitsubishi had been expected to seek shareholder approval on April 30 for a ?700 billion (US$6.39 billion) bailout.
Sources and media had said DaimlerChrysler would fund more than half of that, with plans to consolidate the Japanese company into its books within a few years. Mitsubishi group firms were expected to provide more than ?100 billion.
Mitsubishi Motors said it was evaluating the situation and that chief executive Rolf Eckrodt was in touch with DaimlerChrysler and Mitsubishi group companies.
"The move will leave Mitsubishi Motors with no choice but to shrink its business operations," said Hajime Yagi, a general manager at Meiji Dresdner Asset Manage-ment in Tokyo.
Reeling from losses on easy-term car loans in the US, the maker of the Pajero sport utility vehicle is expecting a net loss of ?72 billion for the 12 months to March 31.
It had a profit of ?37.36 billion the previous year.
Mitsubishi Motors' net automotive debt stood at around ?726 billion 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," one industry source said.
Japanese government officials also expressed concern.
DaimlerChrysler bought the stake in Mitsubishi over three years ago with a view to expanding in Asia, and the decision to cut its losses will intensify pressure on Schrempp, who faced calls to resign at the annual shareholder meeting on April 7.
The Legislative Yuan’s Finance Committee yesterday approved proposed amendments to the Amusement Tax Act (娛樂稅法) that would abolish taxes on films, cultural activities and competitive sporting events, retaining the fee only for dance halls and golf courses. The proposed changes would set the maximum tax rate for dance halls and golf courses at 50 and 20 percent respectively, with local governments authorized to suspend the levies. Article 2 of the act says that “amusement tax shall be levied on tickets sold or fees charged by amusement places, facilities or activities” in six categories: “Cinema; professional singing, story-telling, dancing, circus, magic show, acrobatics
Tainan, Taipei and New Taipei City recorded the highest fines nationwide for illegal accommodations in the first quarter of this year, with fines issued in the three cities each exceeding NT$7 million (US$220,639), Tourism Administration data showed. Among them, Taipei had the highest number of illegal short-term rental units, with 410. There were 3,280 legally registered hotels nationwide in the first quarter, down by 14 properties, or 0.43 percent, from a year earlier, likely indicating operators exiting the market, the agency said. However, the number of unregistered properties rose to 1,174, including 314 illegal hotels and 860 illegal short-term rental
INFLATION UP? The IMF said CPI would increase to 1.5 percent this year, while the DGBAS projected it would rise to 1.68 percent, with GDP per capita of US$44,181 The IMF projected Taiwan’s real GDP would grow 5.2 percent this year, up from its 2.1 percent outlook in January, despite fears of global economic disruptions sparked by the US-Iran conflict. Taiwan’s consumer price index (CPI) is projected to increase to 1.5 percent, while unemployment would be 3.4 percent, roughly in line with estimates for Asia as a whole, the international body wrote in its Global Economic Outlook Report published in the US on Monday. The figures are comparatively better than the IMF outlook for the rest of the world, which pegged real GDP growth at 3.1 percent, down from 3.3 percent
CREDIT-GRABBER: China said its coast guard rescued the crew of a fishing vessel that caught fire, who were actually rescued by a nearby Taiwanese boat and the CGA Maritime search and rescue operations do not have borders, and China should not use a shipwreck to infringe upon Taiwanese sovereignty, the Coast Guard Administration (CGA) said yesterday. The coast guard made the statement in response to the China Coast Guard (CCG) saying it saved a Taiwanese fishing boat. The Chuan Yu No. 6 (全漁6號), a fishing vessel registered in Keelung, on Thursday caught fire and sank in waters northeast of Diaoyutai Islands (釣魚台). The vessel left Keelung’s Badouzih Fishing Harbor (八斗子漁港) at 3:35pm on Sunday last week, with seven people on board — a 62-year-old Taiwanese captain surnamed Chang (張) and six
RSS