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. Last Updated: 07/27/2016

Mitsubishi Losses Reach $1.4Bln

TOKYO -- Mitsubishi Motors Corp. said Monday that its losses grew in the first half of the fiscal year as the Japanese automaker struggled to recover from an auto-defect scandal that has sent sales plunging.

The Tokyo-based company reported a group net loss of 146.2 billion yen ($1.4 billion) in the six months that ended Sept. 30, worse than the 80.2 billion yen loss in the same period a year earlier.

Sales plunged 11 percent to 1.07 trillion yen ($10 billion) from 1.2 trillion yen. The loss and sales figures were worse than what the company had forecast in May.

Mitsubishi has been fighting to win back customer trust after its image was badly tarnished from recurring scandals over cover-ups of auto defects.

In the last several months, it has announced more than 40 recalls after carrying out an investigation into systematic cover-ups extending back at least 25 years. The scandals continued even after Mitsubishi Motors acknowledged a cover-up in 2000 and promised to come clean.

The company said recall and investigation costs totaled about 14.8 billion yen ($140 million). It also spent 19.9 billion yen ($189 million) in measures to win back trust from drivers, including free inspections of Mitsubishi cars now carried out on 267,000 vehicles in Japan.

"Domestic sales continue to be in a tough situation, but we feel there are some signs of a recovery," Mitsubishi Motors President Hideyasu Tagaya told reporters at its Tokyo headquarters.

But sales nosedived not only in Japan but also in North America.

Mitsubishi Motors sold 646,000 vehicles worldwide in the first fiscal half, down 16 percent from 772,000 in the same period a year ago. In Japan, 96,000 vehicles were sold, down 44 percent from 171,000 a year ago. In North America, sales fell to 92,000 vehicles, down 39 percent from 150,000.

Mitsubishi lowered its forecast for the entire year ending March 31, 2005, to 1.4 million vehicles, down from 1.5 million the previous year, and also below its earlier forecast of 1.45 million vehicles. It expects to sell 220,000 vehicles in Japan, down from the initial 200,000 vehicles projected in May, and 185,000 in North America, down from 233,000.

It also raised its expected loss for the year to 240 billion yen ($2.3 billion) from its earlier forecast of a 230 billion yen loss, and worse than the 215 billion yen loss in the previous year.

It now expects sales of 2.1 trillion yen ($20 billion), down from 2.5 trillion yen a year ago. It had initially targeted sales of 2.25 trillion yen ($21 billion).

Thousands of Mitsubishi trucks were recalled this year for defects in the wheel design that caused cracks in wheel parts, as well as in the clutch system, which the automaker said may cause brake failure.

The former president of Mitsubishi Motors and the former chairman of its truck unit have been charged in two fatal accidents suspected of being caused by defects. Their trials are continuing. Both have pleaded innocent.

In one accident, a wheel fell off a Mitsubishi truck and crushed a pedestrian. In another, the brakes failed on a Mitsubishi truck and the driver died after crashing into an embankment.

Mitsubishi Motors is closing a car-assembly plant in Japan by the end of next year and took a monetary injection from companies in the Mitsubishi conglomerate, including a bank and trading company, to keep a turnaround going after DaimlerChrysler, which still owns 20 percent of the automaker, decided against further financial aid in April.

Officials had few new details Monday on a recovery plan. New alliances with automakers on various projects were under consideration but nothing was ready to be announced, they said.