TOKYO - Japan's Mitsubishi Motors Corp. (MMC), 37 percent owned by DaimlerChrysler, is once again at the center of a safety scandal involving its trucks.

The scandal involves three recent accidents, one of which claimed a life. To resolve the situation, MMC has offered to inspect about 300,000 trucks in Japan at its own expense. It is possible that such inspections will expand beyond Japan in the future.

Analysts estimate that the audits could cost MMC between $15 million and $22 million, or about 10 percent of the company's projected profits this year. However, the main damage to Mitsubishi will certainly be the weakening of its brand, which was not particularly strong to begin with.

Because the inspections are being carried out at MMC's own initiative and not at the behest of regulators, they have not received official product recall status, but if a systematic technical defect is discovered, a recall will be inevitable.

The situation worsened after a woman was killed when a wheel came off a Mitsubishi truck. Two similar breakdowns had been reported before, but they did not result in casualties. The scandal was yet another link in the chain of troubles that has dogged DaimlerChrysler's Japanese division. The company had previously been accused of concealing 30 years of consumer complaints. As a result, MMC had to recall 2.5 million vehicles several months ago, after which the company announced that such incidents would never happen again and that there would be no product safety issues from now on.

The expected inspections will not affect passenger cars, but MMC's position remains grave. The recall has sharply worsened the company's performance: in 2001, its sales fell by 18.5%, while the industry as a whole declined by only 0.9%.

DaimlerChrysler is having to deal with MMC's problems as the American-German concern is restructuring its American unit, Chrysler, and implementing a general cost-cutting program.

MMC is now headed by Rolf Eckrodt, a specialist in corporate restructuring. Until now, his work in transforming MMC has been highly valued in business circles. However, the company's shares, which had fallen significantly in value after the recall of cars, continue to fall in price in the context of the new scandal. (FT, 22. 01. 2002)

Mitsubishi let down by trucks