Currently the Japanese automaker finds itself expecting a net loss of 72 billion yen (USD$661 million) for the 12
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| With interest-bearing debt soaring close to $10.5 billion U.S. dollars Mitsubishi Motors faces its most perilous challenge yet. (Photo: Shawn Pisio, Canadian Auto Press) |
Recent profit aside, net automotive debt servicing is what causes the greatest problem for Mitsubishi Motors. Its debt, which stood at around 726 billion yen (USD$6.6 billion) six months ago, while total interest-bearing debt was 1.141 trillion yen (USD$10.5 billion), caused one industry insider to comment, "This could be the end for Mitsubishi if nobody else injects fresh capital."
More doomsayers include Koji Endo, auto analyst at Credit Suisse First Boston in Tokyo, stating, "This is a disaster for Mitsubishi Motors," to Associated Press (AP). Endo added, "The company is about to vanish if things continue this way."
News of DaimlerChrysler's pull-out caused a dive of USD$2.20 in Mitsubishi Motors stock, plunging by 25 percent in a single day, and not falling further only because 25
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| With its stock tumbling and credit rating being downgraded, governmental intervention may be Mitsubishi Motors' most promising prospect. (Photo: Trevor Hofmann, Canadian Auto Press) |
On the contrary DaimlerChrysler's shares rallied by 7.3 percent during morning trading in Frankfurt, to $46.10. It is obvious that at least the market players feel dumping Mitsubishi is good news for DCX.
Adding insult to injury Mitsubishi's Standard & Poor's credit rating has been downgraded from B- to CCC-, mostly due to its heavy debt-load.
All that may be left to Mitsubishi Motors is governmental intervention. According to AP the Japanese government expressed its concern over the predicament MMC is facing, and indicated that a domestic bailout may be forthcoming.