Another Chance

By Jim Frederick

Takashi Nishioka, the new chairman of Mitsubishi Motors Corp. (M.M.C.), has a difficult job ahead. While Japan is the birthplace of some of the world's most successful auto manufacturers--Honda, Nissan, Toyota--Mitsubishi is one of the most troubled. The company has been shaken over the past year by revelations of long-running campaigns in various divisions to cover up critical manufacturing defects, some of which have proved lethal. Many large investors, including DaimlerChrysler and Japanese private-equity fund Phoenix Capital, have begun selling off their stakes or announced that they plan to do so soon, leaving questions about M.M.C.'s survival. Japanese sales dropped 40% in 2004, with $2.2 billion in losses in the first nine months of this fiscal year. Into this mess steps Nishioka, also chairman of M.M.C.'s onetime parent (and still major shareholder), industrial-equipment maker Mitsubishi Heavy Industries. He has orchestrated a $5.2 billion cash infusion and announced a restructuring and cost-cutting plan. A similar $4.7 billion bailout last year was billed as M.M.C.'s "last chance." If Nishioka can't engineer a dramatic turnaround, this may be the last "last chance." --By Jim Frederick