Mitsubishi Motors falls on 700,000-car recall plan

Mitsubishi Motors Corp. shares fell as much as 16 percent after the automaker said it would recall almost 700,000 vehicles following the discovery of unanswered customer complaints about those models dating back eight years.

Shares of Japan’s fourth-largest automaker fell as much as 74 yen in early trading, and last traded at 408, down 54 yen. Some 3.3 million shares traded, over twice the stock’s daily average of 1.4 million shares over the past six months.

The recall, prompted by the discovery of the complaints in an employee locker room, comes a month before Mitsubishi is to complete the sale of a 34 percent equity stake to DaimlerChrysler AG. Mitsubishi officials said the recall, which will cost an estimated 5 billion yen ($46 million), won’t affect the timing of the sale.

Along with the impact on Mitsubishi’s share price, already among the lowest of Japan’s big carmakers, the incident could persuade DaimlerChrysler to demand a bigger management role, similar to Renault SA’s control over Nissan Motor Co., one analyst said.

“People are going to draw comparisons between Renault’s buyout of Nissan, where they essentially cleaned out the managerial deadwood,” said Chris Richter, an analyst with HSBC Securities Japan Ltd. “DaimlerChrysler is probably going to feel less comfortable having almost no managerial control over Mitsubishi.”

The incident follows two high-profile lawsuits filed against the automaker by employees at its U.S. assembly facility. In January, nine workers at the Mitsubishi plant in Normal, Illinois filed a class action lawsuit against the company claiming black employees were taunted and steered into the plant’s least desirable jobs.

And in 1996, a sexual harassment suit filed by female employees at the same U.S. plant led to a $34 million settlement against the company. Transport Ministry officials discovered the complaints, sent to the automaker by dealers from around Japan over the past eight years, during surprise inspections earlier this month of the company’s Tokyo headquarters and passenger car technology centre. The inspections were prompted by a tip from an anonymous caller, Mitsubishi said.

“The company has determined that there have been cases where (complaint) information had been omitted,” the automaker said in a release. As a result, Mitsubishi said it is conducting an internal review and proceeding with plans to recall some 692,502 vehicles, covering models such as Pajero sport-utility vehicles and Lancer sedans.

The company will recall 634,000 Pajero and Lancer passenger cars, as well as 58,502 trucks for repair over a three-month period.

None of the complaints involved serious safety concerns, the company said without elaborating. Mitsubishi plans to release the findings of its internal review, which is to be completed in about six weeks.