***** The New York Times September 9, 2000, Saturday, Late Edition - Final SECTION: Section C; Page 1; Column 2; Business/Financial Desk HEADLINE: INTERNATIONAL BUSINESS; DaimlerChrysler Tightens Reins On Management Of Mitsubishi BYLINE: By MIKI TANIKAWA DATELINE: TOKYO, Sept. 8
DaimlerChrysler moved today to tighten control over the Mitsubishi Motors Corporation, Japan's fourth-largest automaker, which has been reeling from last month's disclosure that it had concealed customer complaints about auto defects for more than two decades.
The president of Mitsubishi Motors, Katsuhiko Kawasoe, will resign on Nov. 1. Takashi Sonobe, currently the executive vice president, will replace him. Rolf Eckrodt, the chief executive of Adtranz, DaimlerChrysler's train-making subsidiary, is coming to Mitsubishi Motors as its new chief operating officer.
Under a renegotiated deal announced here today, DaimlerChrysler will keep its stake in Mitsubishi at the 34 percent agreed to in March, but to compensate for a tumble in Mitsubishi's shares, which have fallen a quarter in value since the cover-up scandal erupted, it will pay 10 percent less. DaimlerChrysler will pay 405 yen a share, instead of 450 yen, or a total of $1.9 billion.
Mitsubishi Motors retains the post of president and chief executive, and the new pact gives DaimlerChrysler increased leverage over the Japanese automaker and a time frame to reassess the alliance, analysts said.
"DaimlerChrysler's intention now is to take firm control" of Mitsubishi Motors, said Koji Endo, an automobile analyst with Credit Suisse First Boston in Tokyo.
The move by DaimlerChrysler echoes a similar one by Renault of France, which took a 35 percent stake in Nissan Motor last year and installed Carlos Ghosn as chief operating officer. Mr. Ghosn has since sold off assets and cut jobs and costs.
Mitsubishi Motors will be the third Japanese automobile manufacturer to embrace a foreign boss, after Nissan and Mazda Motor. The Ford Motor Company owns a 33 percent stake in Mazda, whose president, Mark Fields, is an American.
Of the Japanese auto manufacturers, now only Toyota and Honda are operating under financially independent management. General Motors owns stakes in Isuzu, Fuji Heavy Industries and Suzuki.
Mindful of the delicate balance between DaimlerChrysler and the powerful group of Mitsubishi companies like Mitsubishi Heavy Industries and the Mitsubishi Corporation, which will hold 34 percent of Mitsubishi Motors after the deal with DaimlerChrysler, Mr. Kawasoe, the departing president of Mitsubishi Motors, is said to have resisted DaimlerChrysler's demand to raise its stake in the company.
But Mitsubishi Motors did accept DaimlerChrysler's demand to let it raise its stake in the Japanese auto manufacturer to unlimited levels three years after the accord, instead of the previously agreed 10 years.
"If we had three years, we can recover our performance," Mr. Kawasoe said today. "Or rather, we have to do so."
While the incoming chief operating officer, Mr. Eckrodt, 58, will be reporting to Mr. Sonobe, 59, his arrival is still sure to be a blow to the executives at Mitsubishi Motors, which have insisted it would stay autonomous after entering into the alliance, despite its huge debts and sluggish sales. Mr. Eckrodt has worked for more than three decades at Daimler, and was an executive at its Mercedes-Benz unit.
A foreign boss at Mitsubishi Motors, which sports an inward-looking, group-oriented culture, could mean a rude shock to the car company which is likely to go through a period of uncertainty over whether the company will be a truly market-oriented company with concern for customers and legal compliance.
The departing president, Mr. Kawasoe, had assumed the presidency only three years ago to replace Takemune Kimura who resigned to take responsibility for a scandal involving a payoff to gangsters.
Still, analysts here praised the move. "It is better for Mitubishi Motors to be a DaimlerChrysler company," than a Mitsubishi company, Mr. Endo of First Boston said.
Mr. Sonobe, the incoming president and chief executive who once oversaw the car company's operations in the United States , said that he was eager to see his company transformed culturally. "I want to change the culture of the company," he said. He also noted that he wanted his company to become a more "customer-oriented" company.
But asked if he would rethink his company's relationship with other companies in the Mitsubishi group, he said, "I want to see changes at Mitsubishi Motors. Our relations with other Mitsubishi firms will remain the same."
Some analysts argue that DaimlerChrysler means to use Mitsubishi to fill the holes of its international strategy, especially in Asia, and that it will try not to become too heavily involved in Mitsubishi Motors the way Ford and Renault have with their Japanese partners.
"It takes years to restructure a company," said Seiji Sugiura, an automobile analyst with Nomura Securities. "And share prices of Mazda and Nissan haven't improved." *****
Yoshie