FRANKFURT/TOKYO - DaimlerChrysler AG insisted on Thursday that Mitsubishi Motors Corp remained a key Asian ally, even while the scandal-hit Japanese carmaker reported a 52 percent drop in domestic sales in July.
The German-American group dismissed as "wrong" a newspaper report that Mitsubishi Motors was set to cancel some joint development pacts that had survived Daimler's surprise decision this year not to continue bailing out Japan's only loss-making auto company.
"Mitsubishi remains one of our strategic partners in Asia, and all alliance projects that make economic sense for both partners will continue," a Daimler spokesman said, reiterating its stance. "They are also secured through long-term contracts."
In Tokyo, Japan's only unprofitable carmaker said it would carry on only with projects that made sense for both parties.
"We will keep the ties with DaimlerChrysler in which we can both be in a win-win situation," a spokesman said, but he declined to elaborate further on the two companies' future alliance plans.
Any move by Mitsubish Motors (MMC) to loosen its business alliance with DaimlerChrysler would deepen the rift between the allies at a time Mitsubishi is trying to recover from a defect cover-up scandal that has driven customers away from the brand.
Its domestic sales plunged 52.2 percent in July year-over-year, while its July output in Japan slumped 17.7 percent from a year earlier to 53,307 units.
Business daily Nihon Keizai said MMC would cancel a plan to use common platforms with DaimlerChrysler for medium-size sedans and instead would use its own existing platform to fully realize its R&D investment.
But the Daimler spokesman said this was untrue.
"The alliance projects generate substantial synergies for all partners, so it would not make sense that one of the partners stop the projects now," he said, noting the first cars with common platforms were set to roll out in 2005 and 2006.
These include the redesigned Dodge Neon, Chrysler Sebring, Dodge Stratus and a successor to the Mitsubishi Galant.
WHO WILL OWN NEDCAR?
In May, Mitsubishi said it would continue developing and producing mid-size engines and would maintain an original equipment manufacturer agreement to buy pickups from the Chrysler division of DaimlerChrysler in North America.
The partners are still discussing ownership of "NedCar" production in the Netherlands, which the companies had planned to make a 50-50 joint venture. MMC now has all of Nedcar, which makes Mitsubishi Colts and four-passenger versions of its Smart compact cars on the same platform.
The Nihon Keizai said DaimlerChrysler was to raise its investment in the venture to more than half, but the Daimler spokesman said no such thing had been decided at this stage.
Daimler has said it will keep a stake in MMC for the time being. It bought a stake in MMC in 2000 with a view to expanding in Asia, but its original 37 percent has fallen to less than a quarter after Daimler stood aside when MMC raised fresh capital.
Debt-ridden Mitsubishi got a $4.5 billion rescue package from the Mitsubishi group and investment funds this year. The automaker is struggling to recover from its cover-up scandal.
MMC's decades-old practice of hiding customer complaints came to light in 2000, but it was hit again this year by news that cover-ups had continued.
The company unveiled the results of its latest investigation into its past recall problems on Thursday, announcing that it found 224 instances in which it had secretly repaired defects without issuing a formal recall.
Of those 224, measures have already been taken on 31.
MMC said its analysis showed that a recall was only necessary in one of the remaining 193 cases but said it would consult with Japan's Ministry of Land, Infrastructure and Transport on its findings.
"We looked at all the documents we possibly could," said MMC Vice Chairman and Chief Business Ethics Officer Koji Furukawa, while refraining from giving MMC a clean bill of health. "But it is difficult to make a declaration of total safety."