Mitsubishi crashes into the red

Mitsubishi is struggling to relaunch its domestic sales

Struggling Japanese car firm Mitsubishi has slumped to a heavy loss, hit by sharply weaker sales.

The company said losses for the three months to September widened to 91.5bn yen ($868m), compared with a 29bn yen shortfall a year earlier.

The deteriorating performance partly reflected a steep drop in sales, which fell 14% on the year to 513bn yen.

Mitsubishi, facing allegations that it covered up defects in some cars, also increased its full-year loss forecast.

The company said it was on track to lose 240bn yen for the year as a whole, up from its previous projection of 230bn yen.

On the ropes

Mitsubishi, Japan's only unprofitable car maker, has suffered a collapse in domestic sales following a series of high-profile product recalls over the past four years.

The company's reputation took a further hit in June, when police arrested six Mitsubishi executives as part of an investigation into allegations that the firm failed to report defective vehicles to the transport ministry.

The defects scandal came on top of disastrous performance last year by its US division, which handed out cheap loans in an effort to boost sales, but then found that many customers were unable to make their repayments.

Mitsubishi came close to collapse in April when former majority owner DaimlerChrysler withdrew financial support.

It was eventually bailed out by Japanese investment funds and other companies in the Mitsubishi group, which put together a $4.5bn rescue package.

Mitsubishi said it hoped stronger sales in Europe, China and Russia, where the recall scandal had less of an impact, would offset a weaker performance in Japan and the US in the months ahead.

It is also counting on its new Colt Plus subcompact model to stem the decline in domestic sales.

Mitsubishi shares were down nearly 1% at 114 yen in early trade in Tokyo.