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Last Updated: Tuesday, 2 August 2005, 08:14 GMT 09:14 UK
Mitsubishi Motors narrows losses
Mitsubishi rally car
Mitsubishi is hoping to make profits again in 2006
Japan's only unprofitable carmaker, Mitsubishi Motors, has seen its quarterly loss narrow thanks to a gain in the value of the US dollar.

Its net loss was 60% smaller at 21.65bn yen (109m; $193m) in the three months to 30 June, compared to a year earlier.

But sales continued to fall, down 13% to 485.8bn yen, underlining the problems facing Mitsubishi since it was accused of covering up vehicle defects.

It got a state-backed bailout last year and is forecasting a profit next year.

European focus

The firm is lagging behind rivals Honda, Nissan and Toyota as they expand into markets like the US and take on firms such as Ford, DaimlerChrysler and General Motors.

The earnings environment for carmakers worldwide is not favourable and they have been hit by high raw material costs and fierce competition.

Last week, Mitsubishi's European division said it had stayed in profit despite the cost of launching its new model Colt.

The division made an operating profit of 5.3m euros in the 12 months ending 31 March, down from 180m euros a year earlier.

Sales increased by more than 13% in the same period and the firm said that the trend had continued in recent months.

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