Mitsubishi Case Study Essay

Mitsubishi Situation1 You could call Motohiro Kaibara a Mitsubishi man. He works as a mechanic at his family’s Mitsubishi Motors dealership in Kitakyushu, a city in southern Japan and he will only drive a Mitsubishi. However, Kaibara’s faith in Mitsubishi began to unravel last year when in May 1999 a customer nearly ran down his own grandchild while attempting to park his $33,000 1998 Mitsubishi Diamante. The driver had just put the car into reverse when it lurched backward, barely missing the child before crashing into a gate.

In July 1999 Mitsubishi tested the vehicle at its regional technical centre and insisted that nothing fundamental was wrong. In subsequent months, the incident happened twice more to the same driver almost causing accidents. Kaibara checked the car himself. To his surprise the vehicle shot back a meter upon shifting into reverse. This was not an isolated case. In September 1999, Shigeo Toyoda, the 57 year old president of a small business in western Japan was parking his four-month old Diamante on a Tokyo street.

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Before he could turn off the engine the car jumped back suddenly hitting an empty van. Then, Shigeji Tsugahara, a taxi driver in Saitama with 35 years driving experience, was backing into a parking spot in June 2000 when the engine of his new Diamante revved up unexpectedly and he rammed into another car parked three meters behind him. The following month, Sadao Ito was backing his Diamante into a space on the 5th floor of a Tokyo supermarket parking lot. When he put the car into reverse, the car jumped back, veering to the right and crashed into a pillar.

But for the pillar, the car would have smashed through a railing and fallen 15 meters to the ground. These, and other incidents, come in the wake of revelations that over the last two decades Mitsubishi Motors has covered up thousands of complaints about glitches with its vehicles. Since August 2000 the company has announced the recall of 620,000 vehicles. Already Mitsubishi’s reputation is suffering. Its sales in Japan slumped 3. 9% in August from a year ago and this is posing a headache for DaimlerChrysler, which agreed to acquire 34% of the Japanese automaker.

This is a headache that Daimler-Chrysler can do without in light of its many other problems. Mitsubishi has further problems as police in Tokyo have launched an investigation into allegations that the company was criminally negligent in covering up defects. Mitsubishi declined to comment on the ongoing probe though investigators told the Japanese press they had evidence that serious car defects were secretly repaired at two of Mitsubishi technical centres by repairing or replacing car computers.

Megumu Okubo the general manager of Mitsubishi’s car service department said the computers were not the problem but the result of drivers mistakenly hitting the gas pedal instead of the brakes. Okubo indicated there are two computers in the vehicles. One acts as a backup that takes over if the primary unit fails. After Shideo Toyoda’s incident he asked Mitsubishi to inspect his car. The company said there was nothing wrong. So Toyoda went into action and created a Web site where Mitsubishi owners could report car problems. He received over 1,000 complaints with Mitsubishi vehicles and passed the details to the police.

However, winning a product liability lawsuit in Japan is not easy for consumers as judges often rule against the plaintiff. Further, it is tough taking on big business. Toyoda has received three visits from company executives who he says were rude and implied he was liar. When Toyoda increased his online campaign, Mitsubishi filed a lawsuit in May 2000 demanding $5,000 or the amount they said it cost them to examine Toyado’s car. In October, Toyoda filed a $20,000 damage counter suit against Mitsubishi alleging if he had hit and killed someone, he would have been imprisoned.

Further, Kaibara, the mechanic is feeling the heat. Mitsubishi sent a senior engineer to his dealership to try to convince the mechanic that the Diamante is trouble free. Kaibara is resolute and insists that the car problem is no mirage. 1 Adapted from, “A cover-up at Mitsubishi? As customer complaints rise, police probe the carmaker”, Business Week, 9 October 2000, pp 32-33. You are required to further study about Mitsubishi using the following. ? ? The website of the company information from other websites, magazines and other publications

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