Mitsubishi Motors Corp. officially announced Friday that senior vice president Takashi Sonobe will take over the presidency from Katsuhiko Kawasoe, who will resign over a coverup scandal now plaguing the company.
The change will take place November 1.
In addition, MMC will accept a chief operating officer from DaimlerChrysler AG, which previously agreed to take a controlling stake in the Japanese automaker.
Rolf Eckrodt, head of DaimlerChrysler’s rail systems subsidiary Adtranz, will become the COO, MMC’s No. 2 post, after approval at an extraordinary shareholders meeting in January.
Consequently, MMC’s board will comprise 11 members, up from 10.
The two automakers also agreed to keep DaimlerChrysler’s stake in MMC at the originally agreed 34 percent.
On Thursday, MMC sources said DaimlerChrysler would take a near-40 percent stake, but the German-U.S. firm is wary of taking so large a chunk out of fear that U.S. accounting rules would force it to consolidate MMC’s 1 trillion yen-plus debt on its ledgers.
Instead, the purchase price for the 34 percent stake will be reduced by 10 percent, from 225 billion yen to 202.4 billion yen.
However, the German-U.S. auto giant will be entitled to increase its stake in the Japanese carmaker without limitation after three years, Kawasoe said.
In addition, DaimlerChrysler will send senior officials to the Japanese automaker to improve MMC’s quality-control division.
The two companies originally agreed that MMC would accept three board members from DaimlerChrysler and that DaimlerChrysler’s stake in MMC would remain 34 percent for 10 years.
Sonobe, 59, who will also serve as the chief executive officer, said Friday that he regrets that MMC caused such a serious problem and that his mission will be to recover trust in its vehicles and services.
Kawasoe, who became the president in 1997, said that he will step down to executive counselor and remain a board member to support the succeeding management team.
MMC’s present executives, including Sonobe, will have their salaries reduced to take responsibility for the scandal, in which consumer complaints were covered up for more than three decades and vehicle repairs were done in secret over the same period.
Sonobe said he had not recognized the long-term practice of concealment.
The changes to the tieup agreements, announced Friday, are expected to give DaimlerChrysler greater influence over MMC’s decision-making.
At the same time, they may reduce in relative terms the interest of AB Volvo, a major Swedish truck builder, in the Japanese carmaker.
MMC formed alliances with DaimlerChrysler in March for its passenger car operations and with Volvo last year for its truck and bus business. Volvo has a 5 percent stake in MMC and plans to hold 19.9 percent in a new truck company, which will be jointly set up by MMC and Volvo next year.
Kawasoe said MMC will not raise Volvo’s stake in MMC nor in the planned firm, noting that the two firms will have a meeting in the near future to explain the situation.
On Friday morning, Kawasoe apologized to the public for the company’s long-term practice of covering up customer complaints and defects that might lead to recalls, saying that it is regrettable his company has caused tremendous anxiety among consumers.
When the scandal first broke last month, Kawasoe said he would not resign. On Friday he said he changed his mind after he grew confident that MMC would be able to establish a new management team and a system to prevent a recurrence of the illegal activity.
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