updated 4/26/2004 8:08:57 AM ET 2004-04-26T12:08:57

Rolf Eckrodt resigned Monday as chief executive and president of Mitsubishi Motors Corp., just days after key stakeholder DaimlerChrysler AG’s announcement it won’t offer more money to finance the struggling Japanese company’s turnaround.

Mitsubishi Motors said in a statement that a replacement will be chosen soon, but Keiichiro Hashimoto, chief financial officer, will be acting president until then.

The Tokyo-based automaker, which is burdened with a multibillion dollar debt, plunging car sales and a spate of recalls, was dealt a serious blow by the announcement last Thursday by the U.S.-German automaker that it would not provide a multibillion dollar cash infusion as had been expected.

The German-born Eckrodt, formerly president of Adtranz, the rail systems unit of DaimlerChrysler, was sent in by DaimlerChrysler in 2001 to lead a turnaround at Mitsubishi Motors.

He had recently hinted he would step down. But expectations had been for him to make way for leadership that will carry out a new revival plan with extra cash from DaimlerChrysler, which owns 37 percent of Mitsubishi Motors.

Eckrodt, 61, will retire from a 38-year career in the auto business although he will provide support for Mitsubishi Motors at the automaker’s request, the company statement said.

Eckrodt said he was stepping down because of DaimlerChrysler’s decision against financial support and the subsequent decision by the Mitsubishi group companies to hammer out a different revival plan.

Mitsubishi Heavy Industries owns 15 percent of the automaker, trading company Mitsubishi Corp. a 5 percent stake, and Bank of Tokyo-Mitsubishi 3 percent.

Eckrodt said the Mitsubishi team under the leadership of chairman Yoichiro Okazaki will be working out a plan within a month.

DaimlerChrysler has not said what it will do with its 37 percent stake in Mitsubishi Motors.

DaimlerChrysler’s chief financial officer Manfred Gentz has said the two automakers’ joint projects in Chrysler, Smart and other passenger cars will continue.

But analysts say Mitsubishi Motors’ lagging sales are likely to dip even further now and its chances for recovery are precarious because Mitsubishi companies are unlikely to have enough cash to fund a revival plan.

In Tokyo trading Friday, Mitsubishi Motors shares plunged 25 percent to the day’s allowed limit. The issue fell further Monday, sinking 3.32 percent to 233 yen ($2.14). The other shareholders, including Mitsubishi Tokyo Financial Group and Mitsubishi Heavy, also finished down Monday on the Tokyo Stock Exchange.

Mitsubishi Motors’ image never recovered after it acknowledged four years ago that it had systematically hidden auto defects for decades and announced a massive recall.

It embarked on a revival plan and returned to profitability in fiscal 2002, but the following year suffered massive losses from buyers in North America with bad credit. And the recalls have continued despite DaimlerChrysler’s efforts to upgrade quality.

Mitsubishi Motors is forecasting a 72 billion yen ($661 million) loss for the fiscal year ended March 31, a reversal from 37 billion yen in profit the previous year. Its debts total 1.14 trillion yen ($10 billion).

Mitsubishi Motors spun off its truck division last year, and analysts say Mitsubishi Fuso Truck & Bus Corp. remains a key part of DaimlerChrysler’s ambitions to expand its truck business in Asia’s growing marketRolf Eckrodt has resigned as chief executive of Mitsubishi Motors Corp., a DaimlerChrysler spokesman said Monday, in the wake of last week's decision by the German automaker not to invest more money in its troubled Japanese partner.

DaimlerChrysler spokesman Thomas Froehlich said it was a "personal" decision on Eckrodt's part. The German executive had been sent by DaimlerChrysler to Mitsubishi, in which it owns a 37 percent stake.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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