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Dakar 2010: Mitsubishi Motors withdraws from the Dakar Rally

World motorsports took another blow from the global economic crisis Wednesday as Mitsubishi announced it would no longer compete in the Dakar Rally despite a dozen victories. The Japanese team won the annual event seven times running until its disappointing performance this year.

"It is extremely regrettable. I am sorry for our fans. We were a good team too," said Mitsubishi Motors president Osamu Masuko. "Since 2004, we continued to participate in the rally even in difficult times by cutting costs. We gained much technologically during this time. It pains me to say we will no longer be able to participate," he told reporters.

The team endured a nightmare trip in January to South America, where the world's most gruelling desert raid was shifted after the killing of four French tourists in Mauritania caused the cancellation of the 2008 event. Defending champion Stephane Peterhansel and two Mitsubishi teammates pulled out in the first week as their new diesel-powered Lancers failed to match the pace of Volkswagen.

Mitsubishi said in a statement it would withdraw from all Cross Country Rallying, blaming "the sudden deterioration of the global economy." Other Japanese makers have also been scaling down their motorsports activities to cope with the auto industry crisis.

Honda announced its shock exit from Formula One last month while Suzuki and Subaru withdrew from the world rally championship. Motorcycling has also been hit, with Kawasaki pulling out of the MotoGP. Analysts warned that more Japanese companies could exit such prestigious but expensive sporting competitions as their core businesses fall in the red.

"They have no reason to continue when they are losing money," said Mamoru Kato, an auto analyst at Tokai Tokyo Research Center. Mitsubishi "will incur temporary losses from the pullout but it was the right decision in the long term," he said. "As automakers' earnings have been worsening rapidly since the turn of the year, its (Mitsubishi's) survival will be called into question," Kato said, suggesting the company might need to seek a bailout and overseas alliances.

Mitsubishi Motors, Japan's fourth-largest carmaker, said Wednesday it expects a net loss of 60 billion yen (670 million dollars) for the current financial year to March due to sharp falls in sales and a strong yen. "At this point, I cannot judge that things will bottom out in fiscal 2009," said Masuko. "We are bracing ourselves for an extremely difficult management environment."

Mitsubishi Motors' reputation was badly damaged by a past scandal over covering up defects. It spent several years in the red before returning to profit in the year to March 2007. Japanese carmakers have been cutting production and thousands of jobs as consumer demand plummets and the strong yen erodes overseas earnings.

2009/02/04 | 11:13 CET | Editor: MR/HS/AFP

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