Mitsubishi group was the largest enterprise in Japan and has great influence to the domestic economy. Automobile production is just one of its various businesses. Despite of its strong background, its inflexible management (still loyal to life-time employment) has been proved fail to overcome the economic recession and recorded heavy loss since 1998. A "revival plan" was announced in 1999 but was not successful. The problem was: Mitsubishi still thought itself a big car maker, thus offers a full range of cars, from K-car to luxurious car, but most of the products are just average.

DaimlerChrysler took over the troubled Japanese car maker in 2000. It launched a reform including cutting 9500 staffs (14% work force), closing 1 of the 4 assembly plants, reducing no. of platforms from 12 to 6 and joint-developing cars with Smart and Chrysler. The new Colt drove a comeback in European sales, but sales in USA continued sliding.

But worst of all, in 2000 Mitsubishi was discovered by the Japanese government consealing quality and safety problems of its cars in the past 10 years. This not only involved recalling more than 1 million cars for repairment, customer confidence also dropped to the lowest point.

In 2004, DaimlerChrysler finally sold its 34% stakes back to Mitsubishi, ending the 4-year marriage. At the same time, Mitsubsihi announced another reform plan, cutting 30% staffs and 1 more assembly plant, leaving only 2 plants in Japan. This was described as its last chance for survival.