By Chang-Ran Kim, Asia auto correspondent
TOKYO, April 23 (Reuters) - Mitsubishi Motors Corp faces a bleaker future as a smaller company without financial help from DaimlerChrysler AG and may not survive unless it finds a new strategic partner, analysts said on Friday.
DaimlerChrysler, Mitsubishi Motors' biggest sharholder, cut off financial support for Japan's only unprofitable car maker, saying it would not contribute in a proposed capital increase.
It said it may put its 37 percent Mitsubishi Motors stake up for sale, effectively leaving the company and its Japanese stakeholders to scrape together a rescue plan and turnaround strategy.
The three main stakeholders in the Mitsubishi group -- Mitsubishi Corp , Mitsubishi Heavy Industries and Bank of Tokyo-Mitsubishi -- said they would continue to support Mitsubishi Motors and craft a new revitalisation plan with the auto maker over the next month.
But analysts in Tokyo said any new financial aid package would likely fall short of the 700 billion yen ($6.4 billion) that had been widely expected.
The post-DaimlerChrysler plan also will require severe restructuring of the company and its debt, they said. Mitsubishi Motors must shrink excess production capacity by closing some plants, whittling down its model line-up and cutting thousands of jobs.
Mitsubishi Motors should be able to scrape together enough funds -- through a capital infusion, debt-equity swaps, state-backed loans and debt rollovers, among other options -- keeping Mitsubishi Motors in business for the short term, they said.
However, to ensure long-term survival, Mitsubishi Motors would need another partner to pick up the slack after DaimlerChrysler's exit, analysts said.
"Without a strategic partner, this company will not survive," Koji Endo, a Tokyo-based auto analyst at Credit Suisse First Boston said.
"The Mitsubishi group has pledged complete support for Mitsubishi Motors, but there is a limit to how far the auto maker can recover independently when its total passenger car production stands at only 800,000 units per year."
KOREAN CONNECTION
Given its existing alliance with Hyundai Motor Co in engine development and the South Korean auto maker's rocky relations with 10 percent owner DaimlerChrysler, analysts said Hyundai could be a potential taker.
"Hyundai is aggressively expanding, including in the United
States, but it could still use more growth, and may have some use for Mitsubishi's plant in Europe, for instance," said Tatsuo Yoshida, analyst at Deutsche Securities.
DaimlerChrysler, meanwhile, said in a teleconference on Friday that it would continue its operational cooperation with Mitsubishi Motors in the areas of engine and car development, as outlined in each contract. ($1=109.36 Yen)