TOKYO, November 7: Fuji Heavy Industries Ltd president Takeshi Tanaka said on Friday that the car-maker would maintain its earnings forecast for the year to March 31, 1998, despite the consequences of a delay in a recall of its cars.

Tanaka also said the company would cut salaries of its executives by 10 to 40 per cent from November for three months to take responsibility for the delay, which has led the Japanese Transport Ministry to seek a 1.4 million yen fine against the company.

"We deeply regret the incident. We will take responsibility by avoiding a repeat of this incident."

Last month, Fuji Heavy said it would recall about 490,000 vehicles, and apologised for delaying its disclosure of the defects. It recalled four models, including the Legacy. But the Japanese automaker, known for its Subaru cars, said that it had no intention of concealing the defects in the cars' engine systems, speedometer displays and other parts.

Japan's transport minister Takao Fujii said in a news conference on Friday that there was a strong possibility that the delay was intentional, but Fuji Heavy's Tanaka denied this.

Fuji Heavy said that the company has set aside 3.46 billion yen in reserves during the six months to September 30 to cover the estimated total costs of a series of vehicle recalls.

Fuji Heavy, which makes Subaru cars, said in a statementthat its parent sales would be around 860 billion yen for the full year to March, down from its earlier estimate of 880 billion yen, due to current weakness in the domestic car market.

But the firm said it had not changed its 1997-98 profit forecasts from its earlier estimates of a 39 billion yen parent current profit and a 17 billion yen net profit. It also left its forecast for the year's operating profit unchanged at 44 billion yen.

The company said its domestic car sales would fall 12.6 per cent year-on-year to 303,000 units in 1997/98, cutting its earlier estimate of a 3.9 per cent increase.

Fuji Heavy also cut its 1997-98 domestic output growthforecast to 2.3 per cent, for a total of 433,000 units, from its initial growth estimate of 10.9 per cent.Earlier on Friday, Japan's transport ministry said that it would seek a fine of up to 1.4 million yen against Fuji Heavy for a delay in recalling vehicles.

Fuji Heavy failed to file a recall notice on defects in a total of 1.47 million vehicles until the ministry urged it to do so after an inspection at the company, the ministry said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.