MITSUBISHI shareholders could not believe what they were hearing. Gathering in Tokyo to discover what was to be done about the company's financial woes, they had been led to expect another massive financial injection from largest shareholder DaimlerChrysler.

What they got was a massive shock that led some of the 300 or so gathered at Mitsubishi headquarters to ask if the company could be on the brink of collapse.

In Japan, shareholder meetings are usually civilised affairs. This was not a typical shareholder meeting. There were several raised voices when it became known that DaimlerChrysler - under fire on several fronts - had baulked at the idea of pledging further financial support for Japan's fourth largest car maker.

DaimlerChrysler's decision - it had invested more than $3bn since 2000 - obviously came as a shock to Mitsubishi's senior management as well.

Keiichiro Hashimoto, chief financial officer, said: "The decision by DaimlerChrysler came as a shock to our company. We thought we had set the correct direction for revival."

The German giant said it had not taken the decision lightly.

CEO Juergen Schrempp tried to put a brave face on the decision, saying DaimlerChrysler remained committed to its plan to become a global player.

But further bad news was to follow.

With Mitsubishi in crisis, DaimlerChysler announced it had decided to sell its $1bn stake in South Korea's Hyundai, signalling the failure of another part of the group's global plan.

DaimlerChysler bought its stake four years ago, but the relationship soured amid delays to planned joint ventures and the partners' rival ventures in China.

The two are still expected to continue joint engine projects, which will also encompass Mitsubishi.

Faced with two setbacks in such a short space of time, cynics are starting to wonder if the Mitsubishi debacle may have fatally wounded Schrempp.

Looked at dispassionately, however, it isn't hard to see why DaimlerChrysler decided enough was enough.

Mitsubishi Motors is $10bn in debt. Its sales in North America and Japan have slumped and it is expected to post a $661m loss for the year ended March 31.

Police are also investigating an accident in 2002 when a woman was crushed by a wheel that came off a Mitsubishi truck.

No wonder Mitsubishi shareholders believed a cash injection could be the way forward.

Instead of the expect bail out, the best management had to offer were some fairly nebulous promises on an alternative strategy, drawn up in conjunction with the larger Mitsubishi Group and the Bank of Tokyo, which won't be ready until later this month.

The shareholders were unimpressed.

As the meeting broke up, 71-year-old Hiroshi Koike spoke for many when he told The Associated Press: "Mitsubishi is on a precipice of crisis. The big question is how quickly the company can win back trust from consumers."

The blood-letting began even before the meeting convened.

President and chief executive Rolf Eckrodt, who was parachuted in by DaimlerChrysler in 2001, had already resigned. He did not attend the meeting preferring to leave things to Mr Hashimoto.

The Japanese media is awash with rumours. Despite strenuous denials, one paper has already speculated that Toyota, the country's biggest car manufacturer, may be ready to buy a stake.

DaimlerChrysler was forced to reiterate its intention to hang on to its 37 per cent stake in Mitsubishi Motors.

Schrempp said the company would continue to work on joint projects involving Mitsubishi, Chrysler and Smart. Under Mitsubishi's future plans, more than half its new models will be based around this collaboration.

"But in the end, we simply couldn't guarantee that the financial investment required would, in the foreseeable future, result in an acceptable return for our shareholders," he said.

The job of finding a way forward now falls to Yoichiro Okazaki, a director at Mitsubishi Heavy Industries, who finds himself president and chief executive to replace Eckrodt.

Okazaki, 61, who has little direct car manufacturing experience, would not rule out plant closures, job cuts or refinancing.

His assessment was gloomy.

"We realise our company is in such serious trouble that its very existence is in question," Okazaki told shareholders.

Nor did he rule out other alliances with another company: "We are not considering one now, but I believe it is a possibility in the future. The question is how can Mitsubishi Motors hope to survive."