Mitsubishi Motors Corp. reported a quarterly loss Wednesday and said its annual result will plunge into the red for the first time in three years, hit by plummeting global demand and a rising yen.

Japan's fourth-largest automaker said its group net loss will amount to 60 billion yen ($670 million) in the fiscal year through March 2009. The company had earlier projected a net profit of 20 billion yen.

Mitsubishi said sinking demand amid a deepening global downturn and a rising yen were to blame for the dismal forecast. A strong yen hurts Japanese exporters by eroding their overseas income. More than 80 per cent of Mitsubishi's revenue comes from sales abroad.

The company said its net loss for the fiscal third quarter was 17.6 billion yen, against a net profit of 27.3 billion yen a year earlier. Revenue dropped 30 per cent year-on-year to 444.1 billion yen, and Mitsubishi suffered an operating loss of 5.5 billion yen, reversing from an operating profit of 33.2 billion yen.

Faced with battered sales at home and abroad, Japanese automakers are cutting jobs and production to cope with shrinking global demand. Mitsubishi said last month it will halt production at its biggest plant in Japan for three weeks in February to weather a prolonged slump in the auto market.

As a cost-cutting measure, Mitsubishi yesterday confirmed the withdrawal of its works team from all cross-country motorsport events, including the Dakar Rally, due to the global economic downturn.

The Japanese manufacturer entered the famous Dakar endurance event 26 times, winning on 12 of those occasions and setting a record for consecutive victories with seven between 2001 and 2007. Competing in the two-week-long Dakar race costs more than €200,000 ($257,000), on top of development and additional spending needed to maintain a full-time rally programme.

A statement released by Mitsubishi read, ''The sudden deterioration of the global economy made it necessary for the company to focus its resources more tightly, and for this reason the decision was taken to withdraw its Mitsubishi Motorsports works team from all cross-country competitions.''

Mitsubishi are just the latest in a long line of Japanese firms to scale back their motorsport commitments since the beginning of the economic downturn. Kawasaki has left the MotoGP motorcycle contest; Subaru and Suzuki have withdrawn from the World Rally Championship citing financial concerns while Honda stunned the world of Formula One when it put its grand prix team up for sale in December.

Toyota and Honda, Japan's top automakers, have downgraded their earnings expectations for the year, with Toyota warning of its first operating loss in seven decades. Many analysts expect Toyota, the world's biggest car company, to widen its expected deficit when it announces third-quarter results later today. Mazda Motor, Japan's fifth-biggest carmaker, also warned of an expected full-year loss Tuesday.

Shares in Mitsubishi Motors rose 2.6 per cent to 117 yen.