By Yuri Kageyama

TOKYO (AP) _ Scandal-tarnished Mitsubishi Motors trimmed its losses for the third quarter, although it continued to struggle to boost revenue.

The Japanese automaker reported a 4.3-billion-yen ($36-million-US) net loss for the quarter ended Dec. 31, considerably better than the 49.4-billion-yen loss for the third quarter of 2004.

Tokyo-based Mitsubishi Motors Corp. has struggled for several years to restore its image and boost sales as it fought recurring scandals centred on cover-ups of auto defects.

Sales for the October-December period totalled 538 billion yen ($4.6 billion US), down two per cent from 547 billion yen the previous year.

Lower advertising costs in the United States and Europe as well as the weaker yen helped the company trim its loss, Mitsubishi Motors said in a statement Thursday.

Also adding to the latest results was the absence of losses this fiscal year related to the U.S. financial services unit that came in financial 2004.

In 2000, Mitsubishi Motors acknowledged it had been systematically hiding auto defects from authorities for more than two decades.

The automaker has since announced a spate of recalls, and disclosed in 2004 it had failed to come clean in 2000 and had more concealed defects.

Mitsubishi Motors' sales had been lagging even before the defect scandal surfaced, as it fell behind powerful domestic rivals like Toyota Motor Corp. and Honda Motor Co.

Mitsubishi had already suffered earlier scandals since the mid-1990s, including a sexual harassment lawsuit in the United States and arrests of executives on criminal charges in Japan of paying off racketeers tied to gangsters.

But faith in the Mitsubishi brand, respected for decades in the past, took its worst hit among Japanese consumers with the defect cover-up.

The defects are suspected in two fatal accidents in 2002 in Japan. One occurred when a tire rolled off a truck and crushed a pedestrian; the other when a truck crashed after its brakes failed and killed the driver.

Mitsubishi Motors appeared to be on a turnaround for a few years under an alliance with DaimlerChrysler AG, but the German automaker withdrew additional financing in 2004.

Since then, Mitsubishi Motors has received massive cash infusions from the Mitsubishi group of companies, including a bank, machinery maker and trading company, to support revival efforts.

The automaker said the recovery remains on track.

For the first three quarters of this fiscal year, Mitsubishi Motors sold 985,000 vehicles globally, up four per cent from the same period a year ago.

Mitsubishi Motors kept unchanged its forecast for the year ending March 31 at a 64 billion yen ($542 million US) loss on 2.22 trillion yen ($19 billion US) in sales.