Losses at the Japanese automaker for the fiscal first quarter totaled 21.65 billion yen (£109m), an improvement from the 54.69 billion yen (£277m) loss it racked up the same quarter in 2004. Quarterly sales dipped 13% to 485.83 billion yen (£2.5bn) from 557.60 billion yen (£2.8bn).
Mitsubishi Motors has struggled to revive its image after acknowledging five years ago that it had systematically hidden vehicle defects for more than two decades to avoid recalls.
Since then it has announced a spate of recalls, including those for the same vehicles recalled earlier.
In vehicle sales, global quarterly results were better than first half forecasts. Sales in Japan and North America fell short of target, but sales volume in Europe, Asia and other regions were good enough to offset that.
Mitsubishi Motors sold 326,000 vehicles worldwide for the quarter, down 3% from 338,000 for the same period last year. In Japan, sales dropped 2% to 48,000 vehicles during the period, but sales were finally recovering, the company said in a statement.
Sales also plunged in North America, where it sold 41,000 vehicles, down 23% from the same period a year ago. In Europe, it sold 66,000 vehicles, up 14%.
"The company believes it has made an acceptable start," the company said in a statement.
Mitsubishi Motors is forecasting a 64 billion yen (£322m) loss for the fiscal year ending March 31, 2006. That would mark the automaker's third straight year in the red.