After working in the Accounting, Personnel Planning, and Labor Relations departments, he was appointed Executive Vice President of Mitsubishi Motor Manufacturing of America, General Manager of the Nagoya production plant, and General Manager of the Office of Passenger Car Production. He was appointed to the board of Mitsubishi Motors in 1995, and became President on November 27, 1997 following the resignation of his predecessor Takemune Kimura, who was forced to step down after admitting involvement in a racketeering scandal. At the time the company was suffering the effects of the East Asian financial crisis, and Kawasoe's first year in charge would be marked by a ¥25.7 billion net loss and the suspension of dividend payments to shareholders. In response, Kawasoe proposed a recovery strategy of staff cuts, rationalisation of car platforms, and the closure of plants in Thailand and New Zealand. However, the plan was only partially successful, and following another year without dividend payments in 1999, Mitsubishi was forced to seek external support when it sold a controlling 34 percent stake to DaimlerChrysler for €2.1 billion on March 27, 2000.
In June 2000, Kawasoe was forced to admit that Mitsubishi Motors and its Fuso Truck and Bus subsidiary had systematically covered up reports of vehicle defects from the Japanese Transport Ministry since 1977. The effect on the company's stock was immediate and precipitous, falling 13 percent on the news. As further revelations of "one of the largest corporate scandals in Japanese history" emerged over the summer the stock continued to plummet until Kawasoe was forced to resign on November 1, 2000. For his final month he took a 40 percent pay cut, along with dozens of other executives who suffered similar punishments.
Kawasoe's involvement in Mitsubishi's troubles was not to end after his resignation. Following two fatal accidents involving Fuso trucks in 2002 and 2004, he and five other former executives were arrested by police investigating the deaths and subsequently charged with professional negligence. He, along with the other executives, was convicted and received a suspended sentence.
- "The board", Mitsubishi Motors Annual Report 2000, p.7
- "Mitsubishi Motors Nominates Candidates for Posts of Chairman and President", Mitsubishi Motors press release, November 11, 1997
- "Executives to Step Down At Mitsubishi Motors", The New York Times, October 31, 1997
- "Mitsubishi Motors reports consolidated results for year ending 31 March 1998", Mitsubishi Motors press release, May 28, 1998
- "Setting sun", Neil Weinberg, Forbes, April 20, 1998
- "DaimlerChrysler seals Mitsubishi deal", BBC News, March 27, 2000
- "Katsuhiko Kawasoe, President, Mitsubishi Motors Corp.: Becoming a Major Presence Worldwide", Japan Auto Trends, JAMA, Vol.4, no.2, June 2000
- "Mitsubishi cover-up reported", The New York Times, August 17, 2000
- "Mitsubishi recalls 514,000 vehicles", BBC News, July 19, 2000
- "Mitsubishi's corporate woes tarnish image", Richard Russell, Canadian Car & Driver, July 18, 2005
- "Safety Scandal Shames Mitsubishi", Anthony Faiola, Washington Post Foreign Service, July 6, 2004
- "Cover-up forces Mitsubishi boss out", BBC News, September 8, 2000
- "Pay cuts at Mitsubishi", The New York Times, September 30, 2000
- "Former Mitsubishi boss arrested", BBC News, June 10, 2004
- "Ex-Mitsubishi heads deny cover-up", BBC News, October 6, 2004
- "Former Mitsubishi Motors head convicted for death", Reuters, January 16, 2008