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Mitsubishi admits to cheating on fuel economy tests

2016-04-20 14:21

MISCONDUCT: Japanese automaker Mitsubishi admitted it manipulated pollution data in more than 600 000 vehicles. Image: AFP / Toshifumi Kitamura

Tokyo -Japanese automaker Mitsubishi on Wednesday admitted it falsified fuel-efficiency tests in more than 600 000 vehicles, after reports of misconduct sent its Tokyo-listed shares crashing.

The embarrassing revelation comes in the wake of a massive pollution-cheating scandal at Volkswagen that erupted in September and which the German giant is still struggling to overcome.

Mitsubishi halt sales of affected models

It also marks the latest blow for Japan Inc. after auto parts giant Takata was hammered by an exploding air bag defect blamed for at least 11 deaths, and as Toshiba tries to recover from a huge accounting scandal.

Mitsubishi said it would halt production and sales of the affected vehicle models, mini-cars sold in Japan, and warned that the number of affected vehicles would likely rise.

The maker of the Outlander SUV also said it would investigate cars it sold overseas.

Mitsubishi president Tetsuro Aikawa told a Tokyo news briefing: "(The company) conducted testing improperly to present better fuel consumption rates than the actual rates."

'Automaker's bottom line would take a hit'

Aikawa said that the test was "different" from one required by Japanese law, and warned that the automaker's bottom line would take a hit.

He said: "This is not a simple problem and we need time" to assess the impact.

Aikawa added: "But I'm sure there will be an impact. The damage will be big."

The problem affected about 625 000 vehicles, including mini-cars "eK Wagon" and "eK Space", and the "Dayz" and "Dayz Roox", which Mitsubishi produces for rival Nissan.

Joe Rundle, head of trading at London-based ETX Capital said: "We've always thought that the VW (Volkswagen) emissions scandal would rumble on and now it looks like the dodginess is not confined to the German automaker. 

"Mitsubishi's bombshell that it's been falsifying (fuel-economy) tests calls into question whether we have a much larger industry-wide scandal on our hands."

'Intentionally manipulated'

The rigged figures were discovered after Nissan found inconsistencies in fuel-economy data and reported it.

Japan's number-two automaker said it would halt sales of the affected cars.

"Today, we have no plans to change our relationship," it added, referring to its production outsourcing to Mitsubishi.

Mini-cars, or kei-cars, are small vehicles with 660cc gasoline engines that are hugely popular in the Japanese market, but have found little success abroad.

Mitsubishi sold more than a million vehicles in Japan and overseas during 2015.

Mitsubishi said in a statement: "Taking into account the seriousness of these issues, we will also conduct an investigation into products manufactured for overseas markets."

Share price took a knock

Earlier on Wednesday, Mitsubishi shares plunged 15.16% to 733 yen ($6.73) after Japanese media reported the faulty emissions tests.

Seiji Sugiura, an analyst at Tokai Tokyo Research Center, told Bloomberg News: "This may be different from Volkswagen's issue, but the market has become very sensitive to such kind of news.

"It may have a similar impact in terms of sales and the company's reputation."

The fall in Mitsubishi's stock was its biggest one-day plunge since 2004.

At that time, Mitsubishi was struggling to launch a turnaround as it teetered on the edge of bankruptcy, hit by a lack of cash and a series of huge recalls linked to serious defects.


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