The Mitsubishi Mileage Scandal Is Even Worse Than People Thought

April 22, 2016, 10:45 AM UTC
Photograph by Raymond Boyd Getty Images

Mitsubishi Motors’s fuel economy scandal broadened on Friday as U.S. auto safety authorities said they were seeking information, and media reported that the automaker had submitted misleading data on at least one more model than disclosed and likely several others.

Japan’s sixth-largest automaker admitted this week it had overstated the fuel efficiency of 625,000 cars, wiping off around 40% of its market value, or $3.2 billion in three days.

The revelations have also prompted Japanese authorities to raid one of its research and development facilities while Standard & Poor’s warned its rating could be lowered further into speculative grade territory.

Adding to fears that the scandal will lead to ballooning compensation costs and fines, top Japanese government officials said Mitsubishi (MMTOF) may have to reimburse consumers and the government if investigations find the vehicles were not as fuel-efficient as claimed.

“This is a serious problem that could lead to the loss of trust in our country’s auto industry,” Transport Minister Keiichi Ishii told a news conference on Friday.

He said he wanted Mitsubishi to look at the possibility of buying back the cars in question, while another minister was quoted by media as saying the government could ask it to pay for any electric car subsidies granted to consumers.

Domestic media reported that Mitsubishi had submitted misleading mileage data on its i-MiEV electric car, which is also sold overseas. Previously disclosed models are marketed specifically for the Japanese market and Mitsubishi has admitted to manipulating their fuel economy readings.

The Sankei newspaper also said the automaker is also suspected of using non-Japanese test methodology on its RVR, Outlander, Pajero and Minicab MiEV models.

Mitsubishi has said there may be models other than those disclosed that violate Japanese regulations. A spokesman said on Friday the company was still looking into those models.

“A lot of the potential impact on Mitsubishi is pending whether they find out that something was wrong in cars sold in the U.S.,” said Christopher Richter, an analyst at CLSA.


A Plethora of Scandals

An official at the U.S. National Highway Traffic Safety Administration told Reuters the regulator had asked Mitsubishi for information on vehicles sold in the United States.

He declined to comment on which models it had requested information on, or whether it had requested data from other automakers.

The misconduct has revived memories of a scandal more than 15 years ago in which Mitsubishi admitted to systematically covering up customer complaints for more than 20 years, bringing the company close to collapse.

The industry is also facing an ongoing massive recall of air bag inflators made by Japan’s Takata Corp, which have been linked to 11 deaths and more than 100 injuries, mainly in the United States.

Emissions cheating scandals have also erupted. Volkswagen AG (VLKPF) announced a sweeping U.S. deal on Thursday to buy back or potentially fix about a half million cars and set up environmental and consumer compensation funds after it used software to conceal the level of toxic emissions.

This week alone, PSA Peugeot Citroen (PUGOY) was raided by France’s anti-fraud investigators as part of ongoing probes on pollutants in the industry. Peugeot says its vehicles are compliant. Daimler AG (DDAIF) also said it opened an internal emissions probe at the request of the U.S. Justice Department.

Japan’s Transport Ministry has ordered Mitsubishi to submit a full report on its test data within a week, and for other domestic automakers to submit fuel economy test data by May 18.

Mitsubishi, which sells over 1 million cars annually, has said it expects to post operating income of 125 billion yen ($1.1 billion) for the year just ended. It reports earnings next Wednesday.