Japan: Mitsubishi cheated on mileage by up to 16 pct

Mitsubishi Motors last week made additional disclosures about the extent of the manipulation in mileage ratings and falsified test data, in a scandal that has damaged its brand, claimed two top executives and forced the automaker to turn to Nissan Motor Co. for a bail out.

Government tests had showed that fuel economy for the minivehicles was on average 11 percent lower than their advertised readings but the transport ministry said that this would not lead to change in their vehicle classification.

The ministry plans to issue a reprimand to the automaker instead of withdrawing approval for the models, the sources said.

Mitsubishi said Wednesday that the negative financial impact from the improper testing is expected to amount to 205 billion yen ($2 billion) during this financial year, which ends in March 2017.

On Tuesday, Mitsubishi said it would resume selling four auto models at the centre of the scandal – all minicars sold in Japan.

Mitsubishi admitted in April to overstating the mileage on four of its minivehicles – problems it blamed on competitive pressures and poor oversight. Mitsubishi Motors Corp. forecast its first loss in eight years as the automaker incurs costs to compensate buyers after admitting to manipulating fuel-efficiency ratings and falsifying test data.

Among the compensation costs, Mitsubishi is on the hook to pay about 100 billion yen to Nissan and other suppliers, and about 50 billion yen in payments to customers who bought the affected cars.

Nissan, which plans to spend about JPY237.4bn for its 34% stake in MMC, expects common platforms and joint purchasing will result in synergies equal to about 20% of its investment, chief financial officer Joseph Peter told Bloomberg. Under a special agreement, Mitsubishi had supplied the models to Nissan, which does not make its own minicars.

Mitsubishi’s latest scandal follows its massive and systematic cover-up of defects that surfaced in the early 2000s, which had spanned decades. The company’s president has stepped down to take responsibility for the new scandal.

It also expects to take a 55 billion yen hit to revenue, due largely to a near halving in domestic retail sales in the wake of the scandal.