After fraud allegations rocked Volkswagen and Rolls Royce, Mitsubishi Motors is the latest carmaker embroiled in scandal – one that is poised to cost the company nearly $140 billion. In April, Mitsubishi “admitted using unapproved mileage tests on cars it sells in Japan, which exaggerated the vehicles’ stated fuel performance,” according to an article in the New York Times. Also in the report:
The net loss would be Mitsubishi’s first in eight years. “The scandal prompted Mitsubishi to seek a $2.2 billion rescue from its fellow Japanese automaker Nissan Motor last month as it struggled with falling sales and the rising cost of compensating customers.”
The episode has already cost Mitsubishi a significant amount of independence. “The carmaker gave up about one-third of the company in return for its financial lifeline, becoming part of a global automotive group centered on Nissan and Renault of France.”
Mitsubishi’s admission was part of a series of cheating revelations in the automobile industry. “Carmakers’ reporting of fuel economy and pollution ratings is under especially close scrutiny after Volkswagen admitted last year that it had installed software in 11 million diesel vehicles to cheat on emissions tests.”
We’ve covered the Volkswagen scandal in this blog: “Will Volkswagen’s Emissions Fraud Spur Reform in Europe?” asked whether the scandal would serve as a tipping point in cracking down on automaker fraud in the region. That remains to be seen, but the allegations against Mitsubishi serve as a reminder that fraud is a global problem.
Now, the nearly 100-year-old company finds its very existence in peril. In 1917, the Mitsubishi Shipbuilding Co. introduced the Model A, Japan’s first series-production automobile. In 2017, it will seek to right the ship after suffering a magnitude of losses due to its mileage fraud.
The following is a brief timeline of the Mitsubishi scandal.
April 20, 2016: Mitsubishi president Tetsuro Aikawa bows in apology, tells reporters the fuel efficiency of 625,000 minicars had been exaggerated by as much as 10 percent.
April 25, 2016: The U.S. Environmental Protection Agency and the California Air Resources Board announce an investigation of whether models sold in the U.S. meet fuel economy regulations.
April 26, 2016: Japan’s transport ministry asks Mitsubishi Motors to re-submit findings from its investigation of improper testing methods by May 11. An initial report that the company provided the regulator ahead of a Wednesday deadline was insufficient.
June 22, 2016: Mitsubishi Motors said it expects to incur a loss of 145 billion yen, or $1.39 billion, this year as it faces the fallout from a scandal over falsified fuel-economy ratings.
Sources: Bloomberg, The New York Times