Japan government sets fines for vehicle mileage cheats

September 16, 2016 5:10 AM EDT

The logo of Mitsubishi Motors Corp is seen at its headquarters in Tokyo, Japan, April 21, 2016. REUTERS/Toru Hanai/File Photo


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TOKYO (Reuters) - Japan's transport ministry on Friday said automakers that submit incorrect fuel economy readings will be fined up to 300,000 yen ($2,941) per vehicle type in a bid to avoid a repeat of a mileage cheating scandal involving Mitsubishi Motors Corp <7211.T>.

The ministry implemented the fine a day after it said its third investigation into Mitsubishi showed the automaker continued to cherry pick data to overstate the mileage on its vehicles, ignoring ministry instructions on calculating readings.

"A fine of 300,000 yen may appear low... but it's part of a suite of penalties," said Takao Onoda, a recall director at the ministry.

Earlier this year, Mitsubishi was ordered to stop sales of four minivehicle models for around two months while it recalculated and submitted correct readings, and will likely stop sales of eight more models for at least a month to make similar corrections.

Onoda said "the impact of stopped sales would be significant for any automaker".

In addition to the new penalties, which also require offending automakers to stop sales of affected vehicles until mileage readings are corrected, the ministry introduced tighter mileage reporting guidelines across the industry.

Mitsubishi has admitted that it overstated the mileage on 12 of its models, including two minivehicles produced for Nissan Motor Co. <7201.T>

The fine announced on Friday will not be retroactively applied to the current Mitsubishi case. If it was, the automaker would have been fined for "dozens" of vehicle types, including various sub-versions of its models, a ministry official said.

The ministry has ordered Mitsubishi to submit by end-September additional measures to prevent such practices.

"This will be the last chance for Mitsubishi to transform its operational culture," Transport Minister Keiichi Ishii told reporters on Friday.

"If it fails this time, it could lose the auto industry's trust."

The ministry has criticized Mitsubishi for knowingly overstating the mileage on eight vehicle models after admitting in April that it had falsified the fuel economy for its mini vehicles.

The revelations that Mitsubishi repeatedly cheated on its mileage tests have dealt a reputational blow to the automaker. Since the cheating came to light in April, the company's market value has tumbled while its brand image has taken a beating.

The ordeal prompted Nissan to proposing buying a controlling one-third stake for $2.2 billion, and it is currently conducting due diligence on the deal.

($1 = 102.0000 yen)

(Reporting by Naomi Tajitsu; Editing by Richard Borsuk)



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