Mitsubishi says overstated mileage for more vehicle models

August 30, 2016 4:20 AM EDT

The company logo of Mitsubishi Motors is seen at its headquarters in Tokyo, Japan, August 2, 2016. REUTERS/Kim Kyung-Hoon/File Photo


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By Naomi Tajitsu

TOKYO (Reuters) - Mitsubishi Motors Corp said on Tuesday more of its vehicle models were involved in a mileage cheating scandal than initially stated, and that it would temporarily stop domestic sales of affected vehicles and compensate owners.

Earlier in the day, Japan's transport ministry said its investigation had shown the automaker had overstated the fuel economy for eight vehicles including the RVR, Pajero and Outlander SUV models, in addition to four minivehicles initially confirmed in April.

The latest announcement deals another reputational blow to Japan's sixth-largest automaker, which has been struggling to recover from the mileage scandal, which affected two minivehicle models produced for Nissan Motor Co Ltd.

The company's market value has tumbled since the scandal broke, and the ordeal prompted the company to seek financial assistance from Nissan, which agreed to buy a controlling one-third stake for $2.2 billion.

Mitsubishi said it had submitted new mileage readings to the ministry earlier in the day, after the ministry's probe had shown the fuel economy for some models was as much as 8.8 percent lower than stated in marketing catalogues.

"Both competition and compliance have tightened in the industry, but we had a lax approach to compliance and this was one of the factors which led to this issue," Mitsubishi Motors President Masuko Osamu said at a briefing.

"We need to change this."

Mitsubishi said it would pay compensation of up to 100,000 yen ($977) each to roughly 76,000 owners in Japan. This would amount to an extraordinary loss of 7 billion yen, although the company said the amount would be covered in the expected extraordinary loss of 205 billion yen for this year.

The automaker expects to post a net loss of $1.4 billion this year as the scandal will likely push it into the red for the first time in eight years due to lost sales, compensation costs to customers and payments to Nissan, along with dealers and suppliers.

An internal investigation by the automaker uncovered poor communication, slack governance and pressure on resource-starved engineers at the root of the automaker's problems.

Mitsubishi said it would comply with the ministry's demand for the automaker to stop selling the eight affected models while it corrects marketing materials, a process the ministry expected would take a few weeks.

Masuko said the latest issue would affect some overseas models and the company was considering possible compensation for affected owners, although vehicle numbers would be limited.

Mitsubishi has admitted to using unapproved methods to calculate mileage for 25 years, while it also used estimates, rather than data from actual tests, to calculate the fuel economy for its minivehicles.

Japan is Mitsubishi fifth-largest market, following markets including Asia ex-Japan, Europe and other regions. Its home country comprised roughly 10 percent of its vehicle sales during 2015/16.

($1 = 102.3700 yen)

(Reporting by Naomi Tajitsu; Additional reporting by Maki Shiraki; Editing by Christopher Cushing and Mark Potter)



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