Mitsubishi Motors says cheated on mileage tests for 25 years

Mitsubishi Motors says cheated on mileage tests for 25 years
TOKYO | By Naomi Tajitsu


Japanese car maker Mitsubishi Motors Corp (7211.T) said on Tuesday it used fuel economy testing methods that did not comply with Japanese regulations for 25 years, much longer than previously known.

It said aggressive internal targets may have put pressure on employees to overstate the fuel economy of its vehicles, and would set up an external committee to investigate the matter.

Japan's sixth-largest automaker has lost half its market value - some $3.9 billion - since it admitted last week to manipulating test data for four domestic mini-vehicle models, including two it produced for Nissan Motor Co (7201.T).

It has also said that more models may have used tests non-compliant with Japanese standards, prompting concern about ballooning potential compensation costs and fines. The U.S auto safety regulator is also seeking information, while Japanese authorities have raided one of the company's research and development facilities.

Mitsubishi Motors said it used appropriate testing methods on vehicles sold in the United States, and had no indications of data manipulation in vehicles sold in other overseas markets.

It said it had been submitting non-compliant data to Japan's transport ministry since 1991. It previously said such non-compliance went back only to at least 2002.

Ryugo Nakao, executive vice president, said Japanese regulations changed in 1991 to require testing methods to better reflect stop-and-go urban driving, but Mitsubishi Motors did not follow that rule change. "We should have switched, but it turns out we didn't," he said.

A committee of external experts will report the results of its investigation in three months, he said.

Nakao added that repeatedly raised internal fuel economy targets during the development of the affected models may have contributed to the cheating. "Judging by what the investigations have shown so far, it seems there was pressure," he told reporters.

Another executive, Koji Yokomaku, said Mitsubishi Motors raised its fuel economy targets five times in two years while developing the mini-vehicles, reaching 29.2 km (18.14 miles) per liter from an initial target of 26.4 kms per liter.

Chief Operating Officer Tetsuro Aikawa, who was on the engineering team that developed the original eK Wagon, said he had no idea the fuel economy readings were being falsified. "I was totally unaware this was happening," he said. "It's a problem that this issue didn't come up until now."

FASTER TEST

The automaker has said it compiled data for fuel economy tests using U.S. standards, where higher-speed, highway driving is common, rather than Japanese standards, where more prevalent city driving commonly consumes more fuel. Mitsubishi Motors said the U.S. testing method may have been used as it is shorter and would save time.

Japan’s transport ministry said it found irregularities with the way Mitsubishi Motors compiled mileage data on models in addition to the four affected mini-vehicles. It said it wanted an explanation for this from the company by May 11.

The ministry earlier said it set up a task force to examine how other automakers submit fuel economy data. Last week, it ordered other domestic automakers to submit fuel economy test data by May 18.

The misconduct has revived memories of a scandal more than 15 years ago in which Mitsubishi Motors admitted systematically covering up customer complaints for more than two decades, bringing the company close to collapse. It was bailed out by other Mitsubishi Group companies.

Senior officials at other Mitsubishi firms say it would be difficult for them to help the car maker this time, if needed, as they face their own financial squeeze, as well as calls to put shareholder returns above ties with the former Mitsubishi business empire.

Takehiko Kakiuchi, President and CEO of trading group Mitsubishi Corp (8058.T), told Reuters he as "aghast" at the scandal engulfing its sister company.

http://www.reuters.com/article/us-mitsubishimotors-regulations-idUSKCN0XN0DV?il=0