Mitsubishi admits it cheated on fuel mileage tests for 25 years

Japanese carmaker has lost half of its market value, $3.9bn, since it said fuel-economy readings were being falsified

The Japanese carmaker Mitsubishi Motors has admitted using fuel-economy testing methods that did not comply with Japanese regulations for 25 years, much longer than previously known.

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

Japans sixth-largest carmaker has lost half its market value some $3.9bn (2.7bn) since it admitted last week to manipulating test data for four domestic mini-vehicle models, including two it produced for Nissan.

It has also said that more models may have used tests that did not comply with Japanese standards, prompting concern about ballooning potential compensation costs and fines. The US vehicle safety regulator is also seeking information, while Japanese authorities have raided one of the companys research and development facilities.

Mitsubishi 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 Japans 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 did not follow that rule change. We should have switched, but it turns out we didnt, 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 18.14 miles (29.2km) a litre from an initial target of 16.4 miles.

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I was totally unaware this was happening, Mitsubishis president, Tetsuro Aikawa, told the press. Photograph: Toshifumi Kitamura/AFP/Getty

Tetsuro Aikawa, chief operating officer, who was on the engineering team that developed the original eK Wagon, said he had no idea that the fuel-economy readings were being falsified. I was totally unaware this was happening, he said. Its a problem that this issue didnt come up until now.

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

Japans transport ministry said it found irregularities with the way Mitsubishi 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 11 May.

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

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 carmaker 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 chief executive of Mitsubishi Corporation, told Reuters he was aghast at the scandal engulfing its sister company.

Read more: http://www.theguardian.com/business/2016/apr/26/mitsubishi-admits-cheated-fuel-mileage-tests-25-years-nissan