Mitsubishi admits false fuel economy figures since 1991

Mitsubishi’s crisis over improper fuel consumption figures became dramatically worse on Tuesday as the company’s president has admitted that the flawed system of economy measurements has been in use for a quarter of a century.

Speaking at a press conference, President Tetsuro Aikawa said that "customers bought our cars based on incorrect fuel-economy data. I can't help but apologise." The admissions throws the consumption figures of almost all Mitsubishi models produced since 1991 into doubt, and the company admits that it now does not know how many vehicles are affected.

Last week, revelations surfaced that Mitsubishi had improperly assessed the fuel economy of around 630,000 cars all of which were sold in Asian markets. It was because of a technology sharing agreement with Nissan that the practice came to light – Nissan discovered irregularities in the way Mitsubishi was calculating its fuel economy numbers. Mitsubishi subsequently admitted to artificially skewing the aerodynamic and weight properties of the cars on the test, leading to around a ten per cent fuel economy improvement.

Last week’s admission was enough to wipe USD$1.2-billion from Mitsubishi’s corporate value, while today’s press conference has lead to another stock market rout. Mitsubishi’s market value has now fallen by around half, and with doubts swirling over just how many cars and how many international jurisdictions will be involved, it can be expected to fall further still.

The blow comes at a critical time for Mitsubishi. The company had really only recently been recovering from a series of scandals in the 1990s when it admitted to covering up recalls for serious safety defects. Recently, Mitsubishi had won significant plaudits for its Outlander PHEV plugin hybrid SUV, which had been praised for bringing low-carbon, part-electric motoring to the mass market at a relatively affordable price.

Japan’s Transport Minister Keiichi Ishii has announced a government task force to develop ways to prevent car makers from artificially ‘gaming’ economy and emissions tests, and there are unconfirmed reports that Mitsubishi will have pay back a significant amount of money to the Japanese government for tax breaks associated with the production and sale of economical compact cars.

Worse still, if it can be shown that Mitsubishi falsified fuel economy data in the US and Europe, it will be open to both fines and customer compensation. When both Ford and Kia were found guilty in the US of similar practices, both companies were hit with significant fines, as well as having to pay compensation to owners of their vehicles for fuel used over and above the vehicle's rated economy.

“This may be different from Volkswagen’s issue, but the market has become very sensitive to such kind of news,” Tokyo-based analyst Seiji Sugiura told Bloomberg News. “It may have a similar impact in terms of sales and the company’s reputation.”