Japanese Officials Raid Mitsubishi Plants Following Fuel Efficiency Scandal

Mitsubishi Motors

Mitsubishi Motors manipulated fuel efficiency information to boost publicized mileage rates.

Japan’s Transport Ministry raided Mitsubishi’s Okazaki plant on Thursday to shed more light on the extent of the fuel economy testing fraud that the company admitted to. The plant conducts manufacturing and research activities and is Mitsubishi’s second largest site in Japan.

The raid was conducted despite the government giving Mitsubishi until April 27 to give a full report on the inaccuracy of their testing. The Transport Ministry has been clear to signal that it is not taking the matter sitting down.

The government says that it considers the situation to be very serious. “Based on the raid, and a report from the company, we would like to reveal the extent of the inaccuracies as soon as possible,” Japanese Cabinet Secretary and spokesman Yoshihide Suga declared. “We will deal with the situation in a strict manner and would like to make sure of the safety of cars.”

Another raid was also conducted on Mitsubishi’s research center in Nagoya. A Mitsubishi spokeswoman said that the raids are expected to last until Friday. These investigations would allow the government to determine what and how much the proper punishment for Mitsubishi would be.

Mitsubishi had admitted to manipulating fuel efficiency information to increase publicized mileage rates for about 625,000 mini-cars it produced. The car models involved are ek Wagon, ek Space, Dayz and Dayz Roox, the last two of which are manufactured for Nissan. Mini-cars are popular in Japan and comprised about 38% of auto sales last year.

The Nissan models account for 468,000 of the cars compromised. Nissan was actually the one who pointed out the inaccuracy of the fuel efficiency of the cars when it tested the models Mitsubishi had sold to it. Nissan tested current Mitsubishi models in November last year and found discrepancies. This led to a joint probe in December, with results coming out in February this year. Despite this, Nissan expressed that it currently still does not have any plans to revoke partnership with Mitsubishi. The two companies are already discussing compensation to Nissan.

Mitsubishi’s Executive Vice President Ryugo Nakao said that the manipulation of the data probably came from pressure for employees to meet internal mileage set by the company. But he explained that the internal targets are based on the presentation of the chief product developer approved by top management. “We’re talking about a world of competition. The development team should aim high and set challenging targets, but that doesn’t mean the management is pushing for targets that are not backed by technological evidence.”

Mitsubishi is Japan’s 6th largest car manufacturer. The scandal has seen $2.5 billion or around a third of the company’s value wiped out. This has prompted the Tokyo Stock Exchange to halt trading of the stock. The current closing price is now at 583 yen.

JP Morgan auto analyst, Akira Kishimoto, says that the cost to Mitsubishi would comprise of payment to consumers, payments to Nissan and part replacements that could total up to 50 billion Yen or $450 million.

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