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Mitsubishi admits cheating with ‘kei’ cars fuel economy tests

POSTED BY Nigel Andretti ON 22 April 2016

JAPANESE car Maker Mitsubishi has admitted manipulating fuel economy test results for 625,000 Japanese domestic market ‘kei’ cars, the majority of which are sold by Nissan.

The car-maker said in a statement that fuel economy test data submitted to the Japanese ministry for land, infrastructure, transport and tourism had been tweaked to show a better result.

The minicars produced over the past three years were marketed as being as much as 10 per cent more fuel efficient than they were by understating how much air and tyre resistance they encounter out on the road.

In the statement, MMC acknowledged that it was Mitsubishi, not Nissan, that conducted the tests and submitted results to the government department.

In fact, Nissan found irregularities in the fuel consumption data during development of the next-generation versions of the mini cars.

“MMC conducted testing improperly to present better fuel consumption rates than the actual rates; and that the testing method was also different from the one required by Japanese law.

“We express deep apologies to all of our customers and stakeholders for this issue,” the statement read.

The models impacted are 157,000 examples of the tiny Mitsubishi eK Wagon and eK Space, as well as 468,000 examples of the Nissan Dayz and Dayz Roox, built in Japan by MMC between June 2013 and March 2016 for Nissan Motor Company.

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According to the statement, Nissan “requested MMC to review the running resistance value set by MMC during tests by MMC. In the course of our internal investigation upon this request, MMC learned of the improper conduct that MMC used the running resistance value for testing, which provided more advantageous fuel consumption rates than the actual rates.”

MMC says it has ceased production of both models, while it and Nissan have stopped sales of the cars in Japanese dealerships.

The car-maker admitted that during its internal investigation, it had discovered other models built by MMC for the Japanese market were tested using a method that differed from the one required by Japanese law.

MMC said that given the discovery, it would conduct an investigation into models sold in markets outside Japan.

According to Automotive News, MMC’s shares plunged by 15 per cent, more than they have fallen in more than a decade.

The publication reported that MMC’s president Tetsuro Aikawa (below) and two other key MMC executives bowed in apology at a media briefing in Tokyo discussing the scandal.

While the company said it’s unclear whether the flawed method enhanced or reduced fuel economy, further revelations that ratings have been exaggerated may overwhelm the carmaker, which has the lowest level of cash among its Japanese peers. The company required two rounds of bailouts more than a decade ago from Mitsubishi group companies to survive a scandal involving a cover-up of deadly defects.

“Since the cover-up of recalls in the 2000s, we have tried to reinforce compliance within the company, but a compliance sense still hasn’t penetrated to every employee,” Aikawa said. “I deeply understand how difficult it is to strengthen compliance, and I think this is a very shameful issue.”

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Mitsubishi Motors has been seeking to restore confidence in its vehicles after a series of scandals more than 10 years ago led the carmaker to seek multiple bailouts from Mitsubishi group companies. Mitsubishi Motors had covered up defects involving flawed axles that could lead wheels to detach.

The issue follows Volkswagen Group’s massive diesel emissions cheating scandal that has engulfed the German automotive giant since September last year.

Hyundai and Kia Motors agreed to pay fines and forfeit emissions credits in late 2014 to settle US claims they overstated mileage ratings. Ford also lowered ratings for hybrid models in 2014 and 2013.

The scandal also draws parallels to another crisis engulfing a Japanese auto company at the centre of the industry’s largest safety recall: troubled parts supplier Takata Corp. The company has admitted to manipulating air-bag inflator test data, prompting a rebuke from its biggest customer Honda Motor Co.

Takata is now seeking sponsors that would replenish its capital and allow it to emerge as a new company, a person familiar with the matter said this month.

Meanwhile, Volkswagen and US officials have reached a framework deal under which the automaker would offer to buy back almost 500,000 diesel cars that used sophisticated software to evade US emission rules.

The German automaker is expected to tell a federal judge in San Francisco that it has agreed to offer to buy back up to 500,000 2.0-liter diesel vehicles sold in the United States that exceeded legally allowable emission levels, the people said.

That would include versions of the Jetta sedan, the Golf compact and the Audi A3 sold since 2009, A Reuters report said.

The buyback offer does not apply to the bigger, 80,000 3.0-litre diesel vehicles also found to have exceeded US pollution limits, including Audi and Porsche SUV models, the people said.

VW in September admitted cheating on emissions tests for 11 million vehicles worldwide since 2009, damaging the automaker’s global image.

As part of the settlement with U.S. authorities including the Environmental Protection Agency, Volkswagen has also agreed to a compensation fund for owners, a third person briefed on the terms said.

The compensation fund is expected to represent more than US$1 billion (RM3.92 billion) on top of the cost of buying back the vehicles, but it is not clear how much each owner might receive, the person said.

Volkswagen may also offer to repair polluting diesel vehicles if US regulators approve the proposed fix, the sources said.

The framework deal with US officials was reached after lengthy talks in recent days at the Washington law office of Robert Mueller. The former FBI director is the court appointed mediator named to help settle more than 500 civil suits filed against VW. The talks, which continued over the week, included all the government agencies and lead plaintiffs attorneys suing GM.

Some elements of the settlement are still being worked out and details are not expected to be announced at a court hearing on Thursday (local time), the people briefed on the matter said. The final deal could still change before it is officially announced, they said.

A final settlement is also expected to include an environmental remediation fund to address excess pollution emitted by the US vehicles since 2009.

It is not clear if the deal will resolve the US Justice Department’s civil suit filed in January against VW or if VW will agree to pay a civil penalty. VW also faces ongoing criminal investigations by the Justice Department and other prosecutors around the world.

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