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Mitsubishi Motors Falls on Japan Minicar Fuel Economy Tests

BloombergBloomberg 20/04/2016 Ma Jie and Yuki Hagiwara

Mitsubishi Motors is suspected of manipulating the load placed on the tires of four different models.© REUTERS/Mike Blake Mitsubishi Motors is suspected of manipulating the load placed on the tires of four different models. Mitsubishi Motors Corp. fell the most in more than a decade in Tokyo trading after saying it improperly handled fuel economy tests, making the Japanese carmaker the latest in the auto industry to come under scrutiny for regulatory misdeeds.

The shares plunged 15 percent, their biggest drop since July 2004, after the company issued a statement saying President Tetsuro Aikawa will brief reporters on the matter Wednesday. Mitsubishi Motors improperly handled fuel economy data involving its minicars in Japan, Yoshifumi Nagai, an official with the nation’s transport ministry, said by phone.

Mitsubishi Motors is suspected of manipulating the load placed on the tires of four different models in order to make their fuel economy performance appear better, Kyodo news reported, citing an unidentified person. The company’s manipulation of tests would further intensify scrutiny of the auto industry after Volkswagen AG’s admission last year that it rigged diesel models with software to meet U.S. emissions standards.

“This may be different from Volkswagen’s issue, but the market has become very sensitive to such kind of news,” Seiji Sugiura, an analyst at Tokai Tokyo Research Center, said by phone. “It may have a similar impact in terms of sales and the company’s reputation.”

The plunge in Mitsubishi Motors’s shares dropped its market value to 721 billion yen ($6.6 billion). An internal company probe revealed the mishandled testing involved four models including the eK minicar, Kyodo said.

Kai Inada, a spokesman for the automaker, said he couldn’t comment ahead of the briefing with Aikawa scheduled for 5 p.m. Japan time. Nissan Motor Co., which rebadges the eK model and sells the car as the Nissan DayZ in Japan, also declined to comment.

Mileage Misdeeds

Mitsubishi Motors’s disclosure risks doing further damage to consumers’ trust in car companies’ fuel economy claims. Hyundai Motor Co. and Kia Motors Corp. agreed to pay fines and forfeit emissions credits in late 2014 to settle U.S. claims they overstated mileage ratings. Ford lowered ratings for hybrid models in both 2014 and 2013.

The Japanese automaker has been seeking to restore confidence in its vehicles for more than a decade after a series of scandals more than a decade 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.

“It’s again bad for the company’s image,” Sugiura said. “It’s not the first time for Mitsubishi to have this kind of issue, and this definitely won’t help them rebuild their reputation.”

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