The end of Mitsubishi? Fuel economy cheating scandal, company on brink of collapse

[Achtung!]

The recent fuel economy cheating scandal along with a fading possibility of Mitsubishi clinching the deal with Australia regarding the $50 billion USD submarine deal, it looks like Mitsubishi may be on the brink of collapse.

Mitsubishi is a conglomerate similar to Toyota Group, Samsung Group, LG Corp., Hyundai Group, etc. These conglomerates are termed 'zaibatsu' in Japanese.

Investors have reacted unexpectedly massively to the recent fuel economy scandal and this has wiped off nearly 50% of Mitsubishi's market value.

Mitsubishi Motor's peak days were long gone by 2004 and it seems like things will hit rock bottom soon.

The Mitsubishi Mileage Scandal Is Even Worse Than People Thought

U.S. regulators are now involved, and there are doubts about the company’s i-MiEV electric car.

Mitsubishi Motors’s fuel economy scandal broadened on Friday as U.S. auto safety authorities said they were seeking information, and media reported that the automaker had submitted misleading data on at least one more model than disclosed and likely several others.

Japan’s sixth-largest automaker admitted this week it had overstated the fuel efficiency of 625,000 cars, wiping off around 40% of its market value, or $3.2 billion in three days.

The revelations have also prompted Japanese authorities to raid one of its research and development facilities while Standard & Poor’s warned its rating could be lowered further into speculative grade territory.

Adding to fears that the scandal will lead to ballooning compensation costs and fines, top Japanese government officials said Mitsubishi MMTOF -7.66% may have to reimburse consumers and the government if investigations find the vehicles were not as fuel-efficient as claimed.

“This is a serious problem that could lead to the loss of trust in our country’s auto industry,” Transport Minister Keiichi Ishii told a news conference on Friday.

He said he wanted Mitsubishi to look at the possibility of buying back the cars in question, while another minister was quoted by media as saying the government could ask it to pay for any electric car subsidies granted to consumers.

Domestic media reported that Mitsubishi had submitted misleading mileage data on its i-MiEV electric car, which is also sold overseas. Previously disclosed models are marketed specifically for the Japanese market and Mitsubishi has admitted to manipulating their fuel economy readings.

The Sankei newspaper also said the automaker is also suspected of using non-Japanese test methodology on its RVR, Outlander, Pajero and Minicab MiEV models.

Mitsubishi has said there may be models other than those disclosed that violate Japanese regulations. A spokesman said on Friday the company was still looking into those models.

“A lot of the potential impact on Mitsubishi is pending whether they find out that something was wrong in cars sold in the U.S.,” said Christopher Richter, an analyst at CLSA.

A Plethora of Scandals

An official at the U.S. National Highway Traffic Safety Administration told Reuters the regulator had asked Mitsubishi for information on vehicles sold in the United States.

He declined to comment on which models it had requested information on, or whether it had requested data from other automakers.

The misconduct has revived memories of a scandal more than 15 years ago in which Mitsubishi admitted to systematically covering up customer complaints for more than 20 years, bringing the company close to collapse.

The industry is also facing an ongoing massive recall of air bag inflators made by Japan’s Takata Corp, which have been linked to 11 deaths and more than 100 injuries, mainly in the United States.

Emissions cheating scandals have also erupted. Volkswagen AG VLKPF -1.36% announced a sweeping U.S. deal on Thursday to buy back or potentially fix about a half million cars and set up environmental and consumer compensation funds after it used software to conceal the level of toxic emissions.

This week alone, PSA Peugeot Citroen PUGOY -0.19% was raided by France’s anti-fraud investigators as part of ongoing probes on pollutants in the industry. Peugeot says its vehicles are compliant. Daimler AG DDAIF -4.87% also said it opened an internal emissions probe at the request of the U.S. Justice Department.

Japan’s Transport Ministry has ordered Mitsubishi to submit a full report on its test data within a week, and for other domestic automakers to submit fuel economy test data by May 18.

Mitsubishi, which sells over 1 million cars annually, has said it expects to post operating income of 125 billion yen ($1.1 billion) for the year just ended. It reports earnings next Wednesday.

Mitsubishi Scandal Isn’t Like Volkswagen’s, Stocks Show

Mitsubishi went from being one of the most popular car brands in the US to almost non-existent.

http://www.thetruthaboutcars.com/20...ishi-gradually-recovers-shuts-u-s-production/

Look at the comments from JapanToday from people who actually live in Japan. They say that even a Japanese engineer at Mitsubishi Heavy Industries would never buy a Mitsubishi car and that he only bought one because he was forced to under the company. And "Daimler backed out of its relation with Mitsubishi because they recognized it was a partner that could well tarnish their image."

http://www.japantoday.com/category/...dal-widens-as-u-s-regulator-seeks-information

 

[michal1980]

Mitsubishi went from being one of the most popular car brands in the US to almost non-existent.

That's just not true, near its peak they had 2% of the us market.

http://articles.chicagotribune.com/...bishi-mirage-outlander-sport-mitsubishi-motor

 

[Zivic]

That's just not true, near its peak they had 2% of the us market.

http://articles.chicagotribune.com/...bishi-mirage-outlander-sport-mitsubishi-motor

but it had the evo... and in 2004, that car was pretty special

 

[Zorba]

Interesting. Mitsubishi Heavy makes the wings for the Boeing 787.

 

[Yuriman]

Mitsubishi Motors has admitted falsifying fuel economy data for more than 600,000 vehicles sold in Japan.

Tyre pressure figures were falsified by employees to flatter mileage rates, the company said. Almost 470,000 vehicles that Mitsubishi made for Nissan were affected and the issue was uncovered after Nissan found inconsistencies.

The announcement sent shares in Mitsubishi down more than 15% in Tokyo.

[...] It seems Mitsubishi deliberately used the wrong tyre pressures, as a way of cheating the treadmill test to get more miles per gallon out of the car. Artificially over-inflated tyres give better results.

http://jalopnik.com/mitsubishi-admits-to-cheating-on-fuel-economy-tests-and-1772004418

Funny. Want 10-15% better fuel economy? Air up your tires. You can cheat the EPA figures too.

 

[videogames101]

http://jalopnik.com/mitsubishi-admits-to-cheating-on-fuel-economy-tests-and-1772004418

Funny. Want 10-15% better fuel economy? Air up your tires. You can cheat the EPA figures too.

QFT

"Artificially over-inflated tyres"? LMAO

 

[cyclohexane]

Eh, Mitsubishi is a basically a government owned company. Makes everything from mechanical pencils, to tanks, and the "zero" fighter planes that the Japanese used to bomb Pearl Harbor. They will not go out of business.

 

[Achtung!]

Eh, Mitsubishi is a basically a government owned company. Makes everything from mechanical pencils, to tanks, and the "zero" fighter planes that the Japanese used to bomb Pearl Harbor. They will not go out of business.

You're forgetting that the Japanese government's debt is at nearly 300% of Japan's GDP, the highest in the world.

Financing Mitsubishi's crisis would only worsen their debt situation.

 

[gorcorps]

Eh, Mitsubishi is a basically a government owned company. Makes everything from mechanical pencils, to tanks, and the "zero" fighter planes that the Japanese used to bomb Pearl Harbor. They will not go out of business.

Mitsubishi as a company won't, but Mitsubishi motors might. They plan to shut down their only remaining US facility this year. The company as a whole will be fine, but they could stop making cars and nobody would bat an eye.

 

[cbrsurfr]

MMOA is not long for this world. MiEV was a disaster. They can't sell their factory, especially with the union ties. Killed off the Evo. Their engines are showing their age. I give them a couple years at best in the US.

 

[Midwayman]

I've thought they were a shady company for years. This latest news just cements the deal. Clearly they didn't learn from their previous scandal. I'm just sad I didn't short the company.

 

[Subyman]

I didn't understand why they went away from their sporty image by dropping the Evo and Eclipse. I haven't even thought about them in years.

 

[tracerbullet]

My wife has an Outlander Sport, it's a decent little SUV especially for the price. I liked my old Eclipse too. Will be sad if the company folds but so be it.

Funny that the Mitsubishi dealership used to be a Saturn dealership. The techs can work on both. Maybe they'll end up learning a 3rd car.

 

[angminas]

Too bad. Multiple sources suggest the Mirage actually gets notably better mileage than the EPA estimate.

 

[KentState]

Have a lot of fond memories of the first gen AWD Eclipse Turbo/Eagle Talon Tsi. Buddy and I both had one right out of highschool.

 

[Bubbleawsome]

Huh. I was looking at a lancer EVO and this will probably drop their price, but repairs will cost more if they go out of business.

 

[mxnerd]

My dad insists that Japanese don't lie and I always have a different opinion.

They do lie and lie big, usually at corporate level.

 

[hey there]

OK, so there's something you need to know. The tests are unrealistic.
Impact test requirements have made cars heavier, emissions regs have become tighter. To comply, cars would end up horribly compromised and cost dramatically more.

Basically, with the exception of Tesler, they've all been cheating, in some way, to some degree.

Do not think there hasn't been cheating on the impact tests.


And FYI Japan's national debt is around 229% of GDP, which is pretty high but it's not three times GDP.
The US's national debt is around 121% of GDP, which is also fairly high.

 

[dannydiscus]

Have a lot of fond memories of the first gen AWD Eclipse Turbo/Eagle Talon Tsi. Buddy and I both had one right out of highschool.

Yup, some damn nice/fun cars.

 

[Achtung!]

Mitsubishi cheating scandal now involves ALL models sold in Japan:

http://www.nytimes.com/2016/05/12/b...-cheating-scandal-expands-to-more-models.html

Mitsubishi is already a diminished brand, especially at home. Its market share in Japan has shriveled since a scandal in the 2000s in which officials admitted hiding reports of dangerous vehicle defects for decades.

Today, Mitsubishi’s favored markets are in areas like Southeast Asia and Russia. It sells only about 10 percent of its cars in Japan.

Mitsubishi cars are unpopular in Japan due to the fact that Mitsubishi is known for making unreliable/dangerous cars.

 

[NutBucket]

Basically, with the exception of Tesler, they've all been cheating, in some way, to some degree.

That's a pretty bold claim to make without much evidence junior.....

 

[Achtung!]

OK, so there's something you need to know. The tests are unrealistic.
Impact test requirements have made cars heavier, emissions regs have become tighter. To comply, cars would end up horribly compromised and cost dramatically more.

Basically, with the exception of Tesler, they've all been cheating, in some way, to some degree.

Do not think there hasn't been cheating on the impact tests.


And FYI Japan's national debt is around 229% of GDP, which is pretty high but it's not three times GDP.
The US's national debt is around 121% of GDP, which is also fairly high.

Firstly, it's Tesla, not Tesler.

And where is your evidence that all automakers have been cheating to some degree?

 

[Sheep221]

Have a lot of fond memories of the first gen AWD Eclipse Turbo/Eagle Talon Tsi. Buddy and I both had one right out of highschool.

They definitely made dozens of good cars in the past. I think they dropped the evo and colt due to ongoing efforts to become SUV/Offroad automaker only.

 

[Meghan54]

The US's national debt is around 121% of GDP, which is also fairly high.

FYI, it's last reported at 104%.

 

[Achtung!]

They definitely made dozens of good cars in the past. I think they dropped the evo and colt due to ongoing efforts to become SUV/Offroad automaker only.

Even the Japanese think Mitsubishi cars are trash:

http://www.nytimes.com/2016/05/12/b...-cheating-scandal-expands-to-more-models.html

Mitsubishi is already a diminished brand, especially at home. Its market share in Japan has shriveled since a scandal in the 2000s in which officials admitted hiding reports of dangerous vehicle defects for decades.

Today, Mitsubishi’s favored markets are in areas like Southeast Asia and Russia. It sells only about 10 percent of its cars in Japan.

Japanese people are known to be patriotic. However Mitsubishi is not one of those things.