Risk & Compliance

Mitsubishi’s Mileage Scandal Costs Reach $624M

The latest tranche of $480 million will go toward compensating owners of four minicar models and five larger models.
Katie Kuehner-HebertJune 17, 2016

Mitsubishi Motors expects to book an extraordinary loss of about 50 billion yen ($480 million) in the current fiscal year due to compensation payments to customers for its overstatement of mileage readings.

Drivers of four minicar models for which Mitsubishi manipulated fuel-efficiency numbers will each receive 100,000 yen ($960) to cover extra gasoline and other costs they incurred. The carmaker will also pay 30,000 yen to every owner of five larger models such as the Pajero SUV.

The payments are on top of about 15 billion yen that Mitsubishi set aside in fiscal 2015 for the same purpose.

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As Reuters reports, Mitsubishi admitted in April to deliberately overstating the fuel economy for some 625,000 minivehicles including two models produced for Nissan. Minivehicles, which have engines of up to 660cc, are sold mostly in Japan where they get preferential tax treatment.

An internal probe found the actual mileage of the affected models was 5% to 15% lower than what Mitsubishi advertised. Japan’s transport ministry is conducting its own investigation of the vehicles and is expected to submit a report in the next few weeks

Analysts had estimated owners of the four minicar models — eK Wagon, eK Space, Dayz and Dayz Roox — would receive from 46,000 yen to 146,000 yen in compensation.

“In addition to compensating drivers for gas bills that are higher than they should have been, the payouts are to cover the difference between what owners of the affected vehicles had to pay in automobile weight taxes when they brought their cars in for compulsory inspections and what they would have paid had the cars been running as efficiently as the emissions data said they would,” Nikkei Asian Review said.

The fuel efficiency scandal inspired Mitsubishi’s move last month to sell a controlling stake to Nissan for $2.2 billion. The company is hoping the deal will restore confidence in its brand.

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