Auto industry 2015 Mitsubishi iMiEV

Published on April 27th, 2016 | by Steve Hanley

Mitsubishi May Not Survive Fuel Economy Cheating Scandal

April 27th, 2016 by  
 

A week ago, Mitsubishi admitted it used fraudulent techniques to cheat on fuel economy tests. It said 625,000 vehicles were involved. All of them were Kei class cars intended for the Japanese home market. Kei cars tend to be microvans that pack as much interior volume into a small space.They enjoy several tax advantages under Japanese law.

2015 Mitsubishi iMiEV

In Japan’s crowded cities, maneuverability and ease of parking make them popular choices for families and small businesses. The engines in Kei class cars are limited to 660 cc. The closest most American will ever get to a Kei car is the Mitsubishi i-MiEV, which started life as a gasoline powered microcar in Japan 20 years ago.

Since the company admitted to its fraudulent ways, its market capitalization has been slashed by 50% and sales have gone nearly to zero. A report today in Automotive News suggests that Mitsubishi may not survive the crisis it has created. “Right now, understanding which cars and how many of them are at stake is the most important thing,” says Koji Endo, an analyst with Advanced Research Japan. After two press conferences in the span of a week, investors are “still waiting for a proper report.”

Things just got a lot worse for Mitsubishi. As reported in The Verge, the company now admits it has been fudging fuel economy numbers since 1991. That’s when Japanese regulators added a coasting test to its fuel economy test protocol. For reason that remain unclear, Mitsubishi never updated its testing procedures to comply with the new rules. As a result,  the results obtained were higher by about 2.3%.

Ryugo Nakao, the company’s vice president, said that regulations changed in 1991 to reflect the stop-and-go driving style of Japanese city dwellers. Despite the change, Mitsubishi continued to use the older testing methods. “We should have switched, but it turns out we didn’t,” Nakao told reporters, adding that aggressive internal targets may have been triggered the cheating. “Judging by what the investigations have shown so far, it seems there was pressure,” he said.

It is no coincidence that internal pressure may also have been a major factor in Volkswagen’s decision to brazenly ignore proper procedure and create software designed to falsely report on the emissions of its diesel engines. Hubris is a cruel mistress.

Like Volkswagen, Mitsubishi has created a special panel to delve into the murky depths of this mess. It is tasked with finding out who knew what and when they new it. In the meantime, the company has no idea how many vehicles are involved or how it will compensate those affected by its actions. Depending on how many more vehicles were improperly tested, the company “will get into a situation where its survival is difficult,” analyst Endo said.

How unfortunate would it be if this disaster prevents the Mitsubishi Outlander plug-in hybrid, which is setting sales records in Europe, from ever reaching customers in America?

 

 





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About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.



  • Rick Danger

    It seems Mitsubishi will do anything to keep from selling the Outlander PHEV in the US :/s

    • Steve Hanley

      Yup. They started planning to keep it away from US customers way back in 1991, apparently! ; – )

  • Kieran Delaney

    When will car companies learn, ICE cars are fast approaching the limits of what is possible for them – with regards to emissions targets.

    They should be diving right into E.V. production, and expediting the transition we all know is inevitable…

    • Steve Hanley

      You are correct. But the global market of automobiles is still about 40 million units a year or more. No one wants to leave all that business on the table.

      We are on the way to a fossil fuel free future, but we are a long way from getting there yet.

  • Marc P

    A difference of 2.3%… are you kidding me ??? Why are we even talking about this…??? Most manufacturer’s mileage estimates, even when they respect all testing norms are usually about 15 to 30% off the mark. Maybe there is something I’m missing here, but I don’t know why this is even an issue…???

    • Rick Danger

      IKR? What does that amount to? 1 MPG? On a 50 MPG car? A dog sticking his head out the window could cause that much, or more.
      I totally get why VW is in deep doo-doo, but this has to take the nit-picking prize.

    • Steve Hanley

      You and Rick Danger make valid points. 2.3% is insignificant. The issue is that, following on the heels of the VW fiasco, the deliberate nature of the non-compliance just makes it seem as though all manufacturers are lying scumbags.

      Mercedes has a reputation as being the worst when it comes to gaming the fuel economy tests. It routinely uses shaved tires inflated until they are as hard as bowling balls. Wipers are removed. Seams in the bodywork are covered with clear tape. Special brakes are fitted that retract the pads so they do not contact the rotors at all. By the time they are done, the cars are unsafe to be driven on public roads. But they get great mpg numbers!

      I feel bad for Mitsubishi. At least in the US, they have always been the bargain brand, unable to compete on anything but low price. They actually build some decent cars, but like Rodney Dangerfield, they get no respect.

  • roseland67

    Willfully conspiring to steal $$$ from your customers and then hide the facts for 25 years to keep the profit train rolling and not pay fines?
    Sounds like business as usual for a lot of global companies.

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