Mitsubishi Motors is...how shall I say this.... in deep shit at the moment

Mitsubishi eK Wagon - A Kei Car involved in the emissions scandal. Eeeeeek!!!!!! Help!!!!

This was taken from the BBC.com website. I like websites like the BBC over something like Berita Harian or Utusan Malaysia for news of this sort as the source is usually credible (Just a cheap potshot there for the heck of it). 

Mitsubishi is in deep deep trouble. Two articles from here and here are posted below with my comments following:

Article #1 - States more models may be involved aside from the 600,000+units of small city cars (Kei Cars) involved.

The emissions scandal surrounding Mitsubishi Motors has widened as the firm said further models may be involved.

At a press conference, the company's president Tetsuro Aikawa said there may have been more car models that incorrectly measured fuel efficiency data than initially thought.

Meanwhile, US safety authorities have asked the company for more information.

Shares in the company have lost 40% of their value since the scandal emerged.

On Friday the stock closed at a record low of 504 yen.

So far, at least 600,000 Japanese vehicles have been affected in four models: Mitsubishi's ek Wagon and eK Space, as well as Nissan's Dayz and Dayz Roox, which Mitsubishi produces for Nissan.

"We believe there were four car models where we saw improper data breaches and we believe there were other car models that were not properly measured," said President Tesuro Aikawa.

"We are trying to sort this out."

The US National Highway Traffic Safety Administration told Reuters that it had asked the company for more information on vehicles sold in the US, but did not give details of the models.

Japanese authorities raided one of Mitsubishi's offices on Thursday and has demanded a full report by 27 April. On Friday the transport minister, Keiichi Ishii, raised the possibility of buying back the cars in question, as Volkswagen has agreed to do in the US.

"We would like encourage Mitsubishi Motors to conduct some serious soul searching for having tarnished the 'Japan Brand' that we have built up over these years," he added.

Article #2 - Explains how they rigged the data.

Mitsubishi Motors has admitted rigging data on some of its models' fuel efficiency. About 625,000 cars sold in Japan were affected, and the production of the relevant models has been halted.

The inaccurate tests involved 157,000 of its own cars - the ek Wagon and eK Space - as well as 468,000 vehicles produced for Nissan - the Dayz and Dayz Roox.

What has Mitsubishi done?

Car companies try to outdo each other on how fuel-efficient their models are. It impresses consumers because it's good for the environment, and it's easy on the wallet at the petrol station.

Fuel efficiency is tested by putting cars on what is essentially a treadmill where they run at a certain speed and fuel consumption is measured.

Mitsubishi appears to have overinflated the tyres, which gave better results on the fuel efficiency test.

Imagine inflating your bicycle tyres to the maximum and going up a hill, then letting half the air out and going up the same hill again. It's much harder. The extra muscle you need gives you an idea of the extra fuel that a car would burn through.

The controversy comes hard on the heels of the Volkswagen emissions scandal but is slightly different.

Volkswagen installed hidden software in its diesel models that detected when an official emissions test was being conducted. The software would then lower the emission so the test readings were more favourable.

So VW rigged the level of harmful gases coming from the exhaust pipe to make their cars look greener than they were.

Mitsubishi rigged the fuel consumption readings so their cars would appear to use less fuel than they actually did.

Mitsubishi: Cars, aircon, fridges and nuclear?

Mitsubishi is a somewhat confusing brand. There are a whole host of independent companies that share the name and trace their origins back to the original Mitsubishi company founded in 1870 in the shipping industry.

The current companies though are entirely independent from each other.

That means you will find the name in aviation, banking, air conditioners, the nuclear and chemical industry, optics and of course, cars.

Mitsubishi Motors is the sixth biggest car maker in Japan and number 16 worldwide.

Large-scale production got under way in the 1960s. In 1977 the company entered the European market and in 1982 the US market. Annual car production currently stands at 1,218,853 vehicles.

The current scandal is at Mitsubishi Motors. Any damage to the brand name though, might spill over to the other companies.

Has Mitsubishi been involved in any other scandals in the past?

It's not the first time that Mitsubishi Motors has been in the headlines for misconduct.

In the early 2000s, the company had to admit to lying about defects in its cars for decades.

Back then, an internal investigation found that the firm had covered up faults since 1977 and repaired cars secretly, instead of reporting the problems to the transport ministry.

The cover-up led to huge recalls, criminal charges against several employees and a cost of billions to the company.

Some observations

Yup. The shit has hit the fan for Mitsubishi even though most of the cars in question are Kei Cars or small city cars that are mainly for the Japanese market. Of course unlike the Volkswagen DieselGate scandal, Mitsubishi merely pumped up the tyres making the cars tested have less rolling resistance but way above specification. It is still considered as cheating and the Japanese authorities have actually said that it has spoilt the 'Japanese Brand' that the nation has built over the years. Wow. Of course, you know the Japanese are honourable people. And they've actually dragged another company - Nissan, into the picture. It isn't good at all.

Speaking about Mitsubishi Motors, they have actually been suffering from stiff competition and a lack of cashflow in the mid 2000s. They had even changed their focus on energy efficient vehicles - hybrids and electrics, city cars, crossovers, SUVs and Pickups rather than larger passenger sedans and hatchbacks. They have pulled back funding and development on their larger passenger cars. Note that the Mitsubishi Lancer is soldiering on after more than eight years of production and there is no larger D-segment cars like the Galant for the time being. No more iconic Lancer Evolution too and no real motorsport participation too. 

Now imagine a large chuck of your core business is declared as fraudulent. The Kei car division and their arrangement with Nissan is affected. Another separate business entity that you make cars for is affected. I think the people in Nissan are hopping mad too. 

So Mitsubishi Motors are in serious trouble even though the only thing they did was over inflate tyres. I am stating the obvious actually. They may be profitable being sixth largest in Japan and sixteenth in the world producing 1.2million cars per year. But how profitable can they be now that USD1.2Billion of their stock market value has been wiped out because of this? 

Imagine a few years into your recovery plan something like this happens. Can they recover? Will they come up with a new Lancer Evolution after this? Is it a minor hiccup or the last few nails in Mitsubishi's coffin? I cannot even guess at this point of time.

Share this post

Berlangganan update artikel terbaru via email: