Mitsubishi Motors extends losses on fuel-cheating scandal



Mitsubishi Motors shares nosedived for a third session Friday morning, tumbling as much as 16 percent after the Japanese automaker’s shock admission that it cheated on fuel-efficiency tests.

Panic-selling on Wednesday and Thursday — when the government raided one of its research centres — had already sent the stock tumbling by a third, wiping about $2.5 billion off its market value.

At the break Friday, the firm was down 13.20 percent at 506 yen ($4.60), having crashed 16 percent at one point.

The rout marks Mitsubishi’s worst three-day decline since its 1988 listing, Bloomberg News reported.

The scandal came as German auto giant Volkswagen struggles to restore its badly dented reputation after revelations of emissions rigging.

On Wednesday, Mitsubishi admitted that unnamed employees rigged tests to make some of its cars seem more fuel-efficient than they were in reality.

The company said it would halt production and sales of the affected models — mini-cars sold in Japan including some made for rival Nissan — and warned that the number of cars involved in the scandal would likely rise, as it looks to vehicles sold overseas.

Mini-cars, or kei-cars, are small vehicles with 660cc gasoline engines that are hugely popular in the Japanese market, although they have found little success abroad.

“Certainly it is a blow,” Christopher Richter, a Tokyo-based auto analyst at brokerage CLSA, told AFP.

“The vast majority of (Mitsubishi’s) business in Japan has become selling mini-vehicles to Nissan because the market share of their own branded products after the scandal in the 2000s withered down to practically nothing.”

– ‘Regrettable’ –
More than a decade ago, cash-strapped Mitsubishi teetered on the edge of bankruptcy after slumping sales caused by a series of defect cover-up scandals.

The latest case has raised questions about whether efforts to change the Mitsubishi’s corporate culture since the earlier spate of scandals had sunk in.

Experts have said the firm prized unwavering employee loyalty even more than many Japanese companies, and that may have been a key issue behind the rigged tests.

Japan’s transport minister Keiichi Ishii echoed those concerns Friday.

“I can’t help but have doubt about the company’s basic attitude towards compliance. This is extremely regrettable,” he told reporters Friday.

Ishii also said the government will review testing done by domestic automakers as it awaits the results of an internal probe by Mitsubishi, due next week.

The scandal has raised questions about Mitsubishi’s future, as it faces the prospect of huge lawsuits and fines.

But Richter at CLSA said it was unlikely a beaten-down Mitsubishi would be snapped up by one of its bigger rivals, such as Toyota or Nissan.

The automaker was born from the vast Mitsubishi group of companies, which are still loosely connected through cross-shareholdings and historical ties.

“In the past, consolidation has been talked about for Mitsubishi or streamlining the businesses, (but) there has been a lot of resistance from other companies within the Mitsubishi group,” Richter said.

“They have to be factored in any calculation about consolidation.”

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