Tokyo, Japan - Mitsubishi says Japanese orders for its cars have dropped by half since it revealed last week it cheated on fuel economy tests, intensifying concerns over its prospects given an already chequered history of scandals.
Chief operating officer Tetsuro Aikawa told reporters on Wednesday the company might approach its financial backers, which include other Mitsubishi Group companies, for assistance if necessary, but its financial position was strong and he saw no need for fresh funding for now.
The company said last week it had manipulated fuel-consumption test data for four domestic mini-vehicle models, including two it produced for Nissan. This week, it admitted that it used fuel consumption testing methods that didn't comply with Japanese regulations for as long as 25 years, far more than previously known. It has also said more models may have used those non-compliant tests.
Also read: Mitsubishi admits faking tests since 1991
Nevertherless, Aikwa denied Japanese media reports that he and company CEO Osamu Masuko planned to resign and take responsibility for the scandal, saying they were “based on speculation”.
“It's my responsibility and my mission to put the company on track to recovery,” he said. “Beyond that, I haven't had a chance to even consider the possibility of resigning.”
One of Japan's smaller carmakers by volume, Mitsubishi sold 1.048 million cars globally in the year to March, about a third of them in Asia, its biggest market. Aikawa said he had “absolutely no plans” to pull out of the automotive market.
Having admitted to understating the fuel consumption of its mini-vehicles, Mitsubishi may face a bill of close to $1 billion (R14.4 billion), according to Nomura analysts, to compensate drivers, re-pay government tax rebates and other payments - assuming a cost of ¥68 000 - ¥166 000 (R8800 - R21 500) per car, multiplied by the 625 000 cars affected so far.
Goldman Sachs has estimated a potential cost of as much as ¥200 000 (R26 000) per car.
Independent investigation
Mitsubishi has launched an independent investigation into its latest misconduct, which has revived memories of a scandal more than 15 years ago in which it admitted systematically covering up customer complaints for more than two decades.
Several years later, it had another setback when its truck affiliate admitted to concealing information about potentially dangerous defects, although it managed to secure a bailout that was part-funded by other Mitsubishi companies.
Senior officials in the Mitsubishi group say it would be difficult for them to help the car maker this time as they face their own financial squeeze, as well as calls to put shareholder returns above ties with the former Mitsubishi business empire.
Reuters