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Mitsubishi Motors likely to lose customers over fuel economy data manipulation

Mitsubishi Motors President Tetsuro Aikawais seen at a news conference at the Land, Infrastructure, Transport and Tourism Ministry in Tokyo's Kasumigaseki district on April 20, 2016. (Mainichi)

Mitsubishi Motors Corp., which plunged into a managerial crisis in the first half of the 2000s due to its massive cover-ups of safety records and customer complaints, has again come under fire for serious irregularities, with the manipulation of fuel efficiency data.

The latest scandal highlights the automaker's poor awareness of legal compliance. Since it involves Mitsubishi Motors' mini-vehicles, which account for a major portion of the company's domestic sales, it is expected to inflict huge damage on the company's sales and business performance. But it is hard to predict how much impact the scandal will have on the automaker's overall management.

"We have been placing top priority on legal compliance since 2000 (when a recall cover-up came to light), but I can see how difficult it is to do so. I feel chagrined and ashamed," Mitsubishi Motors President Tetsuro Aikawa said with an agonized expression at a news conference in Tokyo on April 20.

Mitsubishi Motors' management was thrown into turmoil after massive recall cover-ups came to light in 2000 and 2004. Three Mitsubishi group firms -- Mitsubishi Heavy Industries Ltd., Mitsubishi Corp., and the Bank of Tokyo-Mitsubishi UFJ Ltd. -- invested huge amounts of funds in Mitsubishi Motors to help rehabilitate the ailing automaker. At that time, Osamu Masuko from Mitsubishi Corp. assumed the position of president at Mitsubishi Motors. As a result of closing money-losing factories and other facilities overseas under a rehabilitation program, Mitsubishi Motors saw signs of resolving cumulative losses to turn the company around in 2013.

In June 2014, long-term employee Aikawa replaced Masuko, who had served as the president of Mitsubishi Motors for nine years. At that time, a senior Mitsubishi Motors official said, "The stage has changed from reconstruction to a rolling attack."

Because the models mired in the latest irregularities do not have any safety problems, it is unlikely they will be subject to recalls. But an official at one major automaker said, "It is certain that users will stay away (from buying Mitsubishi vehicles again)."

Mitsubishi Motors will suspend the production and sale of two popular models. It will also need to compensate users for the irregularities. If the models concerned prove not to be subject to tax breaks for fuel-efficient vehicles and the irregularities have reduced tax revenues of local and central governments, the automaker says it will pay compensation for any tax revenue losses.

The latest scandal will therefore greatly affect not only the automaker's business performance but also its image. The company, which has been aiming for stronger sales in Southeast Asia, says it will investigate models produced for overseas markets, raising the possibility of the scandal affecting models sold overseas.

Competition in the auto industry is severe and Mitsubishi Motors is running far behind other car makers such as Toyota Motor Corp. and Honda Motor Co. in unit sales. Mitsubishi Motors also lags behind such automakers as Toyota in developing next generation vehicles that hold the key to the survival of automakers. Mitsubishi Motors is likely to see a decrease in its net profit in the business year ending in March 2016 due in part to a drop in sales in Russia, which continues to see its economy deteriorating.

The latest irregularities could develop into a problem in such a way as to shake up Mitsubishi Motors' management, but president Aikawa said over and over again with a distressed expression on his face, "At this stage, we cannot foresee the impact on our business performance."

Mitsubishi Motors President Tetsuro Aikawa, left, bows his head at a news conference at the Land, Infrastructure, Transport and Tourism Ministry in Tokyo's Kasumigaseki district on April 20, 2016. (Mainichi)

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