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Mitsubishi Motors to cover higher tax on vehicles in fuel-economy scandal

Mitsubishi Motors Corp. (MMC), under fire for manipulating fuel mileage test data for some of its models, has decided to fully compensate people who will have to pay extra tax because the levels of their cars' fuel efficiency will be downgraded, company sources said.

Under relevant legislation, in cases where fresh calculations confirm that cars recognized as environment-friendly vehicles do not meet the standards for tax breaks for such vehicles, owners will be required to pay extra taxes.

The amount of additional taxes MMC intends to foot could surpass 10 billion yen. Moreover, the company will be forced to pay tens of billions of yen to make up for extra fuel costs that customers were forced to shoulder as a result of fuel efficiency data manipulation.

The eK Wagon M-grade 2-wheel-drive, priced at about 1.19 million yen, is allowed the biggest tax break for an eco-friendly vehicle, being subject to tax cuts of 27,400 yen at the time of purchase alone. Many Mitsubishi models barely meet the tax break standards. Considering that MMC inflated the fuel efficiency of some of its vehicles by 5 to 10 percent by manipulating test data, the fuel-efficiency level of most of the vehicles concerned could be downgraded by one rank or two.

Nomura Securities Co. estimates additional taxes as a result of the downgrading of the fuel-efficiency level of the vehicles concerned at 10,000 to 20,000 yen per unit. Since data for 625,000 vehicles, including those produced for Nissan Motor Co., have been manipulated, MMC will be required to return 6.25 billion to 12.5 billion yen worth of tax breaks on behalf of its customers who have bought these vehicles, according to the brokerage.

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