Mitsubishi plans $810m payout over mileage fiasco

Top: The Mitsubishi headquarters in Tokyo, Japan. Above, from left: Mitsubishi Motors president Tetsuro Aikawa, chief executive Mr Masuko and executive vice-president Ryugo Nakao apologising during a press conference in Tokyo yesterday. The company s
Above, from left: Mitsubishi Motors president Tetsuro Aikawa, chief executive Mr Masuko and executive vice-president Ryugo Nakao apologising during a press conference in Tokyo yesterday. The company said that it would compensate owners of nine models whose fuel efficiency data was found to have been manipulated.PHOTO: EUROPEAN PRESSPHOTO AGENCY

TOKYO • Japan's Mitsubishi Motors said it plans to give owners of four mini-vehicles close to US$1,000 each (S$1,350) in compensation for its overstating of mileage readings, part of reimbursement costs that will total at least US$600 million (S$810 million).

The mileage scandal, which the firm has blamed on pressure to deliver competitive readings and poor supervision of testing processes, has led to plans for Nissan Motor to take a one-third controlling stake in the embattled carmaker.

Mitsubishi chief executive Osamu Masuko told reporters that the planned compensation costs were not expected to hinder its talks with Nissan.

The carmaker admitted in April to deliberately overstating the fuel economy for some 625,000 mini- vehicles, including two models produced for Nissan.

Mini-vehicles, which have engines of up to 660cc, are sold mostly in Japan where they get preferential tax treatment. The 100,000 yen (S$1,295) payment per customer for the four models compares with analysts' estimates that ranged from 46,000 yen to 146,000 yen.


The Mitsubishi headquarters in Tokyo, Japan. PHOTO: AGENCE FRANCE-PRESSE

The payments do not to cover possible reimbursements for the loss of tax subsidies that are set to be announced at a later date.

In addition to those models, owners of five other vehicles where improper mileage calculations were used will receive around 30,000 yen. The compensation was much lower as the gap between the mileage advertised and actual mileage was much smaller, Mitsubishi said.

Japanese carmakers' mileage calculations have come under increased scrutiny in the wake of the scandal. An investigation by the transport ministry found that Suzuki Motor was also using wrong methods to calculate mileage for models going back to 2010.

Mitsubishi said compensation-related costs will result in a 50 billion yen charge in the current financial year to next March.

That comes on top of 15 billion yen it put aside in the past business year.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 18, 2016, with the headline 'Mitsubishi plans $810m payout over mileage fiasco'. Print Edition | Subscribe