Mitsubishi, Denso under probe in Germany over emissions fraud claims

BERLIN • Mitsubishi Motors and Denso had their German operations probed by investigators over allegations that they may be involved in equipping diesel engines with devices to cheat on emissions tests.

Police and prosecutors began investigating 10 sites across Germany, Ms Nadja Niesen, a spokesman for Frankfurt prosecutors, said in an e-mailed statement.

A spokesman for Denso, an auto parts supplier, confirmed that it had been raided in Germany and is cooperating with the authorities.

Three of the locations raided belong to supplier Continental, which is a witness in the probe and is cooperating fully, according to an e-mailed statement from the company.

Shares in Mitsubishi Motors fell by up to 7.1 per cent, while Denso declined as much as 3.1 per cent as of midday in Tokyo yesterday following the news.

The auto industry has been rattled by allegations that software is being used in diesel engines to cheat on emissions tests. The scandal started almost five years ago when US regulators disclosed they were probing Volkswagen over the issue. Investigations have since mushroomed across the globe.

"There's suspicion that the engines were equipped with a defeat device set up to meet emissions limits during testing but not in real driving conditions," Ms Niesen said. "The use of such a device is prohibited under EU law."

Bloomberg Intelligence analyst Tatsuo Yoshida said a possible recall could involve up to 400,000 vehicles and cost as much as 30 billion yen (S$368 million) to 40 billion yen, including legal costs.

Mitsubishi spokesman Tetsuji Inoue said the company is still gathering information while cooperating with the authorities.

The authorities are looking at Mitsubishi's 1.6-litre and 2.2-litre four-cylinder Euro 5 and Euro 6 diesel engines, asking drivers who acquired cars with the motors since 2014 to contact the police.

According to prosecutors, drivers may have been defrauded because vehicles with defeat devices risk losing the necessary licence to be used on the streets.

Mitsubishi Motors is part of a global automaking alliance with Nissan Motor and Renault, which was thrown into turmoil in November 2018 when its then chairman Carlos Ghosn was arrested in Japan on allegations of financial wrongdoing. Ghosn, who has denied the charges, was freed on bail after spending almost 130 days in jail. He recently fled to Lebanon from Japan.

Mitsubishi has a relatively small presence in the European market. New car registrations rose 3.4 per cent to 138,003 vehicles in the region last year, according to the European Automobile Manufacturers' Association. This translates into a market share of 0.9 per cent, compared with 5 per cent for Japanese peer Toyota Motor.

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A version of this article appeared in the print edition of The Straits Times on January 23, 2020, with the headline Mitsubishi, Denso under probe in Germany over emissions fraud claims. Subscribe