The Mitsubishi Fuel Economy Scandal

1. What's the "Scandal"?
2. Why'd Mitsubishi Do This?
3. What Are the Consequences?

While most of the attention has been focused on the Volkswagen Emissions Scandal of last year, Mitsubishi also has a scandal of its known.

Commonly referred to as the Mitsubishi Fuel Economy Scandal, it's similar to the issues facing Volkswagen, with the difference being that it's only affected vehicles that have been sold in Japan.

What's the "Scandal"?

Just like with Volkswagen, Mitsubishi's scandal, after it was originally revealed in late April of this year, grew progressively worse in the following months as more information was discovered. Mitsubishi has admitted to providing misleading fuel-economy data on 20 models of its vehicles that were sold in Japan over the past 10 years.

The company, Mitsubishi Motors, created various testing methods that deviated and were not in compliance with Japanese regulations, and rather than using actual test data to determine the fuel economy, utilized desktop calculations instead.

While Mitsubishi has only stated the models that were affected during the past 10 years, as they only keep records for that long, the origins of the scandal can be traced back to 1991. That's when they created their own high-speed coasting test that provided inflated numbers. These numbers were based on tire-rolling and air resistance calculations, which allowed Mitsubishi to proclaim a greater fuel economy for their vehicles than they actually had.

Some of the known models affected are the eK Wagon, the eK Space, the Dayz, and the Dayz Roox.

Why'd Mitsubishi Do This?

There are three main reasons why this scandal occurred. First, Mitsubishi wanted to meet the fuel economy targets that they had in place during a vehicle's development. Second, fuel economy is a big selling point from a marketing perspective, and Mitsubishi placed a great deal of emphasis on it. Lastly, Mitsubishi was able to take advantage of various tax breaks and other incentives that the Japanese government had in place should they meet certain eco-friendly benchmarks.

What Are the Consequences?

The consequences that Mitsubishi faces are still being determined, but so far, Mitsubishi has announced that they will be suffering a net loss of ¥145 billion, which comes out to $1.38 billion, due to compensation costs for the fiscal year. This will be the first time that they've reported a net loss in 8 years.

Mitsubishi will have to pay ¥50 billion in compensation costs to those who purchased the vehicles affected by the scandal, as well as to pay ¥100 billion to Nissan, various auto dealers, and suppliers, and even to temporarily suspend its operations at one of its production sites.

Unless you have purchased a Mitsubishi vehicle in Japan during the past 10 years, you won't be affected. In the US, cars that are imported undergo different tests done by the EPA, which has stated that no Mitsubishi models sold in the US have been affected. Mitsubishi, just like Volkswagen, has a public relations crisis that they will need to overcome during the next few years.