Mitsubishi expecting major losses amid mileage cheating admission

    Mitsubishi expecting major losses amid mileage cheating admission

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    Car giant Mitsubishi is forecasting a 145bn yen loss for the financial year to March 2017 after acknowledging it inflated mileage on its models.

    The Japanese car maker said vehicle sales will drop around the world, especially in Japan, where it expects a 41% plunge.

    The projected loss is a reversal from the 72.6bn yen profit for the fiscal year ended in March.

    Japan’s government found Mitsubishi had overstated mileage on its vehicles by up to 16%. Tokyo-based Mitsubishi Motors had a systematic way of cheating on mileage for eK minicar models, including those it supplied to Nissan.

    Mitsubishi said it did not lie about mileage on models sold overseas.

    Nissan has said it is taking a 34% stake in Mitsubishi to help its turnaround, although chief executive Carlos Ghosn reiterated to shareholders that the deal was not final until “due diligence”, and Nissan was checking into Mitsubishi.

    Mitsubishi said last week it will give 100,000 yen to each Japanese owner of a car with a false mileage claim to compensate for the extra petrol costs and for inflating the mileage figure.

    Such compensation will cost Mitsubishi 50bn yen, and payments to Nissan and other suppliers will cost another 100bn yen, it said.

    Slipping sales and expenses related to free inspections and other services in Japan will lower its operating profits by 55bn yen, it said.

    Mitsubishi’s latest scandal follows its massive and systematic cover-up of defects that surfaced in the early 2000s, which had spanned decades.

    The car maker has repeatedly promised to fix its ethical standards. The company’s president has stepped down to take responsibility for the new scandal.

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