Mitsubishi Motors President to Resign as Japan Auto Scandal Engulfs Suzuki – Wall Street Journal

Mitsubishi Motors President Tetsuro Aikawa on Wednesday in Tokyo.
ENLARGE

TOKYO— Mitsubishi Motors Corp.
MMTOY


0.00
%




said its president would resign next month to take responsibility for a fuel-economy rigging scandal in Japan, the fallout from which spread to Suzuki Motor Corp.
7269


-9.37
%




after it admitted to using an improper testing method for its vehicles.

Mitsubishi President and Chief Operating Officer Tetsuro Aikawa, along with Executive Vice President Ryugo Nakao, will step down in June when the auto maker holds its annual shareholders’ meeting, the company said Wednesday.

“I must step down so that a fundamental reform can take place in the vehicle development department,” said Mr. Aikawa, who formerly led that division.

Mitsubishi has admitted to manipulating and fabricating fuel economy-related data in certain vehicles sold in Japan, as well as using an illegal testing method in multiple models for 25 years in the country.

Nissan Motor Co. last week agreed to take a 34% controlling stake in Mitsubishi, subject to regulatory approval. The deal represents a bet by Nissan of more than $2 billion that Mitsubishi can recover from the scandal.


ENLARGE

Mitsubishi’s sales are declining and its costs are ballooning after the auto maker admitted in April to falsifying data relating to fuel economy on at least four minicar models sold in Japan. Two of the models were manufactured by Mitsubishi and sold under Nissan’s brand name.

Nissan will send in an executive to head Mitsubishi’s vehicle development, the two companies said.

On Wednesday, Mitsubishi Motors said it believed fuel-economy data for some versions of its Pajero and RVR sport-utility vehicles currently sold in Japan was also manipulated.

Auto makers selling vehicles in Japan excluding Mitsubishi had faced a Wednesday deadline to report to the nation’s regulators whether they had violated mileage-related rules. Suzuki was the only one that admitted to a problem, Japan’s transport ministry said.

Suzuki said it used an improper method to test mileage data since around 2010 on 16 models it currently sells in Japan.

In measuring vehicles’ air and tire resistance, data that is used to calculate fuel economy, Suzuki said it had used a testing method that wasn’t approved by Japanese regulators on around 2.1 million vehicles sold in the country.

“We apologize for not having used the designated measuring method,” Suzuki Chief Executive Osamu Suzuki said at a news conference, bowing deeply.

Suzuki’s shares closed down 9.4% after earlier falling by as much as 15%.

The auto maker said it believed it wasn’t necessary to revise mileage data for the 16 models in Japan because tests of their fuel-economy performance using the proper method resulted in no significant differences.

Suzuki executives said the improper testing method it had used violated Japan’s law in two ways. First, instead of testing vehicles’ resistance outdoors, Suzuki measured them indoors. Second, it gauged resistance for components, such as tires and transmission, individually and then added them up rather than measuring them all at once.

Suzuki’s admission is the latest among global auto makers under scrutiny after Volkswagen AG
VLKAY


-2.10
%




late last year said it used illegal software on some of its diesel-powered vehicles to cheat on U.S. emissions tests.

Among the models for which Suzuki on Wednesday admitted to using improper testing methods were minicars—inexpensive, boxy vehicles sold in Japan with engine displacements of 0.66 liter or less. Minicars were also among the models for which Mitsubishi admitted manipulating data. The segment accounted for 38% of the Japan’s overall auto sales of around five million vehicles in 2015, up from a third a decade ago.

Japan’s minicar market for years was dominated by Suzuki and Daihatsu Motor Co.
7262


0.55
%




, which still hold a combined share of more than 60%. However, the segment’s rise has prompted rivals, including Mitsubishi and Nissan, to develop fresh models, triggering fierce competition.

Write to Yoko Kubota at yoko.kubota@wsj.com

Comments

Write a Reply or Comment:

Your email address will not be published.*