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Mitsubishi offices raided after CEO admits fuel economy deception

By Ed Adamczyk
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Mitsubishi offices raided after CEO admits fuel economy deception
A Nissan Dayz X microcar designed and manufactured by Mitsubishi and sold under different model names by both companies. Mitsubishi's CEO admitted Thursday that the company lied about the cars' fuel economy. Photo by TTTNIS/Wikimedia

TOKYO, April 21 (UPI) -- Stock prices of Mitsubishi Motors fell again Thursday on the Tokyo market, a reaction to the company's admission it rigged some fuel emissions tests.

Company shares fell 15 percent Wednesday and were on pace to fall another 20 percent Thursday, after the company, Japan's sixth-largest automaker, admitted it overstated the fuel efficiency of more than 625,000 small cars sold exclusively in Japan. The rush to sell the shares led to a temporary suspension of transactions and threatened to erase one-third of Mitsubishi's stock value in just two days.

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The crisis worsened after a public apology, when Mitsubishi's offices at its Okazaki, Japan, research facility near its Nagoya manufacturing plant were raided by Transport Ministry investigators searching for documentation about the four models of mini-cars. Two models are sold in Japan under the Nissan nameplate and two by Mitsubishi. The controversy affects 486,000 Nissan-badged Dayz models, and 157,000 eK model vehicles with an identical body design sold under the Mitsubishi brand.

Mitsubishi published the cars' fuel economy at 60 to 70 miles per gallon, but as Nissan took over the vehicle's development, its engineers noticed the claim was dubious and confronted Mitsubishi about it, said Tetsuro Aikawa, Mitsubishi's president, at today's public apology press event.

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The microcars have tiny 600 cc engines – smaller than some motorcycles – but are popular in Japan. They fall into a special auto class, known as "kei," which are exempt from some taxes imposed on larger vehicles.

Aikawa said Mitsubishi will pay a settlement to Nissan. The company is conducting an internal investigation to determine who ordered the deception. Aikawa said he was unaware of it until Nissan brought it up.

The Japanese government called the situation "extremely serious," noting Mitsubishi violated the trust of its customers. Chief Cabinet Secretary Yoshihide Suga set a deadline of April 27 for a report from the company. He added, "Based on [information found in] the raid, and a report from the company, we would like to reveal the extent of the inaccuracies as soon as possible. We will deal with the situation in a strict manner and would like to make sure of the safety of cars."

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The incident is the first time a Japanese carmaker admitted misconduct in reporting fuel efficiency of its products. South Korea's Hyundai, makers of Kia-brand cars, paid penalties of $350 million in 2014 for exaggerating fuel economy ratings, and Germany-based Volkswagen set aside $7.5 billion in costs involved in a 2015 emissions scandal in which it cheated on emission tests.

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