Mitsubishi’s share price hits record low after the revelation of the company overstating fuel efficiency data.
On Wednesday 20 April, Japan’s 6th biggest car manufacturer, Mitsubishi Motors, admitted to falsifying fuel economy data for more than 600,000 vehicles sold in Japan. 468,000 of the vehicles in question were made for Nissan, and the issue was uncovered as a result of inconsistencies in the data found by Nissan (1).
The day of the announcement saw a 15% fall in shares, and trading was halted on Thursday due to an overwhelming number of sell orders. The Tokyo Stock Exchange set an indicated closing price of 583 yen, a 20% drop from Wednesday close (2).
In the two days since the apology from Mitsubishi motors board, the company’s value has lost around $2.5bn (3).
The Japanese transport ministry investigators have raided the research centre of the car manufacturer’s plant at Nagoya. A Japanese government spokesman said that this is being treated as an “extremely serious case”. Mitsubishi has been ordered to submit a full report by 27 April (4).
Whilst the financial impact of the scandal will be significant, likely to include damages payable to Nissan, and repayment of government tax rebates it should not have been eligible for, there will be great damage to the company’s reputation (3). Mitsubishi has struggled to regain customer confidence following a defects scandal in the early 2000s (4).
The issue affects Mitsubishi’s ek Wagon and ek Space models, and Nissan’s Dayz and Dayz Roox models, all of which are predominantly sold in Japan. It is being investigated whether vehicles sold internationally will also be impacted (4).