Mitsubishi plans to spend $600 million to compensate owners of vehicles with false mileage numbers.
Owners of four Mitsubishi models involved in a mileage cheating scandal will receive nearly $1,000 apiece in compensation, a move expected to cost the embattled automaker around $600 million.
The automaker revealed in April that it used illegal testing procedures to inflate the fuel economy numbers of the four microcar models – two of which were sold under Nissan nameplates. The scandal led to a sharp slump in Mitsubishi sales and ultimately forced the Japanese maker to sell a controlling stake to Nissan.
The compensation program covers not only the four initial products confirmed to have inflated mileage numbers, but also five others that had less of a gap between their stated and actual mileage. Mitsubishi now has acknowledged rigging the numbers for some models going back as long as 25 years.
The four models for which $1,000 compensation will be offered are the Mitsubishi eK Space and eK wagon, as well as the Nissan Dayz and Dayz Roox. They target the hotly competitive microcar segment where buyers are largely searching for low prices and high mileage numbers.
(Mitsubishi top executive resigns in wake of fuel economy scandal. For more, Click Here.)
Owners will receive about $290 in compensation for Mitsubishi’s rigging of mileage for five other models. The smaller package reflects the fact that the fuel economy gap was smaller. It is not clear if owners of other vehicles will also receive compensation, but Mitsubishi has confirmed there was widespread cheating going back a quarter century.
Nissan CEO Ghosn (l), and MMC Chairman Masuko announce Nissan's acquisition of a controlling stake in Mitsubishi in Yokohama.
The maker has insisted it did not rig tests for models sold outside the Japanese market. But final results have not yet been released from an ongoing outside investigation into the company’s practices.
The automaker will spend $600 million for the compensation package announced on Friday. It could face additional costs, including possible fines levied by the Japanese government. Investigators have launched a criminal probe and raided several Mitsubishi offices for evidence.
(Mitsubishi reveals it rigged mileage numbers on all Japanese models. Click Here for the story.)
The scandal has led to the resignation of several senior company executives, including Mitsubishi President and Chief Operating Officer Tetsuro Aikawa. But the most significant impact comes with the loss of the carmaker’s independence. Nissan last month acquired a controlling 34% stake in the smaller automaker for $2.2 billion.
Mitsubishi isn’t the only automaker facing trouble over mileage data. Japanese minicar maker Suzuki also acknowledged it falsified fuel economy figures to improve its competitiveness. That resulted in the retirement this month of CEO Osamu Suzuki and another senior executive.
Like Mitsubishi, Suzuki is a major player in Japan’s so-called “kei car,” or microcar, segment.
(Nissan confirms plans to buy 34% of Mitsubishi. Click Here for the story.)
Meanwhile, in the U.S., General Motors has had to restate mileage on several of its own vehicles and offer compensation to owners.