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Mitsubishi fuel deception hits profits

Hit for six: Mitsubishi's decision to falsify fuel economy figures for models such as the eK Space (left) has impacted its 2015 profits.

Fudged fuel economy figures cuts Mitsubishi's 2015 fiscal year profit

Mitsubishi logo31 May 2016

By TIM NICHOLSON

MITSUBISHI Motors Corporation (MMC) has recorded an “extraordinary loss” of ¥19.1 billion ($A237 million) following the fuel economy cheating scandal that was exposed last month.

The Japanese car-maker said the figure was an amendment of its 2015 financial year results ending March 31, 2016, that were released on April 27, 2016, a week after it announced that it had falsified fuel economy figures for 625,000 Mitsubishi and Nissan-badged mini 'kei' cars.

“As the internal testing process was still ongoing with four mini-cars in question at the time the 2015 fiscal year financial results were announced on April 27, an estimation for the consequent extraordinary loss could not be determined,” Mitsubishi says in a statement.

The company added that based on the test results that are now available, it could now estimate the hefty loss of ¥19.1 billion ($A237m) that it describes as a “loss on fuel economy test” in its results.

The inclusion of the loss means MMC's net profit in the last financial year has dropped from ¥89 billion ($A1.1b) to ¥72.5 billion ($A901.9m).

The Japan Times has reported that the additional costs will be used by MMC to compensate owners for petrol expenses and to return government-sponsored rebates for environmentally friendly cars.

Mitsubishi was unable to confirm a net profit forecast for the 2016 fiscal year, according to the Japanese publication.

The economy scandal impacted the Mitsubishi eK Wagon and eK Space as well as the Nissan Dayz and Dayz Roox that were part of a joint-venture between the two Japanese car-makers, but built by Mitsubishi.

Inaccuracies with fuel economy figures were discovered by Nissan during the development stage of the next-generation Mitsubishi and Nissan mini cars, which had initially put the relationship at risk.

However three weeks after the issue was made public by MMC executives, Nissan announced that it had acquired a 34 per cent stake in MMC for ¥237 billion ($A2.9b).

MMC president Tetsuro Aikawa and quality and product strategy executive vice-president Ryugo Nakao fell on their swords earlier this month as a result of the scandal, and will both be temporarily replaced by CEO and chairman Osamu Masuko.

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