Following the fuel mileage scandal, it looks like Mitsubishi Motors will have to skip its earning forecast for the current financial year. The financial impact of the controversy in its fuel mileage is still uncertain for the company. The company's shares have also plunged to one-third of its value.
Mitsubishi Motors is the sixth largest automaker in Japan and on Wednesday, the company was scheduled to announce financial results for the year ended March. However, as Reuters reported, a person close to company told that the company is unlikely to issue an earnings forecast for the current financial year when it announces annual results this week.
The company's spokesman declined to comment on the forecast issue, while the source who told Reuters also refused to be identifed because the sensitivity of the issue. Mitsubishi was reported to mislead its fuel efficiency data by not conducting vehicle test runs to measure necessary factors affecting fuel efficiency.
Mitsubishi previously made minor changes to its minivehicles which may change the fuel efficiency data. Instead of conducting test runs, the company choose to submit the fuel eficiency data by calculation. While the transport ministry required a data submitted should be obtained from test runs, even when a minor change is made to the vehicle.
Last week, Japanese transport ministry raided the automaker's research and development center in central Japan. Japan Today reported that following the raid, the ministry requested the company to supply the data with any details of data related to fuel efficiency by April 27. Japanese transport minister Keiichi Ishii told reporters his disapointement towards the company.
"I can't help but have doubt about the company's basic attitude toward compliance," minister Ishii said. "This is extremely regrettable."
Public trust the Mitsubishi Motors drastically dropped, as well as investors' confidence. Asashi Shimbun reported that trading of the company's shares was halted before Thursday's closing after it fell nearly 20.5%. While on the next days, the shares continued to plunge more than 40% in three days, the worst three-day loss since 1988.
Prior to this incident, in 2004, the company had made the same mistake which was dubbed as one of the largest corporate scandal in Japanese history. At that time, the company admitted to have covered some defects in its vehicles, including failing brakes, fuel leaks and clutches malfunction. The outcome of the scandal was devastating, because Mitsubishi had to recall 163,707 cars around the world and repairing them for free.
This time, the company had made the same mistake by failig to provide the actual fuel mileage data. The company's shares have lost more than 40% and it seems Mitsubishi may have to skip its earning forecast for the current financial year.
