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| Behind Mitsubishi’s Faked Data, Fierce Competition | Behind Mitsubishi’s Faked Data, Fierce Competition |
| (35 minutes later) | |
| TOKYO — In most of the world, few consumers even know microcars exist. But in Japan, the tiny vehicles, whose fuel consumption is as small as their price tags, are a crucial battleground for domestic automakers. | |
| And for years, Mitsubishi Motors has been losing to its heavyweight competitors. | And for years, Mitsubishi Motors has been losing to its heavyweight competitors. |
| A day after the company admitted it had cheated on fuel economy tests for a line of “kei,” or ultralight, cars, in the latest scandal to grip the global automobile industry, attention focused on the company’s struggles in the brutally competitive Japanese microcar market. | A day after the company admitted it had cheated on fuel economy tests for a line of “kei,” or ultralight, cars, in the latest scandal to grip the global automobile industry, attention focused on the company’s struggles in the brutally competitive Japanese microcar market. |
| Rivals like Suzuki and Daihatsu, an affiliate of Toyota, produce vehicles with significantly better mileage, a crucial selling point for cars designed to appeal to the most budget-conscious buyers. That, specialists said, may have tempted Mitsubishi to cheat. Although the company said it was retesting the affected vehicles to determine their true fuel economy, Mitsubishi’s president, Tetsuro Aikawa, estimated on Wednesday that “improper” tests had inflated their ratings 5 percent to 10 percent. | Rivals like Suzuki and Daihatsu, an affiliate of Toyota, produce vehicles with significantly better mileage, a crucial selling point for cars designed to appeal to the most budget-conscious buyers. That, specialists said, may have tempted Mitsubishi to cheat. Although the company said it was retesting the affected vehicles to determine their true fuel economy, Mitsubishi’s president, Tetsuro Aikawa, estimated on Wednesday that “improper” tests had inflated their ratings 5 percent to 10 percent. |
| Keis are more than a niche in Japan. About 40 percent of new cars sold belong to the category, which is subject to lower taxes that increase their price advantage over full-size vehicles. With engines limited by law to smaller than 0.66 liters — smaller than those of many motorcycles — some sell for the equivalent of less than $10,000. | Keis are more than a niche in Japan. About 40 percent of new cars sold belong to the category, which is subject to lower taxes that increase their price advantage over full-size vehicles. With engines limited by law to smaller than 0.66 liters — smaller than those of many motorcycles — some sell for the equivalent of less than $10,000. |
| “The competition in keis is all about fuel consumption. It’s extremely fierce,” said Koichi Hatamura, a former Mazda engineer who now runs an independent technology firm, Hatamura Engine Research Office. “Mitsubishi has no technology for improving fuel efficiency but has no money to spend, either. Its development people were given an impossible task, to cut costs and improve mileage.” | “The competition in keis is all about fuel consumption. It’s extremely fierce,” said Koichi Hatamura, a former Mazda engineer who now runs an independent technology firm, Hatamura Engine Research Office. “Mitsubishi has no technology for improving fuel efficiency but has no money to spend, either. Its development people were given an impossible task, to cut costs and improve mileage.” |
| On Thursday, officials from the Japanese Ministry of Land, Infrastructure, Transport and Tourism removed documents from a Mitsubishi technical center in central Japan. The ministry said it had begun searching for evidence at Mitsubishi facilities on Wednesday. | On Thursday, officials from the Japanese Ministry of Land, Infrastructure, Transport and Tourism removed documents from a Mitsubishi technical center in central Japan. The ministry said it had begun searching for evidence at Mitsubishi facilities on Wednesday. |
| The company’s share price plunged about 20 percent on Thursday—the daily limit in yen terms—compounding a 15 percent drop a day earlier. | The company’s share price plunged about 20 percent on Thursday—the daily limit in yen terms—compounding a 15 percent drop a day earlier. |
| Mitsubishi is one of the smaller players in the crowded Japanese car industry, selling one vehicle for every eight shipped globally by Toyota, the world’s largest producer. In the race to develop more fuel-efficient vehicles, Mitsubishi has focused its scarce resources on new technology: The company was one of the first to produce an all-electric vehicle, the iMiev. | Mitsubishi is one of the smaller players in the crowded Japanese car industry, selling one vehicle for every eight shipped globally by Toyota, the world’s largest producer. In the race to develop more fuel-efficient vehicles, Mitsubishi has focused its scarce resources on new technology: The company was one of the first to produce an all-electric vehicle, the iMiev. |
| But perhaps as a result, experts said, it has fallen behind in the crucial task of making its traditional gasoline-powered engines more efficient. | But perhaps as a result, experts said, it has fallen behind in the crucial task of making its traditional gasoline-powered engines more efficient. |
| Even with an exaggerated mileage rating, the most fuel-efficient version of Mitsubishi’s microcar, the eK, ranked 10th among kei models sold in Japan, according to Car Sensor, a website that tracks automobile data. | Even with an exaggerated mileage rating, the most fuel-efficient version of Mitsubishi’s microcar, the eK, ranked 10th among kei models sold in Japan, according to Car Sensor, a website that tracks automobile data. |
| The now discredited rating of 30.4 kilometers per liter, or about 71.5 miles per gallon, compared with a rating of 37 kilometers per liter for the top-ranked Suzuki Alto. Not coincidentally, Mitsubishi also lagged in sales. | The now discredited rating of 30.4 kilometers per liter, or about 71.5 miles per gallon, compared with a rating of 37 kilometers per liter for the top-ranked Suzuki Alto. Not coincidentally, Mitsubishi also lagged in sales. |
| “Competition has increased among kei producers, but it’s really been a fight between Suzuki, Daihatsu and Honda,” said Koji Endo, an automotive analyst at Advanced Research Japan. “Mitsubishi has been left out.” | “Competition has increased among kei producers, but it’s really been a fight between Suzuki, Daihatsu and Honda,” said Koji Endo, an automotive analyst at Advanced Research Japan. “Mitsubishi has been left out.” |
| Japan’s government increased new- vehicle taxes on keis last year, a policy shift intended to narrow the price gap between them and full-size cars. That has added pressure on kei manufacturers, whose profit margins were already narrow. | Japan’s government increased new- vehicle taxes on keis last year, a policy shift intended to narrow the price gap between them and full-size cars. That has added pressure on kei manufacturers, whose profit margins were already narrow. |
| Mitsubishi started supplying versions of the eK to Nissan several years ago under a joint venture agreement, a deal that may have further increased the temptation to exaggerate the car’s performance. The first Nissan-branded eKs — sold by Nissan as the Dayz — went on sale in 2013, the same year Mitsubishi says its cheating began. | Mitsubishi started supplying versions of the eK to Nissan several years ago under a joint venture agreement, a deal that may have further increased the temptation to exaggerate the car’s performance. The first Nissan-branded eKs — sold by Nissan as the Dayz — went on sale in 2013, the same year Mitsubishi says its cheating began. |
| “Nissan let Mitsubishi take the lead in developing minicars, but Mitsubishi’s own level of tech was not that high,” Mr. Endo said. “They had a lot of incentives” to cheat. | “Nissan let Mitsubishi take the lead in developing minicars, but Mitsubishi’s own level of tech was not that high,” Mr. Endo said. “They had a lot of incentives” to cheat. |
| Nissan engineers were the ones who spotted the mileage-rating discrepancy, Mitsubishi said. | Nissan engineers were the ones who spotted the mileage-rating discrepancy, Mitsubishi said. |
| There are fears that other models besides the eK may be caught up in the scandal. Mr. Aikawa, Mitsubishi’s president, said the company had used unapproved testing methods on an unspecified number of other lines over the years, and was currently reviewing their mileage ratings. | There are fears that other models besides the eK may be caught up in the scandal. Mr. Aikawa, Mitsubishi’s president, said the company had used unapproved testing methods on an unspecified number of other lines over the years, and was currently reviewing their mileage ratings. |
| Mitsubishi had spent years trying to rebuild its reputation after another scandal. In 2000, the company admitted that it had been hiding reports on vehicle defects for more than two decades. Sales plunged, top executives were arrested and the carmaker came close to collapse; it was saved only by an injection of capital from other companies in the loosely allied Mitsubishi group of companies. | Mitsubishi had spent years trying to rebuild its reputation after another scandal. In 2000, the company admitted that it had been hiding reports on vehicle defects for more than two decades. Sales plunged, top executives were arrested and the carmaker came close to collapse; it was saved only by an injection of capital from other companies in the loosely allied Mitsubishi group of companies. |
| Mitsubishi’s latest admission is the latest in a series of cheating revelations to hit the automobile industry. Carmakers’ reporting of fuel economy and pollution ratings is under especially close scrutiny after Volkswagen admitted last year that it had installed software in 11 million diesel vehicles to cheat on emissions tests. The Japanese Transportation Ministry said it had sent a letter on Wednesday to other carmakers, asking them to check their fuel economy test data. But it did not specify how the companies could prove they had not cheated like Mitsubishi, which has until April 27 to report back on the affair; the other carmakers have until May 18. | Mitsubishi’s latest admission is the latest in a series of cheating revelations to hit the automobile industry. Carmakers’ reporting of fuel economy and pollution ratings is under especially close scrutiny after Volkswagen admitted last year that it had installed software in 11 million diesel vehicles to cheat on emissions tests. The Japanese Transportation Ministry said it had sent a letter on Wednesday to other carmakers, asking them to check their fuel economy test data. But it did not specify how the companies could prove they had not cheated like Mitsubishi, which has until April 27 to report back on the affair; the other carmakers have until May 18. |
| “This is an extremely serious matter,” Yoshihide Suga, the government’s chief cabinet secretary, said at a daily news briefing. “I hope all the details of this improper conduct will be revealed as soon as possible, and stringent measures to ensure vehicle safety.” | “This is an extremely serious matter,” Yoshihide Suga, the government’s chief cabinet secretary, said at a daily news briefing. “I hope all the details of this improper conduct will be revealed as soon as possible, and stringent measures to ensure vehicle safety.” |