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Behind Mitsubishi's faked data, fierce competition

 
Mitsubishi’s microcars rank below those produced by rivals like Suzuki and Daihatsu in gas mileage, a major selling point for such cars.
Mitsubishi’s microcars rank below those produced by rivals like Suzuki and Daihatsu in gas mileage, a major selling point for such cars.
Published April 22, 2016

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 automakers.

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, 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 Wednesday that tests had inflated their ratings 5 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.

"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, saying it had begun searching for evidence at Mitsubishi facilities Wednesday.

The company's share price plunged about 20 percent Thursday — the daily limit — compounding a 15 percent drop a day earlier.

Automakers' reports of fuel economy and pollution ratings have come under especially close scrutiny after the scandal at Volkswagen last year. The German automaker was found to have manipulated software in 11 million diesel vehicles to cheat on emissions tests.

Mitsubishi's reputation has been battered by scandal before. In 2000, the company admitted that it had been hiding reports on vehicle defects for more than two decades. The news contributed to its sales plunging nearly 50 percent and nearly pushed it into bankruptcy.

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.

Its now-discredited rating of 71.5 miles per gallon is much less than the 87 mpg for 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."

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," Endo said. "They had a lot of incentives" to cheat.

Nissan engineers were the ones who spotted the mileage-rating discrepancy, Mitsubishi said.