Mitsubishi Motors Corp. said Wednesday that it expects to swing to a net loss of $1.38 billion in this fiscal year, which would be its first in eight years as it grapples with a fuel-economy data scandal that has led to surging costs and falling sales for the auto maker.
Japan’s sixth-biggest auto maker by sales faces a hefty compensation bill for owners of affected vehicles, payments to dealers and suppliers and also to Nissan Motor Co., with whom it jointly produced certain minicar models that were among those for which Mitsubishi falsified data to make mileage appear better. Mitsubishi has also admitted to using unapproved testing methods on certain vehicles for 25 years.
Mitsubishi forecast a net loss of ¥145 billion ($1.38 billion) in the 12 months ending March 2017, as it accounts for ¥150 billion of special losses related to the scandal.
The one-time charge was triple the figure given at a company announcement last week, when Mitsubishi said it was still calculating the necessary charges.
They include ¥50 billion to compensate owners of affected vehicles and ¥100 billion for payments to Nissan, dealers and suppliers, as well as fees needed to suspend operations at a minicar production site.
Declining sales and the cost of free inspections for affected vehicles are also likely to subtract about ¥55 billion from its operating profit, Mitsubishi said. It expects car sales to decline 8% to 962,000 vehicles this fiscal year compared with the previous year, with sales in Japan falling 41% to 60,000.
The company first admitted in April to falsifying data related to fuel economy on four models, so-called minicars sold only in Japan. Two of these minicars, with 0.66 liter engines, were manufactured by Mitsubishi and sold under Nissan’s brand name.Mitsubishi President Tetsuro Aikawa resigned in the weeks following the revelations.
Mitsubishi has since admitted to falsifying data on 25 models, including those manufactured and sold under the Nissan brand. None of its vehicles sold overseas are affected, it said.
Last month, it reached an agreement for Nissan to take a 34% controlling stake for more than $2 billion, subject to regulatory approval.
On Tuesday, Japan’s transport ministry released results of on-site inspections that showed Mitsubishi’s mileage data on the four types of minicars, including two Nissan models, was 5% to 16% better than the ministry’s test results.
The auto maker now hopes to get its production back to normal.
Mitsubishi chairman and chief executive Osamu Masuko said Tuesday that it aims to resume production and sales of the minicars around early July, after they were suspended following the fuel-economy data revelations.
Shares of Mitsubishi Motors ended 2.5% higher at ¥542 on Wednesday, partly boosted by Mr. Masuko’s comments. The auto maker’s shares have lost about 37% since the fuel-economy scandal emerged in April.
By: Megumi Fujikawa (WSJ, Tokyo).
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