Scandal-hit Mitsubishi Motors to Run Maiden Annual Loss of $1.4 Bn
The losses may double due to compensation costs – 100 billion yen to suppliers, 50 billion yen to customers.
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Mitsubishi Motors today warned it is on track to lose $1.4 billion this fiscal year in the wake of a mileage-cheating scandal that slammed the brakes on sales.
In light of the scandal, Mitsubishi is about to face its first annual loss in eight years. The compensation costs have doubled the losses predicted by analysts.
Among the compensation costs, Mitsubishi is on the hook to pay about 100 billion yen to Nissan and other suppliers, and about 50 billion yen in payments to customers who bought the affected cars.
Rival company Nissan first uncovered problems with the fuel economy data after Mitsubishi made two models for it. After the scandal broke out, Mitsubishi stopped selling the cars voluntarily.
The announcement comes about two months after the company admitted it had been falsifying mileage tests for years, manipulating data to make cars seem more efficient than they were.
On Wednesday, Mitsubishi announced resumed sales of 4 minicars in Japan, although the transport ministry said that they were on average 11 percent less efficient than they claimed.
The company which pointed out the scandal, Nissan, announced plans to buy one-third of the stake in the crisis-hit automaker for $2.2 billion.
The alliance, if forged, is believed to challenge some of the world’s biggest auto groups.
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