Mitsubishi Motors Mileage Fraud: Automaker To Spend $480 Million On Compensation

Two months after admitting to cheating on fuel economy tests, Mitsubishi Motors Corp. announced Friday it was booking an extraordinary loss of 50 billion yen ($480 million) in the current fiscal year that will go toward compensating customers who bought the affected vehicles. This is in addition to the 15 billion yen the company already provided for in the financial year ended March 31, 2016.

A bulk of the payment will go to customers of four light car models — eK Wagon, eK Space, Dayz and Dayz Roox. The first two models were sold by Mitsubishi directly, while the Japanese automaker manufactured the other two for Nissan Motor Co. Mitsubishi had admitted to 625,000 of the four models being affected, all of which were sold in Japan. About 3 billion yen from the newly announced tranche is meant for compensation to owners of five other models.

While Mitsubishi did not provide a further breakdown of how the money would be distributed to individual vehicle owners, a report in the Nikkei Asian Review Friday cited unnamed sources to say every affected customer would be paid 100,000 yen to cover extra costs, such as on gasoline, they may have made. The payout was also intended to cover “extra tax costs incurred as a result of the fraud,” the report added.

An internal probe at the company put the actual mileage of the affected models at 5 percent to 15 percent lower than what it advertised. Japan’s transport ministry is conducting its own investigation of the vehicles and is expected to submit a report in the next few weeks. Final compensation for customers will be announced by Mitsubishi after that.

In its statement, the car manufacturer said additional payment to customers as a result of the ongoing scrutiny will be announced once it becomes apparent.

Nissan and Mitsubishi had announced on May 12 an agreement for the former to buy 34 percent stake in its Japanese peer for $2.2 billion.

Shares of Mitsubishi Motors closed 6.42 percent higher on the Tokyo Stock Exchange Thursday, while shares of Nissan Motor Co. rose 1.2 percent. By way of comparison, the broader Nikkei 225 Index climbed 1.07 percent.