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Mitsubishi Becomes Latest Automaker to Admit to Cheating Consumers and Regulators

Japanese authorities raided the company's offices on Thursday after the automaker said it improperly conducted fuel efficiency tests.

by John Dyer
Apr 21 2016, 2:40pm

Photo by Franck Robichon/EPA

Automakers seem to have a pattern of hiring liars.

The latest example of the trend surfaced Wednesday when Mitsubishi Motors Corporation (MMC) revealed that it lied about the fuel economy of at least 620,000 so-called "microcars" sold in Japan.

"MMC conducted testing improperly to present better fuel consumption rates than the actual rates," a company statement said. "The testing method was also different from the one required by Japanese law. We express deep apologies to all of our customers and stakeholders for this issue."

Executives who held a press conference to discuss the false mileage rates bowed low to apologize and vowed to investigate the matter.

"The wrongdoing was intentional," Mitsubishi Motors President Tetsuro Aikawa said. "It is clear the falsification was done to make the mileage look better. But why they would resort to fraud to do this is still unclear."

Japanese authorities raided on Thursday the company's second largest facility, which is located in Okazaki and serves as a research and manufacturing hub. Mitsubishi, the sixth largest auto maker in Japan and the sixteenth largest worldwide, is required to hand over a report to authorities on it's cheating by April 27.

Related: The 'Long Shadow' of Volkswagen's Cheating Scandal Falls on France's Renault

What's crystal clear is that Mitsubishi is just the latest example of car companies deceiving regulators and customers, experts said.

"The auto industry has been mired in a series of scandals — Volkswagen emissions, GM ignition switches, Takata airbags — just to name a few," William Wallace, policy analyst for Consumers Union, the advocacy arm of Consumer Reports, said. "This is an industry that has a huge impact on people's lives, and it is facing very real problems when it comes to transparency and credibility."

Mitsubishi surely had Volkswagen in mind when it voluntarily disclosed its fuel economy dissembling, said Drew Kodjak, executive director of the International Council on Clean Transportation.

Last year, American regulators discovered that Volkswagen had installed software called a "defeat device" on around 11 million cars worldwide that fooled emissions tests, masking how its diesel cars were producing as much as 40 times more pollutants than allowed under US law.

The scandal has been a major embarrassment for Volkswagen, which bills itself as an environmentally conscious company. On Wednesday, the German automaker reached an agreement with the US government to spend around $1 billion to compensate owners of the cars, according to the Associated Press.

Kodjak noted that Mitsubishi came forward after engineers at Nissan, which sells a rebranded version of the Mitsubishi microcar, discovered the discrepancy between the vehicle's stated and actual fuel consumption. As soon as the cat was out of the bag, Mitsubishi confessed.

"You are seeing continue repercussions from the VW case," Kodjak said. "Manufacturers now realize the gravity and the magnitude of the risk associated with deliberately cheating on vehicle emissions."

But obviously Mitsubishi had tolerated the lying in its ranks for years, Kodjak added. While federal and California regulators have long scrutinized car emissions, Europe has been revving up its emissions tests only recently while other markets are less concerned. That's led companies to take chances and fib, said Kodjak.

Car companies cultivate secrecy because for a variety of reasons.

Consumer safety guru Joan Claybrook, who served as the chief of the National Highway Traffic Safety Administration under former President Jimmy Carter, said Congress needed to also beef up American safety laws. At present, she said, auto executives must know they are doing something illegal in order to face criminal charges. That's too high a bar, she said.

But lax regulators and toothless regulations were only part of the problem. The culture at auto companies is also flawed, she added.

"We have always presumed, in the past anyway, that these big companies think their reputation is at sake and therefore they aren't going to take any risk and they are going to obey the law," Claybrook said. "That has become less and less true."

GM knew about faulty ignition switches in 2.6 million cars for a decade before at least 124 people died and the company admitted to the problem. Last year, GM paid a $900 million penalty for the malfunction and agreed to a series of requirements, including allowing an independent monitor to review its safety practices, to avoid prosecution.

Japanese airbag maker Takata last year admitted to defects in almost 34 million cars that caused exploding airbags that resulted in at least six deaths and more than 100 injuries. The company had denied the problem for a decade. Takata paid $70 million in fines.

In 2014, Toyota paid $1.2 billion to settle a criminal investigation stemming from allegations that its executives concealed for seven years a malfunction that caused vehicles to accelerate uncontrollably. The glitch led to at least five deaths.

Car companies cultivate secrecy because for a variety of reasons, said Claybrook. They're often old and big companies, so they're often somewhat hidebound in a top-down corporate culture that doesn't encourage dissent. They're also facing stiffer competition than ever, so they need to keep on pumping out cars at all costs.

"There's a lack of checks and balances and controls that would make it easy for the company to make sure that things are going properly and there are canaries in the coal mines blowing the whistle if there is a problem," she said. "If they discover something along the way, they don't want to stop the production line to fix it because it will cost a lot of money."

But the executives also know that prosecutors face a near-impossible task of figuring out who among the tens of thousands of employees in major car companies might be to blame for tampering with inspection readings or hiding malfunctions.

"It's very hard to identify who the individuals are, who are the decision makers," she said. "Everyone at GM denied they were the decision makers. They were cogs in the wheel."

Related: Volkswagen Will Reportedly Pay $1 Billion for Cheating on US Emissions Tests

Follow John Dyer on Twitter: @johnjdyerjr