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Mitsubishi Motors Sees First Loss in 8 Years on Fuel Scandal

June 22, 2016
The net loss in the year ending March 31 will probably be 145 billion yen ($1.4 billion), more than double the deficit analysts had estimated. 

Mitsubishi Motors Corp. said the fallout from its fuel-economy manipulation scandal is contained and temporary as the Japanese automaker forecast its first loss in eight years on related compensation costs.

The net loss in the year ending March 31 will probably be 145 billion yen ($1.4 billion), the company said in a statement Wednesday, more than double the deficit analysts had estimated. Mitsubishi Motors said it sees a 205 billion yen impact from the fuel-economy scandal this fiscal year, though no additional charges are expected.

Chairman Osamu Masuko aims to resume minicar production early next month and has said he’s prepared to cut prices on models that aren’t as efficient as previously advertised. Ongoing disclosures about the extent of mileage ratings manipulation and test data falsification has damaged the Mitsubishi Motors brand, claimed two top executives and forced the automaker to turn to Nissan Motor Co. for a bailout.

Nissan, which plans to spend about 237.4 billion yen for a 34% stake in Mitsubishi Motors, expects common platforms and joint purchasing will result in synergies equal to about 20 percent of its investment, Chief Financial Officer Joseph Peter said Wednesday. Mitsubishi Motors’ latest announcements have been within Nissan’s expectations and won’t impact its plans, he said after the company’s annual shareholders’ meeting.

Financial Hits

Mitsubishi Motors estimates a 55 billion yen negative impact from a decrease in domestic sales and expenses related to vehicle inspections. The financial hit from the scandal won’t carry over to the next financial year, and there are no plans to revise capital expenditures or spending on research and development, Executive Managing Officer Yoshihiro Kuroi said Wednesday.

The automaker will book 150 billion yen in one-time charges related to faulty fuel tests, which will include 100 billion yen in payments to Nissan, suppliers and the costs of halting production at its Mizushima plant. Mitsubishi Motors said last week it’ll book a one-time charge of 50 billion yen this fiscal year to compensate buyers.

Japan’s Transport Minister Keiichi Ishii said Tuesday the scandal has damaged the reputation of Japan’s auto industry and Mitsubishi Motors will face stricter type certification for some time to come.

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