Apr 20

mitsubishi-president-bow
Japan’s traditional management bow when caught engaging in fraud, somehow it makes everything better. 

“We Express Deep Apologies” – Mitsubishi Admits Rigging Emissions Test Data:

It’s all fun and games until someone is caught cheating. That is the lesson that Volkswagen learned last fall, when the German car manufacturer was caught using software that could detect when an emissions test was taking place in order to give better results. Today, it looks like Mitsubishi Motors will learn that very same lesson.

As Bloomberg reports, Japanese automaker Mitsubishi was the latest (but surely not last) to admit manipulating the load placed on the tires of four different models in order to make their fuel economy performance appear better. Thus far, an estimated 625,000 vehicles are impacted, including models that are manufactured and supplied to Nissan for their DayZ model (Nissan ultimately discovered the issue). Mitsubishi is no stranger to lies and poor public relations, as back in 2000 it admitted to lying about faulty fuel tanks, clutches, and brakes.

“We express deep apologies to all of our customers and stakeholders for this issue,” Mitsubishi said in a statement, also saying that the company “conducted testing improperly to present better fuel consumption rates than the actual rates.”

Mitsubishi shares plunged 15.2% to close at $6.74 on Wednesday, according to the Wall Street Journal.

What this means economically for Japan could be just as devastating. Between Mitsubishi now having to face significant trust issues in the market, and the fact that Toyota had to be completely shut down recently in the wake of the devastating earthquakes, Japan’s auto exports are going to be under pressure for the quarter and perhaps the year, depending on how long it takes for supply chains to come back on line. Fresh off of reporting awful economic data in March, and pretty disastrous import and export data last night, these issues certainly will not help aid the turnaround.

Wait, did we say devastating? We meant fantastic, because as the companies that anchor Japan’s economy are either put offline or humiliated, it will be up to Kuroda-san to come up with another rabit out of the hat, which as Goldman suggested overnight he will do when he doubles the Japanese purchase of ETFs during the BOJ’s next announcement.

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