Mitsubishi in trouble on both sides of the world

Automotive industry

Seems like we can’t go a week without some big automaker or another getting into trouble. From Ford’s new plant in Mexico to the VW emissions scandal and GM’s ignition debacle, automakers are hurting for positive public relations. Now, apparently, it’s Mitsubishi’s turn.

Various media sources are reporting the automaker is in trouble for “submitting misleading data” on at least one – possibly more – vehicles. The data is related to fuel economy, a huge marketing factor in that market segment. People want to know if they are buying fuel economy, they are getting what they pay for. Some U.S. auto safety authorities are now saying that may not be the case.

Now Mitsubishi has been forced to admit it overstated fuel efficiency of roughly 625,000 cars, an admission which has hit the company hard, causing it to lose $3.2 billion in market value in about 72 hours.

Worse, news is trickling over the ocean that Japanese authorities have raided one of the company’s R&D facilities, expecting to find more bad news. Market watchers are already saying Mitsubishi may have to reimburse consumers … and that’s just the beginning of the potential fallout.

Worse, the company that built its US market toehold on being both “different” and “efficient” has suffered a massive consumer confidence loss.

Japanese transport minister Keiichi Ishii said, “This is a serious problem that could lead to a loss of trust in our country’s auto industry…”

By putting the fate of an entire nation’s auto industry on one company, Ishii has created an even more daunting PR crisis for Mitsubishi on its home turf. The company is already at a competitive disadvantage, being only the sixth largest automaker in the island nation. Now, they have a mess on their hands on at least two continents.

This, apparently, is only the tip of the iceberg. Japanese media is reporting the company may have also violated Japanese auto manufacturing regulations. While this may not have the harsh PR consequences of an allegation of lying to consumers, a lengthy legal battle related to the allegations will compel the media to keep bringing up the manipulated fuel economy tests over and over again.

Mitsubishi has a tough road ahead, and will need to focus concerted efforts on both settling the regulations issue and re-establishing consumer trust.

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