Daily Management Review

Errant Tech Unit to be Overseen by Auditor at Mitsubishi Motors say Sources: Reuters


Errant Tech Unit to be Overseen by Auditor at Mitsubishi Motors say Sources: Reuters
Blamed for at least three high-profile cheating scandals, Japanese automaker Mitsubishi Motors plans to bring in an outside auditor to monitor its technology division, reports Reuters quoting two people familiar with the thinking of the company's leadership.
A third-party auditor would oversee major research and development and engineering processes and decisions at the company of the move is formalized, the sources told Reuters.
This would be a way to "modernize" the division at a time of increasing competitive pressures in the auto industry and is partly in response to the company's recent admission that it cheated on fuel economy tests for some models.
"We lag behind in modernizing our tech unit. We've not been able to put in place a system that could prevent cheating and irregularities," the sources reportedly said.
There were however no information available on when this might happen or who may be hired as auditor.
Engineers can be tempted to cut corners as there is increasing rush among the automakers to develop electric cars and autonomous driving and pressure to meet tougher fuel economy and emissions requirements. While Ford Motor and Hyundai Motor have previously been damaged by overstated mileage claims, Volkswagen admitted last year to cheating on U.S. diesel emissions tests. Executive pay and bonuses would be cut and its CEO would step down after it cheated on some fuel economy tests, Suzuki Motor said this week.
"We need to audit aggressively and thoroughly all the engineering decisions we make and processes we take. We need to ask our engineers: did you test the technology appropriately? Did you input the data correctly and appropriately?," the Mitsubishi Motor insider said.
Some changes at its technology arm in Okazaki some 250 km (155 miles) from the company's Tokyo head office have already been made by Mitsubishi Motors.
The company asked Nissan Motor for people and expertise to help reform its technology division after admitting in April it used falsified fuel economy data for four models it sells in Japan. Nissan ultimately agreed to buy a controlling stake in Mitsubishi Motor
As a part of a board and management reshuffle expected to take effect after this month's annual shareholders' meeting, Nissan executive Mitsuhiko Yamashita has since been named as head of Mitsubishi Motor's technology unit.
Mitsubishi Motor's CEO Osamu Masuko is now focusing on restructuring to concentrate on efficiency and profitability. To help the automaker recover from a previous scandal, Masuko was brought in from sister trading firm Mitsubishi Corp over a decade ago.
The tech arm tends to operate behind "walls" and often in a state of "secrecy and arrogance" and Musako has struggled to control it, the two insiders say.
One of the insider said that the engineers in some departments work "almost as if they were craftsmen in a remote village with little contact with the outside world" and rarely rotated through the company.
The technology division's ability to meet stricter regulations on fuel economy and emissions have been questioned by Masuko and senior executives even before the latest scandal. However the insiders said that they were  told by the engineers not to worry.
The technology division at Mitsubishi was insular and resistant to outside suggestions on work processes or technology development, said consultants including Roland Berger and Deloitte who had been hired previously by the CEO. The sources also confirmed that even before the scandal broke, the CEO was considering overhauling the unit.

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