Daily Management Review

Mitsubishi Heavy says too Early to Decide on Support for Mitsubishi Motors


04/25/2016




Mitsubishi Heavy says too Early to Decide on Support for Mitsubishi Motors
It is not yet clear whether Mitsubishi Motors Corp would get support from its sister concern - Mitsubishi Heavy Industries Ltd on the issue of fuel economy scandal.
 
On Monday,  Mitsubishi Heavy Industries Ltd said that it was too early to decide whether to offer support to sister Mitsubishi Motors Corp. the later had very recently admitted to falsifying fuel economy data on its vehicles and is facing a financial hit.
 
After the automaker admitted that it had submitted misleading fuel economy data on four vehicle models sold in Japan, an investigation against the company on the basis of the admission has been initiated by Japan's transport ministry.
 
With the aim of providing an update on the issue, the Japanese automaker had announced holding of a press conference the next day. However citing scheduling conflicts, the troubled company cancelled the event hours later. Adhering to direction from the transport ministry of Japan, the company said it would be submitting information related to data falsification on Tuesday.
 
With a 12.6 percent stake as of March 2015, Mitsubishi Heavy is the biggest share holder of Mitsubishi Motors. Mitsubishi Heavy is engaged in operations that include building military aircraft, rail infrastructure and luxury cruise ships.
 
Both the Mitsubishi Motors and Mitsubishi Heavy are part of the Mitsubishi group which has businesses as diverse as finance and mining.
 
"The investigation into Mitsubishi Motors over its falsified fuel economy data is still ongoing, so at this point we can not decide on whether to offer assistance," Mitsubishi Heavy President and Chief Executive Shunichi Miyanaga told reporters.
 
After another scandal that had brought the Japanese automaker close to collapse over a scandal of the systematic cover-up of customer complaints more than 15 years ago, Mitsubishi Heavy had offered a lifeline to Mitsubishi Motors.
 
Since Mitsubishi Motors had admitted to the wrongdoing last week, the scandal has resulted in the wiping out of more than $3 billion off the company's market value. On Monday, shares in the company fell 4.7 percent, plumbing a record low.
 
Due to uncertainties over the financial impact of the scandal, Mitsubishi Motors is unlikely to issue an earnings forecast for the current business year when it announces annual results on Wednesday, reported Reuters on Monday quoting sources knowledgeable on the issue.
 
Based on factors like the repayment of fuel economy-related tax reductions, compensation for gasoline costs, and apology payments to customers, analysts at Nomura Research estimated costs stemming from the scandal may be as much as 104 billion yen ($935.50 million).
 
Mitsubishi Motors, which sells over 1 million vehicles annually, expects to report a 5.5 percent decline in operating income for the year ended March at 125 billion yen.
 
(Source:www.reuters.com) 






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