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Business

Facing customer ire, Mitsubishi Motors tries dousing flames fast

TOKYO -- By offering cash payments to aggrieved customers, Mitsubishi Motors aims to bring a swift end to a fuel economy scandal that has shattered its reputation in the domestic market.

Each owner of the eK Wagon, eK Space, Dayz and Dayz Roox minicars will receive 100,000 yen ($959) to cover gasoline and other costs, the automaker said. The payments will result in roughly 50 billion yen in extraordinary losses in the year ending March 2017.

The transportation ministry has been measuring the fuel economy of affected models since May at a test course in Saitama Prefecture, with the results due out as early as this month. An automaker would normally wait for the findings before setting compensation, but Mitsubishi Motors tentatively set the figure on its own to show that it is taking concrete steps.

"We wanted to explain our thinking when we announced the full extent of the scandal and preventive measures," Chairman Osamu Masuko told a news conference Friday, noting that much time had passed since the company's April 20 admission to falsifying fuel economy tests. Sales of the four models have been suspended since late April.

The blanket 100,000 yen payout assumes that the owner drives 10,000km per year for 10 years. This should cover the higher costs for almost all customers, Masuko said.

The eK Wagon and Nissan Motor Dayz minicars bought right after their release in June 2013 are now due for their first mandatory vehicle inspections after three years, and some owners are asking dealers about compensation. Mitsubishi Motors hopes to ease the burden on dealerships by setting a tentative figure.

The automaker indicated at the news conference that it is still sorting out compensation for suppliers and the additional vehicle purchase tax it will have to pay on behalf of customers. But Mitsubishi Motors deemed it necessary to give an update on customer compensation ahead of its annual shareholders meeting June 24.

Mitsubishi Motors also confirmed improprieties in testing for 20 models released from April 2006 on. Owners of the Outlander sport utility vehicle and four other models affected by cheating -- albeit to a lesser extent than the minicars -- will receive a flat 30,000 yen. Among the nine models now on the market, some incorrect details were found for the Mirage.

The scandal has broadened to 1,527,000 units of 23 Mitsubishi models sold in Japan. No issues have been found for vehicles sold overseas.

The automaker outlined 23 steps to prevent a recurrence. These include strengthening oversight of development; separating the development team from the staffers who file for vehicle certification; and re-examining assigned responsibilities, including for subsidiaries. But the hurdles are high for an automaker that has repeatedly succumbed to scandal in the past.

(Nikkei)

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