Mitsubishi Heavy says too early to decide on support for Mitsubishi Motors

Mitsubishi Heavy Industries Ltd (7011.T) on Monday said it was too early to decide whether to offer support to sister company Mitsubishi Motors Corp (7211.T), which is facing a financial hit after admitting to falsifying fuel economy data on its vehicles.

Japan’s transport ministry is investigating Mitsubishi Motors after the automaker said it had submitted misleading fuel economy data on four vehicle models sold in Japan.

The automaker on Monday said it would hold a media conference the next day to provide an update on the issue, only to cancel it hours later citing scheduling conflicts. It added it would submit information related to data falsification to the transport ministry on Tuesday, as requested by the ministry.

Mitsubishi Motors’ biggest shareholder – with a 12.6 percent stake as of March 2015 – is Mitsubishi Heavy, whose operations include building military aircraft, rail infrastructure and luxury cruise ships.

Both companies are members 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.

Mitsubishi Heavy offered a lifeline to Mitsubishi Motors after another scandal involving the systematic cover-up of customer complaints more than 15 years ago, which brought the automaker close to collapse.

The latest scandal facing Mitsubishi Motors has wiped more than $3 billion off the company’s market value since it admitted to the wrongdoing last week. On Monday, shares in the company fell 4.7 percent, plumbing a record low.

On Sunday, a source told Reuters that Mitsubishi Motors is unlikely to issue an earnings forecast for the current business year when it announces annual results on Wednesday, due to uncertainties over the financial impact of the scandal.

Analysts at Nomura Research estimated costs stemming from the scandal may be as much as 104 billion yen ($935.50 million), based on the repayment of fuel economy-related tax reductions, compensation for gasoline costs, and apology payments to customers.

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: Reuters