Abstract

This case discusses the scandal in which Mitsubishi was involved where it was accused of cheating on mileage tests for its models eK wagon and eK Space light passenger cars and the Dayz and Dayz Roox vehicles produced for Nissan. Later, it also admitted that its models sold over the previous 10 years were affected by the fuel economy scandal. As a consequence, President Tetsuro Aikawa said he would step down, taking responsibility for the mileage scandal. The company would post a US$480 million special loss for the fiscal year 2016-17 to pay compensation to customers for the years of cheating on fuel economy tests. When the scandal broke, Mitsubishi’s shares in the Japanese market plummeted and continue to fall. The spreading scandal at Mitsubishi called for an inspection of carmakers’ reports on fuel economy and pollution ratings. Analysts felt that while Mitsubishi had promised Nissan as well as the consumers that it would deliver a car with remarkable mileage specifications, it was incapable of doing so. Mitsubishi’s employees opined that the scandal was the result of the company’s narrow-minded corporate culture focused on its financial interests and that it had not learnt any lessons from its earlier scandals. The analysts opined that the company covered up safety problems and overlooked customer complaints about unsafe vehicles.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the events which led to the exposure of Mitsubishi mileage scandal.
• Study the impact of the scandal on Mitsubishi.
• Understand the impact of fraud on consumers’ confidence.
• Discuss the role and responsibility of the senior executives, the management of Mitsubishi, and the nature and extent of the failure to avert the situation.
• Analyze the role of ethics in a growing competitive business environment.

Keywords

Mitsubishi Motors, Fuel Economy scandal, Corporate governance, Business ethics, Mileage Data, Fuel-Cheat Scandal, Fuel Efficient, Mileage Scandal