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Mpg scandal pushes Mitsubishi to $1.4B loss

The company has not posted a loss in eight years.

Mitsubishi expects its fiscal year to end in a nearly $1.4 billion net loss as profits are erased by the ongoing fuel-economy scandal.

The company last week set aside $480 million to compensate customers who purchased vehicles with overstated mpg ratings. The first pool of cash was reserved exclusively for Mitsubishi-badged vehicles, however the company is also expected to provide compensation for jointly-produced vehicles sold by Nissan.

The loss reflects an additional one-time charge of approximately $950 million to compensate Nissan and dealers.

The compensation programs include flat-rate payouts and variable payments based on actual fuel expenditures. The Japanese government has claimed some vehicles overstated fuel efficiency by up to 16 percent.

Despite taking a one-time charge for expected compensation programs, the company still faces potential trouble selling new cars. Global car sales are expected to fall by eight percent to 962,000 vehicles this fiscal year, while Japan are on track to collapse by 41 percent to 60,000 units, according to the Wall Street Journal.

Photo by Ben Hsu.

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