Mitsubishi Shares Dive, Japan Officials Raid Factory

Discussion in 'General Trading Discussion' started by Rainman, Apr 21, 2016.

  1. Rainman

    Rainman Senior Investor

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    Mitsubishi stocks lost about a third of value in two days after the company admitted that they overstated the fuel efficiency of 625,000 cars. The problem was exposed when Nissan Motors which markets a model made by Mitsubishi found a discrepancy in fuel efficiency data.

    http://www.reuters.com/article/us-mitsubishimotors-regulations-idUSKCN0XI01M
    JPMorgan auto analyst Akira Kishimoto estimated the cheating could cost Mitsubishi more than 50 billion yen ($450 million), including payments to consumers, the cost of replacing parts and compensation to Nissan.
     
  2. GiltEdged

    GiltEdged Active Member

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    I just saw that in the paper. It dwarfs the fall in 2004 after the safety scandal, with a 15% fall on Wednesday and another 20% today. Their UK boss has apparently stressed that there "is no evidence to suggest UK or European models are affected", which probably isn't really going to help since the model affected sold over half a million cars in Japan.

    This may be fuel efficiency, not emissions, but with the VW deal only just struck, I think people are going to be looking at all car manufacturers (with the likely exception of Tesla) rather sceptically for the foreseeable future.
     
  3. pwarbi

    pwarbi Senior Investor

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    Even before the Volkswagen scandel became common knowledge, I think most people didn't trust the motor vehicle manufacturers and we always knew that some of the information they gave out wasn't exactly legitimate.

    All these scandals have done is confirm what we already thought. That's probably while at the time Volkswagen was under a lot of pressure, 6 months down the line it's all been forgotten about.
     
  4. anders

    anders Well-Known Member

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    Fuel efficiency data is far more important than emissions data, so I'm not surprised that their shares tanked so much. VW can probably come back from their scandal, but this is far more serious. "Miles per gallon" is an important metric when it comes to buying a car, and if Mitsubishi can't be trusted on this, that is going to hit their bottom line very hard.
     
  5. GiltEdged

    GiltEdged Active Member

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    I'm not sure about 'forgotten about', as VW only just announced the compensation deal yesterday. It seems they will be buying back all the affected cars, at a cost of over $7billion, and their share price might be recovering but its still close to half what it was when the issue broke.

    With Peugeot now being raided over emissions, I think the issue of cars not doing what they claim is going to be in the news for a while.
     

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