May 11, 2016 / 6:44 AM / 3 years ago

Mitsubishi Motors says has cash to ride out widening mileage affair

TOKYO (Reuters) - Mitsubishi Motors Corp (7211.T) is confident it has enough cash to weather a damaging fuel efficiency scandal alone, even as it warned incorrect data may have been used for more of its cars.

Mitsubishi Motors Corp Chairman of the Board and CEO Osamu Masuko (R) and President Tetsuro Aikawa attend a news conference in Tokyo, Japan, May 11, 2016. REUTERS/Toru Hanai

The Japanese carmaker last month admitted to overstating the fuel economy of four of its models - small cars sold in Japan, including two under Nissan Motor’s badge.

On Wednesday, it said it suspected improper data was used for models among the nine current ones on the market, as well as models it no longer sells. Overseas models are not affected.

Analysts have estimated that Mitsubishi may have to pay close to $1 billion to compensate Japanese mini-vehicle customers over lost ‘eco-car’ tax breaks and extra fuel costs.

“Our finances through the year just ended have been strong, so we think we can manage the issue,” Chief Executive Osamu Masuko told a press conference.

“We haven’t approached our sister companies for financial support.”

After a scandal more than 15 years ago - in which Mitsubishi Motors admitted systematically covering up customer complaints for more than two decades - Mitsubishi group companies came to its support. They rescued the auto arm with a major bailout.

Since the latest scandal broke on April 20, in the wake of last year’s Volkswagen (VOWG_p.DE) diesel emissions revelations, the Japanese company’s market value has fallen by around 42 percent, or $3 billion, on fears of compensation costs and collapsing sales.

Mitsubishi Motors holds $4 billion in cash, and little debt.

Earlier in the day, Mitsubishi submitted an additional explanation to Japan’s transport ministry after officials found more irregularities with its vehicles following a raid on the company’s research facilities last month.

It again blamed intense competition for the manipulation, as well as insufficient communication with a subcontractor, also owned by Mitsubishi.

“The coordinators at the time were well aware that fuel consumption meant ‘the factor that would give the most product marketing appeal’; so they felt that the fuel consumption improvement targets requested by managers and executives were absolute,” it said in a statement.

But a transport ministry official said that the fresh information was insufficient, as it did not confirm which models were using non-compliant data, or had overstated fuel economy readings.

Masuko said he expected the company to explain “everything” by May 18, the deadline set by the transport ministry for all Japanese automakers to submit reconfirmed fuel economy readings.

Reporting by Naomi Tajitsu; Writing by Chris Gallagher and Clara Ferreira Marques; Editing by Alexander Smith

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