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Mitsubishi scandal expands. Is more regulation on the way?

Mitsubishi revealed recently that the scandal that rocked the company last week had gone on longer than previously imagined, stretching back to 1991. 

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    Mitsubishi Motors Corp's President Tetsuro Aikawa (c.) and Executive Vice President Ryugo Nakao (l.) leave a news conference at the transport ministry in Tokyo.
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Mitsubishi revealed today that the fuel economy testing scandal that rocked the company last week has been going on for at least 25 years.

After investigation, Mitsubishi found that improper fuel efficiency testing methods have been in use since 1991. In recent years, the company has sold about 100,000 vehicles per year in its Japanese market, though that number was up to five times higher before another scandal in the early 2000s.

Millions of vehicles sold in the Japanese market could therefore have been impacted, according to the company, although chief executive officer Tetsuro Aikawa declined to give an exact number.

"I'm truly sorry that customers were led to buy vehicles based on incorrect fuel-efficiency ratings," said Mr. Aikawa at a Tuesday press conference. "All I can do is apologize."

In a statement released by Mitsubishi's corporate offices, the company announced that "the board of directors decided to establish a special investigation committee (the 'Committee') consisting of only external experts."

Mitsubishi, like other automakers, was in charge of reporting its own fuel economy standards to Japan's Ministry of Land, Infrastructure, Transport, and Tourism. When standards were changed in 2007, Mitsubishi officials printed out new handbooks for the development department. According to The New York Times, however, the department ignored the new standards.

The catch to this story is that at least one of the methods used to fudge fuel economy numbers is against the rules in Japan, but fully legal in the United States.

Fuel economy testing regulations, among others, are not standardized worldwide, partially because of different driving conditions in each country.

Mitsubishi's latest problem, however, alongside well publicized scandals at other worldwide manufacturers such as Volkswagen, begs the question of whether or not the auto industry requires more universal standards and testing bodies.

Commentary published Monday by The Christian Science Monitor's editorial board notes that consumers have lost trust in the auto industry after this most recent scandal and Volkswagen's even larger emissions cheating scandal last fall and that these problems can only be fixed by greater transparency

Fumihiko Ike, head of the Japan Automobile Manufacturers Association, echoed that sentiment last fall, saying of Volkswagen, "This one company's deeds have damaged trust in the auto industry."

A McKinsey Company report on the future of the global auto industry notes that, worldwide, regulations (environmental regulations in particular) are likely to become even more strict as auto markets evolve.

Even at the national level, US auto regulators are contemplating closer observation of the auto industry.

"Every time we have an individual automaker or supplier where we find an issue, your first question has to be how extensive is it through the whole industry?" said Mark Rosekind, the director of the National Highway Traffic Safety Administration. "If they did it, anyone else can do it."

For this reason, several auto industry officials told NBC news last fall that they expect to see the NHTSA become less willing to accept automakers own self-certification data for categories such as safety, fuel economy, and emissions.

Thus far, a Republican controlled Congress has stonewalled efforts to grant greater funding to the NHTSA's regulatory groups, though automakers worldwide are increasingly concerned as Volkswagen's scandal continues to loom and Mitsubishi's mistakes are revealed.

In Japan, where auto companies self-reported data to the government, companies have now been asked to submit fuel economy data in the next few weeks. 

Mitsubishi lost half of its market value after last week's announcement.

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