Subaru Investigating Possible Cheating on Mileage

Japan-based Subaru Corp., already hurting from a domestic scandal involving vehicle inspections, said it is now carrying out an investigation into whether mileage readings might have been falsified as well during final checks, pushing down shares by 8%.

Mileage readings, which are indicators of a vehicle’s fuel efficiency, are not part of safety requirements. However, proof a of second instance of wrongdoing in as many months would tarnish the image of not just Subaru but the manufacturing industry of Japan that has been hit by several scandals of recent.

In 2016, Mitsubishi Motors saw close to 40% of its overall market value equal to $3.2 billion, lost over a period of three days following its admission it overstated fuel economy of mini-vehicles.

On Wednesday, Subaru announced it was checking to determine if any fabrication may have impacted its mileage readings and if any models exported might have also been affected.

A spokesperson for Subaru said that any evidence that mileage figures were falsified would not likely result in any recalls as it would be a violation of any safety requirements.

The probe into mileage follows the revelation by Subaru in October that uncertified technicians had for decades been carrying out the final checks for new vehicles sold within its domestic market.

Subaru this week said it would improve oversight, but made no mention of any probe related to mileage readings.

Subaru said that reports of the falsification of mileage readings had emerged as external investigators searched for data related to the inspection scandal.

Some inspectors told the investigators that the data about mileage was altered for some sample vehicle models that were tested during final checks. Although the carmaker said it did not confirm any such fabrications actually took place.

Arriving following the issue over certified inspections, this new potential problem could be a sign of a larger problem of how manufacturing operations are managed by Subaru, said an industry analyst.

Subaru shares dropped by up to 8.5% to their lowest level since July of 2016, prior to ending 7% down for the day. The stock has lost almost 10% the last two months amidst the scandal involving inspections.

Several compliance failings by companies in Japan have come to light over the past few months, hitting the reputation of the country for quality control and prompted requests for having better governance.

Worrying about impact from scandals, close to half of the firms in Japan have taken steps to make internal controls stronger or have planned to do so.