Essay by PaperNerd ContributorUniversity, Master's October 2001

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The scandal over Mitsubishi Motors concealing customer complaints about defective products seems to be deepening into much more serious allegations about the procedures and ethical standards at Japan's fourth largest car maker.

Mitsubishi has already publicly apologized and agreed to recall 532,000 vehicles built between December 1990 and June this year after admitting not reporting to the authorities customer complaints about these units.

Now there are media reports in Japan suggesting that Mitsubishi has been concealing complaints and making false reports to the government for the past 30 years, dating right back to 1969.

The affair is becoming increasingly embarrassing for Mitsubishi Motors' alliance partners - Daimler Chrysler, which has taken a 34% stake in the Japanese company, and Sweden's Volvo, which is involved in a number of commercial vehicle ventures with Mitsubishi.

Next week Mitsubishi is reporting on its own internal investigations into how it handled customer complaints.

But it seems that a lot of documentation is not available, so that the company may have difficulty refuting new allegations in the influential Yomiuri Shim bun daily that it practiced double record-keeping since shortly after Japan introduced its vehicle recall system in 1969.

The paper quoted a source close to the company alleging that one set of records was for Mitsubishi's own internal use and contained serious customer complaints, which were not included in the official report to the regulatory authorities.

Now it seems likely that Mitsubishi Motors will have to expand its enquiry into how it has been conducting its affairs and perhaps brace itself and use some of the money Daimler Chrysler is pumping into it to help meet the cost of a very expensive expanded recall campaign.

The Jiji news agency is reporting that Mitsubishi has already decided to add more than 50,000 cars and trucks to the present recall, pushing the total towards 600,000 units.

There was a 7% drop in Mitsubishi's shares on Thursday (August 17) as investors started worrying about the situation, but there are no signs yet of the deals with Daimler Chrysler or Volvo being affected.

Jiji is reporting that at least two separate divisions within Mitsubishi were involved in covering up complaints since 1969.

The carmaker's image has already been dented by its involvement in 1997 in a scandal involving payoffs to corporate racketeers.

That led to the appointment of a new CEO - Katsuhiko Kawasoe - to clean up the company. He has introduced wide-ranging restructuring and cost-cutting measures, but the Mitsubishi group has still forecast a net loss in the current financial year of 70 billion yen.