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Mitsubishi Motors Warned by Ministry Amid Recall in Japan

Japan’s transport ministry issued a warning to Mitsubishi Motors Corp. (7211), saying the automaker was “passive” after it ordered a fourth round of recalls related to the similar issue of engine oil leaks.

Mitsubishi Motors will call back eight models, including the Town Box and the Minica minicar, for a total of 1.21 million vehicles in Japan, the company said in a filing to the stock exchange yesterday. Mitsubishi will book a 7.5-billion yen ($89 million) charge for the recalls, which is related to oil leakage that may cause engines to stop, according to the filing.

“The ministry warned the company on having been passive in its handling of the recalls, for having made inappropriate decisions, for providing the ministry with inappropriate explanation, for being insufficient in clarifying the causes of the recall,” according to the ministry’s statement.

The latest round of recalls brings the total number of vehicles called back by Tokyo-based Mitsubishi Motors for the engine flaw to 1.76 million units, according to the transport ministry. No accidents have been reported as a result of the defect, which prompted the first round of related recalls by the automaker in November 2010, the ministry said.

“Recalls are quite common in the automotive industry,” said Ashvin Chotai, managing director of Intelligence Automotive Asia in London. “The difference between this one and the others is that Mitsubishi has failed repeatedly to deal with the issue. But because the recall problems are so common, as long as they fix it relatively quickly, they still have a chance.”

‘Greatly Apologize’

The automaker had decided against the need for wider measures after the first call back because there wasn’t a safety issue, Koji Yokomaku, Mitsubishi Motors’ general manager for quality, said at a press conference yesterday.

“We have received very strict verbal warnings, and here, we were made aware of what was still lacking in our company,” Yokomaku said. “With this incident, we want to improve our personnel training, and we greatly apologize for causing this problem.”

Senior Executive Officer Masao Omichi said at the same briefing that the automaker didn’t intentionally skew its reports.

The ministry said it will soon conduct an inspection and ordered the automaker to submit a report by March about the improvements made, according to the statement.

Mitsubishi Motors rose 3.4 percent to 91 yen at the close in Tokyo trading yesterday, before the announcement. Its shares are unchanged for this year, compared with the 20 percent gain in the benchmark Nikkei 225 Stock Average.

To contact the reporters on this story: Anna Mukai in Tokyo at amukai1@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net

To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net

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