Suzuki Motor admits to using improper testing

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Suzuki Motor admits to using improper testing

Suzuki Motor Corp. said it used fuel-economy testing methods that weren’t compliant with Japan regulations on about 2.1 million vehicles sold locally, making it the second automaker in the country to admit having conducted improper checks.

Suzuki said it won’t need to revise the ratings, as proper testing showed earlier results were within an acceptable range of deviation. The automaker said it used a tunnel to test the fuel efficiency of its vehicles out of concern about wind at its Sagara proving grounds, located on a hill near Japan’s southern coast. All 16 of its models currently on sale locally were reviewed, and the issues don’t apply to products sold overseas, it said.

Chairman Osamu Suzuki apologized after Suzuki’s disclosure of improper testing prompted its shares to tumble the most in more than seven years. The stock rebounded Thursday, rising as much as 7.8 percent as of 9:18 a.m. in Tokyo trading. Japan’s transport ministry said that, except for Suzuki and Mitsubishi Motors Corp., all other carmakers self-reported no misconduct in their mileage testing.

The ministry had asked about 41 companies to carry out internal investigations after Mitsubishi Motors said it overstated the mileage ratings of four minicar models by as much as 15 percent and is probing improper testing of other models dating back to 1991.

The automaker said it measured data related to components such as tires, brakes and transmissions, and combined those results with air resistance tests in the wind tunnel. Consumers haven’t been harmed because the fuel economy of Suzuki’s models were roughly consistent with previously stated ratings, Suzuki, 86, told reporters Wednesday.

President Toshihiro Suzuki said the automaker will revamp the testing course and that the improper method was used starting around 2010.

The disclosure by Suzuki isn’t manipulation if the company’s report is true, Masato Sahashi, an official at the transport ministry, said at a briefing in Tokyo on Wednesday. The regulator will continue investigating the automaker over mileage tests and Suzuki has been asked to provide more information by the end of May, the ministry officials said. About 22 percent of Suzuki’s 2.86 million worldwide vehicles sales were in Japan during the fiscal year that ended in March, as the company has shifted to expanding in India. Affiliate Maruti Suzuki India Ltd. last month reiterated that Suzuki will start production at its wholly-owned factory in India’s western Gujarat state in January. At about $17 billion, Maruti Suzuki has a higher market value than its majority owner.

Suzuki has a market value of about $12.4 billion, and the stock is down 25 percent this year. With about $6.9 billion in cash and equivalents, Suzuki’s balance sheet as of March 31 was better positioned to weather any scandal compared with Mitsubishi Motors, which reported about $4 billion.

Maruti Suzuki said Wednesday the mileage issue at its parent doesn’t affect products sold outside Japan and the system of conducting such tests in India is distinct from the one in Suzuki’s home market. All vehicles in India are tested for road load and emissions by government-approved agencies, the Indian automaker said.

Mitsubishi Motors last week said it plans to sell a 34 percent controlling stake to Nissan Motor Co. for about $2.2 billion. Bloomberg

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