A recent Reuters news article stated that Japanese car-maker Mitsubishi was unlikely to issue an earnings forecast for the current financial year. This was largely attributed to the news that it was manipulating fuel economy data. This immediately resulted in shares dropping by more than 15%.
The brand came clean on the matter mid last week after being forced into admission by Nissan to which it supplied over 468,000 cars to, according to a report on Bloomberg.
Mitsubishi in a press statement said: “We express deep apologies to all of our customers and stakeholders for this issue.” Moreover, in a press conference held in Tokyo last week, company leads along with Mitsubishi Motors president Tetsuro Aikawa bowed as a sign of apology at the start of a press conference and admitted the act was intentional.
The entire incident resounds back to the Volkswagen incident in 2015 which forced the resignation of CEO Martin Winterkorn.
Back when the Volkswagen incident happened, speaking under anonymity, one Italian car brand marketer told Marketing that the practice was a common one for the automotive industry, describing it as a “well kept secret.” He added the entire incident will force the automotive industry forward – forcing many players to air their dirty laundry.
Branding and PR experts Marketing spoke to however were quick to unanimously say Mitsubishi should in fact "not get special treatment" from consumers - despite its quick admission and apology. This was simply because the brand was forced into admission by Nissan. There was no way out of the matter but to admit guilt. Lars Voedisch, principal consultant and managing director of PRecious Communications said:
Quickly admitting to it, indicates that either they knew about it, or it was so obvious that it's surprising it didn't come out earlier.
However he added the upside to the quick confirmation means they can be in control of the situation and reduces the room for speculation.
“Everyone however will still remember the first brand to get caught - in this case VW. With every additional manufacturer getting exposed or stepping forward, the attention will be less. So there isn't really a big incentive for brands to come out on their own,” Voedisch said.
Branding agency lead Graham Hitchmough, CEO of Brand Union South & Southeast Asia agreed with Voedisch saying reputable brands now need to stand up and be transparent about their testing methods.
They need to distance themselves from the growing list of brands for whom any admissions of wrongdoing are far too little and too late.
“It’s now likely that a ‘guilty until proven innocent’ mentality will emerge among car buyers and distributors in which, rather than sit tight and risk guilt by association, any manufacturer with an unimpeachable record will need to proactively demonstrate the fact,” he said.
Will this lead to more brands admitting their flaws?
Scott Pettet, Lewis APAC vice president said while the short term damage is very apparent with share prices dwindling, the long-term damage could be even greater due to erosion in trust with consumers.
“Just as with VW, it will take Mitsubishi a long time to re-build this trust. It will be interesting to see how many other car brands suffer similar fates as I suspect these types of practices are not isolated. Due to the potential losses however, it’s unlikely a brand will disclose this sort of misconduct unless their hand is being forced.”
Voedisch advised that with Mitsubishi and Nissan having to admit to false admission declarations, now would actually be a good time for other brands, who have a similar issue but haven't publicly spoken about it, to speak up. Then, the whole issue would become an overarching industry matter and not brand specific.
“If you know it will hit the public, better have it come out on your terms. At least you're seen as proactively admitting and directly presenting an action plan rather being recognised as having tried to hide known wrongdoing.”
Graham Drew, creative director of Grey Malaysia added if a brand can be the breaker of the story it makes a big difference.
You have far greater control of the narrative - rather than being caught-out, you’re showing responsibility and a will to rectify. Trust is the number one commodity for any brand. People can forgive mistakes, pre–meditated deception is something else entirely.