Mitsubishi forecasts an annual loss of $2 billion because of the mileage scandal image

The Japanese automaker announced its annual forecast for the ongoing financial year and expectations are gloomy because of its manipulation of fuel-economy readings.

In its full fiscal year 2016 forecast announced this week, Mitsubishi expects to take a serious hit over the mileage scandal. The automaker plans to book an extraordinary loss of 100 billion yen (956 billion dollars) to repay the affected customers and a 50-billion-yen punch (478 million dollars) to further compensate Nissan, suppliers and its dealers. Mitsubishi also expects a 55-billion-yen impact (526 million dollars) on its operating income because of a forecasted plunge of demand. The company projects a 41 percent drop in domestic sales, down to 60,000 units, compared to 102,000 units it sold last year, 9 percent fewer in Europe and 13 percent lower on other regions.

The company admitted in April it manipulated fuel economy readings for four domestic mini-vehicle models, including two it produced for Nissan, for later on to reveal that the number of the affected cars was actually 20. Therefore, Nissan is now investigating into whether Mitsubishi may have faked fuel economy figures outside of Japan as well, as Renault’s alliance partner is looking to close the 237-billion-yen deal (2.28 billion dollars) this year for a 34 percent stake in Mitsubishi. “That would be an issue that could cause considerable concern,” Joe Peter, chief financial officer, said on the sidelines of Nissan’s annual shareholders’ meeting on Wednesday.