Mitsubishi Motors (OTC: MMTOF) shares fell sharply after authorities raided facilities associated with the company’s German subsidiary on Tuesday over suspected diesel emissions fraud, according to Nikkei Asian Review.
German prosecutors raided ten business premises connected to the German subsidiary of Mitsubishi Motors as part of an investigation into allegations that the Japanese automaker installed illegal software on some of its diesel models to thwart emissions tests, German authorities said Tuesday.
Following the news, the company's stock dropped as much as 7% from Tuesday's close.
The probe mainly targeted Mitsubishi vehicles with 1.6-liter and 2.-liter four-cylinder diesel engines that meet Euro 5 and Euro 6 emissions standards, said the prosecutor’s office.
“It is suspected that the vehicles contain so-called defeat devices that ensure that legal nitrogen-oxide emissions limits are kept during treadmill tests but not during real driving,” the German prosecutor Nadja Niesen told The Wall Street Journal.
Mitsubishi confirmed that prosecutors visited some of their facilities in Germany.
"We are collecting detailed information at this time," said a spokesperson of the company. "We will cooperate with the investigation,” he added.
Why It Matters
The German automaker later admitted that they committed the fraud and agreed to pay over $30 billion in fines and penalties.
Mitsubishi Motors shares closed at $3.96 with 4.19% loss on Tuesday, while Volkswagen AG’s stock decreased by 0.40% and closed at $200.28.
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