Mitsubishi Motors has forecast it will swing to an annual net loss for the first time in eight years, hit by fallout from the revelation it falsified fuel economy data for its vehicles sold in Japan over the past decade.

The carmaker said on Wednesday that it expected to book a net loss of ¥145 billion ($1.39 billion) in the 2016-17 financial year, on revenue of ¥1.9 trillion. It projected an operating profit of ¥25 billion.

That compares with a net profit of ¥89.1 billion in the 2016 financial year that ended on March 31, on revenue of ¥2.27 trillion.

The net loss will be the first for the Japanese carmaker since a ¥54.9 billion loss in the 2008-09 financial year.

Charge

Mitsubishi announced last week that it would take a ¥50 billion charge in the current financial year to cover compensation costs to vehicle owners affected by the fuel scandal, which stand at ¥65.5 billion. Those costs are likely to rise, however, as the company considers compensation for Nissan, for which it builds two models, and its suppliers over lost sales.

The carmaker – Japan’s sixth-largest – said it will pay more than $600 million to owners of affected vehicles, with the bulk of the compensation going to owners of minicars, for which fuel economy discrepancies were the biggest. The company says none of its models sold overseas were affected.

In May, Mitsubishi agreed to sell a 34 per cent stake to Nissan, Japan’s second-largest carmaker, for ¥237 billion ($2.2 billion) to help it weather the scandal that has dented domestic vehicle sales.

Mitsubishi said in April that some of its employees overstated fuel efficiency by up to 15 per cent on four types of small cars sold in Japan. A subsequent internal investigation found that improper fuel economy data had been issued for all 20 types of vehicles sold in Japan from 2006 – including five models for which employees intentionally manipulated fuel figures.

Revelations

The revelations were the latest irregularities in the global car industry to rattle consumer confidence in carmakers’ fuel consumption and emissions figures. Global investigations were sparked by VW’s admission late last year that 11m of its cars were fitted with emissions-cheating software.

Mitsubishi’s misconduct came to light last year after Nissan, its partner in mini-cars since 2011, highlighted discrepancies in fuel-efficiency data.

Shares in Mitsubishi closed up 2.5 per cent on Wednesday but have fallen nearly 38 per cent since news of the scandal emerged on April 20.

The company will hold its annual general meeting on Friday.

– Copyright The Financial Times Limited 2016