The Secret Files

By Wehrfritz, George; Itoi, Kay et al. | Newsweek International, September 11, 2000 | Go to article overview

The Secret Files


Wehrfritz, George, Itoi, Kay, Takayama, Hideko, Newsweek International


Shigeo Toyoda's one-man battle against Mitsubishi Motors began last September in the parking lot outside a Tokyo supermarket. The 57-year- old businessman says he was idling there in his new Diamante, with the parking brake on and the transmission in park. Suddenly, he says, the $24,000 sedan lurched backward, smashing into a minivan and causing $10,000 in damage. After the crash, Toyoda says, the transmission was still stuck in park. Toyoda complained to the manufacturer. "From the beginning Mitsubishi's attitude was: 'This is impossible'," says Toyoda. "Four days later a salesman came to my home and said: "There is nothing wrong with your car."

For decades that's been Mitsubishi's standard response to complaints. Yet many Japanese were nonetheless shocked last week when government investigators revealed that the country's fourth largest automaker had been covering up serious defects since the late 1970s. Acting on a tip from inside Mitsubishi, Ministry of Transportation officials raided the company headquarters on Aug. 27 and found thousands of customer complaints hidden away in boxes and locker rooms. Many were marked "H," for himitsu, or "secret." Caught red-handed, Mitsubishi agreed to recall some 620,000 cars and trucks made over the last 20 years. The problems include substandard brakes, fuel systems and clutches --flaws reportedly responsible for several injury accidents. The cost to repair those problems amounts to a mere $70 million, but the damage to Mitsubishi's image could be much greater. In a tearful public apology, Mitsubishi Motors president Katsuhiko Kawasoe admitted that his company deliberately covered up complaints because "we were ashamed."

Until recently, they were under little pressure to fess up. Japan's consumer-protection laws are the weakest in the developed world. Since 1945, for example, only about 100 product-liability lawsuits have gone to trial in Japan, compared with about 200,000 every year in the United States. Even under the new Product Liability Law written in 1995, consumers have won few cases against any Japanese automaker. The nation's huge industrial groups, or keiretsu, felt free to brush off complaints at home. Forced recalls like the one now rocking the tire manufacturer Firestone--a U.S. subsidiary of Japan's Bridgestone Corp.- -were rare. Hiroko Mizuhara, secretary-general of the Consumers Union of Japan, says, "The system as a whole is built to protect big business."

That's changing now. Consumers like Toyoda are increasingly fed up. Car-industry insiders suspect the government's decision to pursue Mitsubishi could foreshadow larger battles to come. "The Mitsubishi incident makes people wonder how other companies are handling claims," says a retired auto executive in Tokyo. …

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