Japanese authorities raided the research centre of Mitsubishi Motors after the company admitted to improper testing of fuel efficiency, with the government saying the situation is extremely serious.
Japanese Chief Cabinet Secretary Yoshihide Suga said, "Based on the findings from the raid, and a report from the company, we would like to reveal the extent of the inaccuracies as soon as possible. We will deal with the situation in a strict manner and would like to ensure the safety of cars."
Mitsubishi Motors Corp admitted to manipulating test data to overstate the fuel economy of 625,000 cars sold in Japan, knocking its shares down more than 15 percent and wiping $1.2 billion off its market value on Wednesday.
The automaker said it stopped making and selling its eK mini-wagons for the domestic market after Nissan Motor, which markets a similar model made by Mitsubishi, found a discrepancy in fuel efficiency test data.
Mitsubishi Motors said the fuel economy levels of models made for the local market were up to a tenth lower than stated in its test results. It said it manipulated those levels to gain a favourable reading for its fuel economy certification.
As global emissions regulations tighten, fuel economy has become a major factor for environmental- and cost-conscious buyers.
Tetsuro Aikawa, the president of Japan's sixth-largest automaker, bowed in apology at a news conference in Tokyo for what is the biggest scandal at Mitsubishi Motors since a damaging defect cover-up over a decade ago.
"We'd like to apologise for the issue," Aikawa said. "The focus right now is to resolve this problem and prevent it from happening again ... it could be quite damaging."
Shares in Mitsubishi Motors closed down more than 15 percent at 733 yen, the stock's biggest one-day drop in almost 12 years. Shares in Nissan closed down 1 percent.
Mitsubishi Motors said the test manipulation involved 625,000 vehicles produced since mid-2013. These include its eK mini-wagon as well as 468,000 cars it made for Nissan, which markets them as the Dayz.