Meanwhile, a Reuters report said members of Japan's Transport Ministry raided a company plant in the central Japanese city of Okazaki and a spokeswoman for the company said the raid would continue on Friday.

The raid affects two models – Mitsubishi's eK mini-wagon and Nissan's Dayz; both automakers have said they will halt sales of the vehicles.

The report said, "JPMorgan auto analyst Akira Kishimoto estimated the cheating could cost Mitsubishi more than 50 billion yen ($450 million), including payments to consumers, the cost of replacing parts and compensation to Nissan."

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Subsequently, Mitsubishi issued a following statement on Wednesday admitting the wrongdoings.

"In connection with the certification process for the mini-cars manufactured by MMC, we found that with respect to the fuel consumption testing data submitted to the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), MMC conducted testing improperly to present better fuel consumption rates than the actual rates; and that the testing method was also different from the one required by Japanese law. We express deep apologies to all of our customers and stakeholders for this issue."

The company said it had used the running resistance value for testing, which shows more advantageous fuel consumption rates than the actual rates.

The company said the improper testing method affects four mini-car models, the "eK Wagon," "eK Space," "Dayz" and "Dayz Roox". Out of these, "Dayz" and "Dayz Roox" are manufactured by Mitsubishi and have been supplied to Nissan Motor Co Ltd (ADR) (OTC: NSANY) (OTC: NSANF) since June 2013.

As of the end of March 2016, Mitsubishi has sold 157 thousand units of the eK Wagon and eK Space and supplied 468 thousand units of the Dayz and Dayz Roox to Nissan. Mitsubishi have decided to stop production and sales of the applicable cars.

Mitsubishi shares touched a new 52-week low of $5.10 and were recently seen down 20.49 percent to $5.20, while ADRs of Nissan gained 1.64 percent to $18.94.