Japanese car manufacturer Mitsubishi has admitted manipulating test data to show better fuel consumption on more than 600,000 vehicles.
The company said the inaccurate tests had been carried out on four mini-car models and impacted 157,000 built for Mitsubishi and 468,000 for Nissan.
It added that its testing method, which is different to the one required by Japanese law, had also been used on other Mitsubishi cars manufactured for the Japanese market.
Shares plummeted 15% in their biggest one-day fall for 12 years.
The firm said Mitsubishi and Nissan had stopped producing and selling the "applicable cars" and would begin discussing compensation.
The four models are the Mitsubishi eK Wagon and ek Space and the Nissan Dayz and Dayz Roox.
The announcement is the latest scandal to hit the automotive industry after Volkswagen admitted using software to allow diesel vehicles to cheat emissions tests
Mitsubishi said it had "conducted testing improperly to present better fuel consumption rates than the actual rates, and 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."
It added: "Taking into account the seriousness of these issues, we will also conduct an investigation into products manufactured for overseas markets."
Some 22,693 new Mitsubishi cars were sold in the UK last year, according to the Society of Motor Manufacturers and Traders. This represents 0.9% of the UK market.
Joe Rundle, head of trading at ETX Capital, said the revelation from Mitsubishi "calls into question whether we have a much larger industry-wide scandal on our hands".
He said: "We've always thought that the VW emissions scandal would rumble on and now it looks like the dodginess is not confined to the German carmaker."
He added: "If – and only if – US carmakers are involved too it could be a devastating blow to the industry. After being bailed out with taxpayers' cash in 08 like the banks, it would look like neither had mended their ways.
"Emissions could be for the car sector like Libor fixing has been for the banks – a further stain on an already tarnished image.
"One person who benefits from all this is Elon Musk, whose Tesla brand is increasingly looking like a white knight."
Lance Bradley, managing director of Mitsubishi Motors in the UK, said: "I would like to reassure everyone that there is no evidence to suggest that UK or European models are affected."