Carlos Ghosn, one of the auto industry's most celebrated turnaround artists, saved Nissan Motor Co. by managing himself out of numerous tight spots. Now his hand-picked successor faces a big test of his own, just six-months into his tenure as Nissan's chief executive officer.

In what Nissan CEO Hiroto Saikawa has called a "shocking" lapse, the automaker announced on Monday that it's recalling 1.2 million vehicles in Japan after regulators discovered unauthorized inspectors approved vehicle quality. The recall covers all models produced in Nissan factories in Japan and will cost the company ¥25 billion ($222 million).

Less than 48 hours later, Nissan's stock took a hit after the Kyodo news agency reported that the company allegedly falsified inspection documents to make it seem as if authorized inspectors had checked the new vehicles. The shares dropped. A Nissan spokesman declined comment on the report.