Business / Corporate

Subaru report says lack of respect for regulations led to inspection scandal

Kyodo

Subaru Corp. said Tuesday a third-party investigation has found that overconfidence in the firm’s technical skills and a lack of respect for regulations led to its decades-long use of uncertified inspectors for state-mandated vehicle checks.

Yasuyuki Yoshinaga, the automaker’s president, submitted a report compiled by a team of lawyers on the malpractice, which triggered a recall of around 395,000 vehicles, to the transport ministry.

Workers at two factories in Gunma Prefecture were allowed for more than 30 years to conduct last-stage safety checks on cars coming off the assembly line without clearing an in-company vetting process. The probe found that the practice may have begun as far back as the 1980s and was widespread by the 1990s.

It also found that workers at the factories sought to conceal the practice from authorities by withdrawing uncertified staff from the inspection floor during visits by transport ministry officials, casting doubt on earlier assertions that the practice was not a deliberate effort to cut corners.

“We need to change our outdated corporate culture and educate our staff,” Yoshinaga told a news conference on Tuesday, underscoring that correcting the issue was an urgent task for the automaker.

It also found evidence of malpractice in the vetting process itself, with exam answers being leaked and workers being certified before the necessary probationary period had passed.

Staff at the plants had a disregard for the importance of carrying out the inspections in accordance with government regulations, and there was a pervasive belief that even uncertified workers were capable of completing inspections on their own, the report said.

To prevent such a problem, the report called on Subaru to educate its workers on the importance of complying with the rules, and to improve its ability to self-check for problematic practices.

Subaru said it had already taken corrective steps including making certified inspectors wear red caps or helmets to make them easier to identify at a glance, and that it also planned to implement biometric authentication on the inspection floor.

Nine models have been recalled, including the Impreza, the Forester and Toyota’s 86 sports car, which Subaru manufactures.

The cost of recalling vehicles affected by the scandal, which became public on Oct. 27 following the revelation of a similar issue at Nissan Motor Co., is expected to reach ¥20 billion ($180 million), forcing the automaker to cut its net profit forecast for fiscal 2017 through March by 9.4 percent to ¥207 billion.

Orders for Subaru vehicles in December had fallen to around 70 percent of those a year prior, Yoshinaga said.

Subaru shares have fallen over 8 percent since the uncertified checks came to light. They ended Tuesday up 0.81 percent at ¥3,742. Tokyo’s benchmark Nikkei average ended the session down 0.15 percent.

Subaru also potentially faces a hefty fine, and the Ministry of Land, Infrastructure, Transport and Tourism could revoke its license to conduct final vehicle checks, effectively stopping it from shipping cars.

The domestic manufacturing sector’s reputation for high-quality products has been hit by a string of recent scandals including at the nation’s third-largest steel-maker Kobe Steel Ltd. as well as Mitsubishi Materials Corp. and Toray Industries Inc.

Nissan recalled 1.2 million cars in the Japanese market, with CEO Hiroto Saikawa and other executives taking pay cuts as a result.

Coronavirus banner