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Business

Inspection scandals hit production at Nissan, Subaru

Temporary factory closures to rectify errors expected to hurt sales

Nissan's overseas shipments have also been hurt by its response to the auto inspection scandal.

TOKYO -- Production suffered at automakers Nissan Motor and Subaru in November thanks to inspection scandals that forced a halt to domestic shipments and slowdowns needed to retrain workers.

Nissan's domestic production for November sank 42.9% on the year to 59,227 units, the company said Wednesday, following a 13.6% year-on-year drop in October. Nissan restarted production and shipments for domestic cars at all six of its Japanese plants as of Nov. 8 after taking measures to prevent recurrences, such as restricting access to final inspection areas to qualified employees. But the plants are producing cars at a slower pace until workers master the rules.

The scandal has also hurt Nissan's production of cars for export that are made on the same production lines as domestic models. November exports fell 21.3% on the year to 50,678 units, the first drop in six months. Brisk sales in North America and elsewhere could slow should production lag for a prolonged time.

Production is expected to return to planned levels by the end of March. Nissan has informed its parts suppliers that it will reduce production targets for the second half of fiscal 2017 by 15% from its original plan to around 510,000 units.

Nissan's domestic orders for December are returning to prior year levels, but production and shipments have not kept pace. The inspection scandal is expected to affect domestic sales for the time being.

Subaru's domestic production for November dropped 8.2% to 60,223 cars after the company temporarily halted work at its Gunma Prefecture factory at the end of the month so workers involved in final inspections could take additional courses on compliance and other training. The automaker plans to make up for lost production in December by opening the plant on off days and extending overtime hours.

An internal investigation by Subaru revealed that fuel efficiency data may also have been tampered with, but the probe is still in progress. Domestic orders for December are less than 80% of last year's level as Subaru held back on television commercials, among other factors.

The problem at Nissan and Subaru of unqualified workers making final checks began to be exposed in mid-September when the transport ministry conducted an on-site inspection at Nissan Shatai's Shonan Plant in Kanagawa Prefecture. The ministry also conducted a spot investigation of Nissan's Yokohama headquarters last Friday, seeing management as responsible for letting these improprieties continue for so long.

Domestic production in November for Japan's eight passenger car makers rose 0.5% on the year to 803,627 units for 13 straight months of gains, led by a recovery for such minicars as Suzuki Motor's WagonR, which saw a roughly 30% increase in production. Yet the result is a significant decrease from the 6% growth seen in October as Nissan and Subaru drag down the rest of the pack.

(Nikkei)

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