Nissan's 40 year faulty car inspections add to Japan's latest corporate scandals

The saga could signal a recall crisis for the Japanese automaker

Nissan Motors chef executive, Hiroto Saikawa, said the company was suspending all production destined for the local market, as Japan's number-two automaker grapples with a mounting inspection scandal Show more

Nissan Motor had been conducting its current inspection process for vehicles sold in Japan -deemed faulty by the government last month - since at least 1979, according to a person familiar with the situation.

The finding will be part of a report from an external investigation team commissioned by the carmaker, said the person, who asked not to be identified because the information isn’t public. Nissan’s manufacturing division will likely take responsibility, the person said. The report will be submitted ahead of the Yokohama, Japan-based company’s results announcement scheduled for November 8.

The inspection scandal in Japan is widening after Subaru also allowed uncertified workers to inspect vehicles before shipment, according to another person with direct knowledge of the matter. The reputation of Japan’s manufacturing sector has taken a beating with Kobe Steel admitting to falsifying product quality and Takata filing for bankruptcy earlier this year after one of the world’s most famous recall crises.

“Nissan has commissioned a third party to thoroughly investigate the issue and suggest measures to prevent recurrence,” a company spokesman said in an emailed statement. “Details of the investigation will be shared at the appropriate time.” The spokesman declined to comment specifically on the timeframe.

Nissan chief executive Hiroto Saikawa, who was handpicked by chairman Carlos Ghosn, to run the Japanese carmaker earlier this year, has promised to investigate the matter. Mr Saikawa, 63, has been criticized by local media for not bowing long enough while apologising about the incident, as is customary in Japan.

Nissan has its roots in the 1930s. Jidosha-Seizo Kabushiki-Kaisha was established on December 26, 1933, taking over all the operations for manufacturing Datsuns from the automobile division of Tobata Casting. That company name was changed to Nissan Motor on June 1, 1934, according to Nissan’s website.

The 1970s were the years of the oil shock, which helped catapult the Japanese automakers into the global stage. The Sunny was one of the most popular models of Nissan during that time along with other models such as Silvia, Cedric and Datsun. That decade was also when Nissan opened its factory in Kyushu.

Revelations late last month that Nissan technicians who weren’t registered with Japan’s transport ministry signed off final inspection of vehicles triggered a recall of about 1.2 million automobiles and a temporary shutdown of all production at the manufacturer’s factories in Japan for local sales.

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The company has said models exported from Japan aren’t involved in the recall as the quality certificate is a Japan-specific requirement by the ministry. There are no safety issues with the vehicles, the company has said repeatedly.

Nissan is confident sales in Japan will recover within this fiscal year, chief performance officer Jose Munoz said in an interview with Bloomberg Television at the Tokyo Motor Show this week.

An internal investigation by Subaru found that workers training to be certified were involved in inspections at its main factory complex in Gunma prefecture, according to the person, who asked not to be identified because the information is private. The person added the company may announce details as early as Friday.

After the initial revelations of uncertified inspection, an external team probing the lapses found that some Nissan plants had transferred final vehicle checks to other lines. As a result, employees who were not internally registered as final vehicle inspectors performed the check. The company will reconfigure the inspection process, and plans to add additional final inspectors, Mr Saikawa said this month.