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Subaru recalls more cars, slashes guidance as cheating issue widens

By Naomi Tajitsu TOKYO — Subaru Corp said it would recall more vehicles sold in the Japan domestic market on new cases of inspection cheating, and cautioned that rising recall costs would lop off about a quarter from its annual profit forecast. Shares in Subaru, already reeling from a series of recalls for issues ranging from faulty components to inspection do-overs, fell 5 percent to a four-year low on Monday after news of the fresh recalls and the bleak outlook. The company, the smallest among Japan's major automakers, said it would recall around 100,000 vehicles, including its popular Impreza sedan, after discovering that final tests for components including brakes were not conducted properly. Vehicles sold overseas will not be affected. "It's unforgivable that these inspection-related issues are continuing," CEO Tomomi Nakamura said at a briefing, while repeatedly adding that the latest recall would be the last related to testing misconduct. The automaker expects to incur 6.5 billion yen ($57 million) in costs related to the latest recall. This, along with other quality-linked issues, is expected to push down Subaru's operating profit to 220 billion yen in the year to March 2019. It had previously forecast a 300 billion yen profit. Subaru posted a surprise operating loss of 25 billion yen for the three months ended September, its first time in the red for a quarter since 2009 and missing a mean forecast for a 68.46 billion yen profit from 10 analysts polled by Refinitiv. Recall-related costs were the main driver of the loss, while global sales fell 6 percent over the quarter due to weak demand in the United States — its biggest market, where overall demand has cooled since record-high sales in 2016. (Click here for an interactive version of this chart) Engine recall Last month, Subaru nearly halved its first-half operating profit view, citing higher quality-related costs. It later announced a global recall of around 400,000 vehicles, including its Forester SUV and Impreza sedan, to fix a design flaw in the engines' valve springs. That came on the heels of another series of recalls stemming from revelations last year that uncertified workers had been submitting final inspection reports for vehicles sold in Japan. That had also led to a recall of about 400,000 cars. Recalls are common in the auto industry, and automakers regularly put funds aside to pay for them.

2015 Subaru Outback offers more room and better econ behind that new face

While its new front fascia makes the biggest obvious impact, Subaru says changes to the entire 2015 Outback package make it roomier, more powerful, more efficient and quieter. The hexagonal grille gets it in line with the corporate template, to go along with a new shape to the lower grille and fog light cladding, a sharp crease for a shoulder line and a faster rake to the windshield. The rocker panel cladding and its 'toothed' molding remain, but it now also doubles as a step for when you want to place items on the roof rack.
Under the aluminum hood will either be a 2.5-liter, four-cylinder boxer engine with 175 horsepower and a carryover 174 pound-feet of torque, or a 3.6-liter inline-six-cylinder with 256 hp and 247 lb-ft exclusively in the 3.6R Limited model. Paired to the lower-friction Lineartronic CVT that is the only shifting choice, and aided by features like the active grille shutter system and electric power steering, Subaru estimates fuel economy for the four-cylinder at 25 miles per gallon city, 33 highway and 28 combined, an increase of 1/3/2 mpg over the outgoing car. The sixer is pegged at 19 city, 27 highway and 22 combined, an increase of 2 mpg across the board.
The Outback has grown in every dimension, but never by more than 0.7 of an inch. The passenger cabin grows by 2.7 cubic feet, though, so occupants have more shoulder, hip, elbow and legroom. The cargo hold is enlarged by 1.2 cu-ft with the rear seats up, by 2.0 cu-ft with them down and the load floor is flatter. Accessing it is made easier by the memory height function on the power tailgate and new release handles for the rear thrones. Cabin ambiance is improved by sound abatement measures like an acoustic windshield, thicker panels and more noise-insulating foam.

Subaru, like Nissan, admits improper checks on Japan cars, expects recalls

TOKYO — Subaru on Friday said it had failed to follow proper inspection procedures for vehicles for the domestic market, an issue likely to result in a product recall and adding to a list of compliance problems at Japanese companies. The automaker said for more than 30 years, final inspections of new vehicles at its main Gunma complex north of Tokyo were sometimes conducted by inspectors who were not listed as certified technicians, violating transport ministry requirements. The automaker said it was therefore considering recalling about 255,000 vehicles including its Legacy, Forester and Impreza models produced at the complex and sold at home, at a cost of around 5 billion yen ($43.86 million). Chief Executive Officer Yasuyuki Yoshinaga at a news conference said inspectors in training for certification to sign off final checks had been approving the checks under the names of their trainers, a process the automaker followed for over 30 years without realizing it did not meet ministry requirements. "The final inspection process is very important and we acknowledge that we did not meet requirements," Yoshinaga said. "It's always been my goal to make this company good. This issue shows that we're not there yet." Subaru said it would report details of an internal investigation to the ministry on Monday, and that it needed to better communicate requirements to workers. "It's always been my goal to make this company good. This issue shows that we're not there yet." The revelation followed a similar oversight at Nissan, while Kobe Steel has been grappling with a data fabrication scandal, tarnishing Japan's reputation for quality control. Yoshinaga said the issue was discovered during an internal inspection ordered by the ministry after Nissan late last month revealed similar violations on inspections governing vehicles sold in Japan at its domestic factories. The ministry requires certified technicians to sign off on paperwork for final inspections for vehicles produced in Japan for the domestic market. The extra step does not affect product quality and is not needed for vehicles exported overseas. Toyota, Honda and other Japanese automakers on Friday said they have reported to the ministry that they found no issues with their respective inspections. Subaru shares closed down 2.6 percent on Friday after falling more than 3 percent following media reports of the improper inspections. The broader market rose 1.2 percent.