Subaru Is Reportedly Mulling a Recall After Allowing Uncertified Technicians to Inspect Vehicles

October 27, 2017, 5:01 AM UTC
Tokyo Motor Show Begins
TOKYO, JAPAN - OCTOBER 25: Subaru Corp.'s Viziv Performance Concept vehicle is displayed during the Tokyo Motor Show at Tokyo Big Sight on October 25, 2017 in Tokyo, Japan. The 45th edition of Tokyo Motor Show, which domestic and international automobile manufacturers exhibit their latest products, continues until November 5. (Photo by Tomohiro Ohsumi/Getty Images)
Tomohiro Ohsumi—Getty Images

Subaru Corp failed to follow proper inspection procedures for vehicles destined for the domestic market at a factory in Japan, two people with knowledge of the matter said on Friday.

The revelation follows a similar issue at Nissan Motor (NSANY) and comes as Japanese manufacturers grapple with wider compliance problems with Kobe Steel (KBSTY) saying on Thursday it had found more possible cases of data fabrication on its products.

Shares of Subaru fell more than 3% in early trade, underperforming a slight rise in the broader Tokyo market .

Japan’s transport ministry had instructed domestic automakers to conduct internal investigations after Nissan found violations on inspections governing vehicles sold in Japan at its domestic factories. The ministry had set an end-October deadline for submitting the results.

The sources told Reuters that Subaru had allowed uncertified technicians to conduct final vehicle inspections at its main Gunma factory complex, north of Tokyo, which violates ministry requirements. They asked not to be identified because they were not authorized to disclose the information.

The Nikkei business daily reported earlier that Subaru had yet to determine whether a recall, which could affect 300,000 vehicles, would be necessary.

A Subaru spokesman said the company could not comment on the inspection issue because the automaker had not submitted results of its internal investigation to the transport ministry yet.

Kyodo News reported separately that Subaru had been letting uncertified technicians oversee final inspections for over 30 years, without citing its source.