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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.

Subaru Impreza gets smarter, safer and sharper in Japan

Subaru quietly gave the sedan and hatchback variants of the Impreza a mid-cycle update in Japan. Both body styles now wear a sharper front-end design, and they receive additional tech features. The current, fifth-generation Impreza made its global debut at the 2017 New York Auto Show. The 2020 model introduced online in Japan stands out with a revised front fascia characterized by a wide air dam that stretches the entire width of the bumper, chrome-look L-shaped trim on either end of it, and a revised grille. The changes made to the rear fascia are largely limited to tweaked lights. All told, you need to be an eagle-eyed car-spotter to tell the face-lifted model apart from its predecessor. Buyers seeking a sportier Impreza will be disappointed, Subaru is still taking its time developing the next WRX, but those who want a more high-tech car that helps them drive will be thrilled. Every Japanese-spec Impreza regardless of trim level is now equipped with EyeSight Touring Assist, a suite of electronic driving aids that handles accelerating, braking and steering in a wide range of conditions. These features don't make the Impreza autonomous in any way, and the driver still needs to stay focused on the road ahead, but they help when driving becomes tedious. There are other, more minor upgrades on the menu. The door mirrors now tilt down when the driver selects reverse, for example, and Subaru added a front-view camera.  In Japan, the Impreza carries on with either a 1.6-liter flat-four rated at 115 horsepower, or a 2.0-liter flat-four with 154 horses on tap. The entry-level model is front-wheel drive, surprisingly, but all-wheel drive is standard on higher trims. Regardless, both engines shift through a continuously variable transmission (CVT) that offers seven pre-programmed virtual gears. The Impreza lost its manual transmission in its home country years ago, though the company's American division continues to let buyers give a shift. Subaru hasn't announced plans to make similar changes to the American-spec model and tells us "it's too early for us to release information" about that, but it's not too far-fetched to speculate we'll get an updated Impreza sooner rather than later. We might see the model break cover during the 2019 edition of the Los Angeles Auto Show in November, and it could arrive in showrooms during the 2020 model year.

2018 Crosstrek propels Subaru to best-ever April sales

April was a dismal month for most automakers, with sales declines that ranged from 4.7 percent for Ford to a whopping 28 percent for Nissan. So here comes mighty little Subaru, which claimed the month as the best April in its history. The gain is entirely attributable to the Crosstrek, which is all-new for 2018. Sales of the compact, raised crossover climbed almost 70 percent for the month to 12,266. Year to date, Subaru has sold 45,728 Crosstreks, an increase of 66.6 percent. That helped push Subaru's total U.S. sales to 53,170 in April and 202,873 for the first four months of 2018, increases of 1.5 percent and 3.2 percent, respectively. It also marks 77 consecutive months of yearly month-over-month growth for Subaru. All other models saw declining sales for April, led by the Impreza, which was down 27.4 percent. "Our customers' interest in the Crosstrek continues to increase every month," Jeff Walters, senior vice president of sales, said in a statement. "We're now looking forward to the start of production later this month of the all-new Subaru Ascent at our plant in Indiana." The 2018 version of the Crosstrek went on sale last August featuring a new 2.0-liter flat-four engine, stiff new chassis, more ground clearance and the EyeSight suite of safety technologies, among other changes. But the Crosstrek has been on a hot streak for a few years now, with sales up 15.1 percent in 2017 and 6.7 percent in 2016. The Crosstrek is Subaru's third top-selling model behind the Forester and Outback. Subaru spokesman Dominick Infante says the company did not see the sales trail-off last year that's typical of a vehicle at the end of its lifecycle with the Crosstrek. "It was essentially a straight line going up, and it was limited by production," he said. The difference, he said, is that Subaru is now able to make more of them. The company last year shifted production of the Impreza to its plant in Lafayette, Ind., to free up capacity to build more Crosstreks at its plant in Gunma Prefecture, Japan, which underwent a major retooling. The Indiana plant now builds the Impreza, Legacy and Outback after the expiration of a contract in 2016 with Toyota to build 100,000 Camry sedans annually. Production of the new three-row Ascent crossover will start in Indiana in May, following a $140 million expansion at the plant, according to Automotive News. The vehicle is due in showrooms in June, Infante said, with sales of 60,000 expected in the first year.