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Japan carmakers vouch for safety of some Kobe Steel parts

TOKYO — Four Japanese automakers on Thursday said they found no safety issues with aluminum parts supplied by Kobe Steel Ltd, allaying some concerns that falsified quality data on products from the steelmaker had compromised their vehicles. Kobe Steel shares surged after the car makers' statements, but the steelmaker still has to contend with a U.S. Justice Department probe, while checks continue at hundreds of companies involved in complex supply chains spanning the globe. Japan's third-biggest steelmaker admitted earlier this month it falsified specifications on the strength and durability of aluminum, copper and steel products, along with materials for optical disks. The falsifications stretch back for more than 10 years, a senior executive told Reuters this week. Since then, global automakers, aircraft companies and other manufacturers have scrambled to identify potential hazards in their products. Toyota, Honda, Nissan and Mazda said that hoods and other exterior parts used in their cars which were made from aluminum directly supplied by Kobe Steel were safe. Kobe Steel shares ended the day nearly 7 percent higher but are still down by more than a third since it announced the data falsification. Automakers are still making checks on other parts, including those that they received through their parts suppliers. "We confirmed that the materials satisfy applicable statutory standards, and our own internal standard, for key safety and durability requirements for vehicles," Toyota said in a statement. Toyota, one of the world's largest automakers, identified aluminum plates supplied by Kobe Steel for the hoods and rear hatches of Toyota and Lexus brand vehicles. Though outside the automaker's specifications, they were still safe to use. While Subaru and other carmakers said they were still investigating the issue, the announcements by Toyota, Honda, Nissan and Mazda suggest that Kobe Steel's cheating scandal may have a limited impact on product safety."SERIOUS SITUATION" Nonetheless, the company's fate hangs in the balance while checks are being carried out. It must report to Japan's industry ministry by around the end of next week on any safety concerns and provide a more extensive account of the problems a fortnight later. Industry leaders have reached a consensus that Kobe Steel is in a "serious situation," a senior Japanese manufacturing executive told Reuters.

Subaru to stop building Camry for Toyota in the US

It was back in 2007 that Subaru of Indiana Automotive, under contract from Subaru minority shareholder Toyota, built the first Toyota Camry at its plant in Lafayette, Indiana. Rumblings of the end of that contract work have been around for a while, as Subaru talked of expanding capacity to build more units and add a line for the Impreza, and Toyota talked of moving Camry production to its Georgetown, KY plant. The news was official internally last November when SIA Executive Vice President Tom Easterday told the Louisville Courier-Journal that Camry production would end. Now, Automotive News reports that both automakers have admitted publicly that the end will come in 2016.
SIA currently has a 170,000-unit capacity devoted to the home-brand Legacy and Outback models, while a $400-million expansion increases that to 300,000 units to prepare the facility for Impreza production in two years. Freeing up the 100,000 units of production devoted to the Camry means a 400,000-unit capability, which is far more than Subaru needs at the moment, but the Toyota exit will allow it to expand any way it sees fit. Subaru has said it will absorb the workers on the Camry line and no jobs will be lost, the mayor of Lafayette saying the development could change the timetable for the expansion.

The next steps automakers could take after sales drop again in April

DETROIT (Reuters) - Major automakers on Tuesday posted declines in U.S. new vehicle sales for April in a sign the long boom cycle that lifted the American auto industry to record sales last year is losing steam, sending carmaker stocks down. The drop in sales versus April 2016 came on the heels of a disappointing March, which automakers had shrugged off as just a bad month. But two straight weak months has heightened Wall Street worries the cyclical industry is on a downward swing after a nearly uninterrupted boom since the Great Recession's end in 2010. Auto sales were a drag on U.S. first-quarter gross domestic product, with the economy growing at an annual rate of just 0.7 percent according to an advance estimate published by the Commerce Department last Friday. Excluding the auto sector the GDP growth rate would have been 1.2 percent. Industry consultant Autodata put the industry's seasonally adjusted annualized rate of sales at 16.88 million units for April, below the average of 17.2 million units predicted by analysts polled by Reuters. General Motors Co shares fell 2.9 percent while Ford Motor Co slid 4.3 percent and Fiat Chrysler Automobiles NV's U.S.-traded shares tumbled 4.2 percent. The U.S. auto industry faces multiple challenges. Sales are slipping and vehicle inventory levels have risen even as carmakers have hiked discounts to lure customers. A flood of used vehicles from the boom cycle are increasingly competing with new cars. The question for automakers: How much and for how long to curtail production this summer, which will result in worker layoffs? To bring down stocks of unsold vehicles, the Detroit automakers need to cut production, and offer more discounts without creating "an incentives war," said Mark Wakefield, head of the North American automotive practice for AlixPartners in Southfield, Michigan. "We see multiple weeks (of production) being taken out on the car side," he said, "and some softness on the truck side." Rival automakers will be watching each other to see if one is cutting prices to gain market share from another, he said, instead of just clearing inventory. INVESTORS DIGEST BAD NEWS Just last week GM reported a record first-quarter profit, but that had almost zero impact on the automaker's stock. The iconic carmaker, whose own interest was once conflated with that of America's, has slipped behind luxury carmaker Tesla Inc in terms of valuation.