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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 is America's third most off-roaded brand

When you think of iconic off-road brands, where does Subaru fall on your radar? Somewhere in the middle? Perhaps near the bottom? Don't worry, you're not alone. Until recently spending some time in Bend, OR, where we drove the all-new 2015 Subaru Outback, we never really pegged the Japanese automaker to be a highly lauded brand among off-road enthusiasts, despite many of the company's products actually being quite capable when the going gets rough.
But the data says we're wrong. According to a 2013 J.D. Power study, Subaru vehicles have some of the highest use off road compared to other brands - of course "off road" here just means anything not on a paved road, so even gravel trails and tame two-tracks count in these statistics. Nearly 29.5 percent of its cars are used on trails and dirt roads, with only the Ram and Jeep brands besting that statistic, at 30.2 and 31.0 percent, respectively. Said another way, Subaru sold 424,683 vehicles in the US in 2013, meaning that some 125,281 saw off-road use. Mainstream brands like GMC, Ford and Chevrolet all trail Subaru, and even Land Rover comes in at less than 20 percent.
Some 34.7 percent of Outbacks are taken off paved roads, according to J.D. Power data.

Consumer Reports says infotainment systems 'growing first-year reliability plague'

The Consumer Reports Annual Auto Reliability Survey (right) is out, and the top two spots look much the same as last year's list with Lexus and Toyota in first and second place, respectively. However, there are some major shakeups for 2014, with Acura plunging eight spots from third in 2013 to 11th this year, and Mazda replaces it on the lowest step of the podium. Honda and Audi round out the top five. This year's list includes six Japanese brands in the top 10, two Europeans, one America and one Korean.
Acura isn't the only one taking a tumble, though. Infiniti is the biggest loser this year by dropping 14 spots to 20th place. Other big losses come from Mercedes-Benz with an 11-place fall to 24th, and GMC, which declines 10 positions to 19th.
Perhaps unsurprisingly, it's not traditional mechanical bugs hauling down these automaker's reliability scores. Instead, pesky problems with infotainment systems are taking a series toll on the rankings. According to Consumer Reports, complaints about "in-car electronics" were the most grumbled about element in new cars. Problem areas included things like unresponsive touchscreens, issues pairing phones and multi-use controllers that refused to work right.