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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.

2016 Subaru WRX makes IIHS TSP+ fun

We write about boring, utilitarian compacts being named to the Insurance Institute for Highway Safety's Top Safety Pick+ list pretty regularly. Today, we've got yet another fun car to add to the tally – the Subaru WRX. Thanks to the inclusion of the company's impressive EyeSight active safety system, the WRX was able to score a "Superior" rating on IIHS' frontal crash prevention test, which is the highest score possible. Vehicles are required to score at least an "Advanced" rating to earn the TSP+ mark. In addition to the active safety system, TSP+ vehicles must also record "Good" ratings across the four basic crash tests – front, side, rear, and rollover – and a "Good" or "Acceptable" rating the small-overlap crash test. Of course, Subaru is no stranger to IIHS' biggest honor – the Legacy and Outback were named Top Safety Pick + vehicles in April 2014. We're still scouring the Internet for the actual crash test video from IIHS. Once we uncover it, we'll update this post. Until then, scroll down for the official press release from Subaru. 2016 Subaru WRX Awarded IIHS' Highest Standard of Safety "2015 TOP SAFETY PICK (TSP) +" ? "EyeSight" achieved the highest possible rating of "Superior" for front crash prevention. ? Seven models have earned 2015 safety awards from IIHS. Tokyo, September 14, 2015 - Fuji Heavy Industries Ltd. (FHI), the manufacturer of Subaru automobiles, today announced that the Insurance Institute for Highway Safety (IIHS; a nonprofit organization supported by auto insurers in the US) has awarded the highest standard of safety, 2015 TOP SAFETY PICK+ (TSP+) along with the highest possible rating of "Superior" for front crash prevention to the 2016 Subaru WRX (US specs.), equipped with Subaru's EyeSight* driver assist technology. By adopting the EyeSight for 2016 model, WRX earned 6 of 6 points for front crash prevention. Including 2016 Subaru WRX, Subaru has seven models that have earned 2015 safety awards from IIHS - six with TOP SAFETY PICK+ and one with TOP SAFETY PICK. The EyeSight was the first system ever to use only stereo camera technology to detect the objects such as vehicles, pedestrians and cyclists. Since its Japanese debut in May 2008, features available on this system have been highly praised; they included pre-collision braking control and all-speed range adaptive cruise control tracking function.

Kayaba, Sumitomo to pay millions for price-fixing in US

Kayaba Industry Co, which does business in the US as suspension parts maker KYB, and Sumitomo Electric Industries are facing payments in the millions to settle price-fixing cases about the components that they make. As part of the Department of Justice's ongoing crackdown of price fixing in the auto industry, KYB agreed to pay $62 million and pleaded guilty to conspiracy to set the cost of shock absorbers from the mid '90s through 2012. The company allegedly worked with co-conspirators to keep the cost of the parts high, and those components then made it into vehicles from Honda, Kawasaki, Nissan, Subaru, Suzuki, and Toyota. "Any collusive agreement among competitors to restrict price competition undercuts our free enterprise system and violates the law," said Carter M. Stewart, US Attorney of the Southern District of Ohio, in the DoJ's announcement. Over the past few years, the DoJ has brought cases against 37 parts suppliers and 55 executives, leading to over $2.6 billion in fines. The investigations haven't always been so successful – some of the Japanese execs fled from the US to avoid prosecution. Critics allege that price fixing is simply how business is done. According to Automotive News, Sumitomo Electric Industries is also facing a $50 million settlement in a civil lawsuit that's related to price fixing of parts like wiring harnesses and heater control panels. The plaintiffs include owners and dealers that purchased vehicles with these parts. The company asserts that the violations are from before 2010, and it now has different process in place to avoid further violations. KYB Agrees to Plead Guilty and Pay $62 Million Criminal Fine for Fixing Price of Shock Absorbers Kayaba Industry Co. Ltd., dba KYB Corporation (KYB) has agreed to plead guilty and to pay a $62 million criminal fine for its role in a conspiracy to fix the price of shock absorbers installed in cars and motorcycles sold to U.S. consumers. According to charges filed today, KYB conspired from the mid-1990s until 2012 to fix the prices of shock absorbers sold to Fuji Heavy Industries Ltd. (manufacturer of Subaru vehicles), Honda Motor Co. Ltd., Kawasaki Heavy Industries Ltd., Nissan Motor Company Ltd., Suzuki Motor Corporation and Toyota Motor Company, including their subsidiaries in the United States.