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Subaru sees $177m in costs linked to inspection scandal

the logo of Japan's automaker Subaru outside the company's headquarters in Tokyo.
The logo of Japan's automaker Subaru outside the company's headquarters in Tokyo, October 27, 2017. PHOTO | AFP 

Tokyo

Subaru Corp said it was recalling 395,000 vehicles in Japan and that it expected to incur about 20 billion yen ($177 million) in costs related to improper final inspection procedures at domestic plants.

The automaker on Thursday said it had not yet decided when to book the costs and that, for now, it would not revise the forecasts for the financial year ending in March.

Subaru - hurt by weak sales in the United States, its biggest market - cut its full-year operating profit forecast when it announced quarterly results recently.

It pegged its operating profit for the year at 380 billion yen, versus a prior forecast of 410 billion yen and lower than 410.8 billion yen a year ago.

Violating requirements

Last month, Subaru said that for more than 30 years, final inspections of new vehicles at its main Gunma complex north of Tokyo were sometimes done by inspectors who were not listed as certified technicians, violating transport ministry requirements.

Japanese manufacturing prowess has taken a hit in recent months due to the Subaru inspection scandal, which follows a similar oversight at Nissan Motor Co Ltd (7201.T).

Japan’s reputation for quality control has been tarnished further by a data-fabrication scandal at Kobe Steel, the country’s third-largest steelmaker.

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