Nissan recalls 1.2 million cars on lapse in inspectors

Nissan Motor Co will recall about 1.2 million vehicles sold in Japan after regulators discovered unauthorised inspectors approved vehicle quality, potentially costing the company 25 billion yen (US$222mil).

The vehicles, from as many as 24 models made and sold between October 2014 and September 2017, will be called back for inspection, chief executive officer Hiroto Saikawa said.

The cars have no quality issues and won’t need to have any parts replaced, the company said. Nissan vehicles exported from Japan aren’t involved in the recall.

Nissan shares rose as much as 1.7% yesterday as the company said the models involved, produced in six Japanese factories, are safe to drive and will be called back purely for re-inspection by authorised personnel.

The stock had tumbled on Monday after the automaker disclosed it had temporarily suspended vehicle registration in Japan due to the non-compliance.

While the issue is bad for the carmaker’s corporate image and leads to concern that sales could be affected, it doesn’t mean Nissan cars are lacking in quality, Takeyuki Atake, a credit analyst at SMBC Nikko Securities Inc, wrote in a report yesterday.

The recall costs are also small compared with Nissan’s net income forecast of 535 billion yen for the current fiscal year, Atake wrote.

Saikawa said he will personally investigate the issue and find out the cause before deciding who should bear responsibility for the “shocking” lapse.

There will also be an external probe, he said at the company’s headquarters in Yokohama on Monday.

In addition to the more than 1 million vehicles being recalled, about 34,000 units that have yet to be registered will also be re-inspected.

Nissan said final inspections were carried out by technicians not properly authorised to carry out those duties under the company’s processes approved by the Japanese Ministry of Land, Infrastructure and Transport.

The inspection process has been fixed and registrations for new vehicles have resumed, Nissan said.

“It’s very regrettable” the lapse occurred, Hiroshige Seko, Japan’s trade minister, told reporters yesterday.

“I’d like Nissan to do everything possible to prevent user concern and confusion from spreading.”

Automakers worldwide are under increased scrutiny over quality and compliance with regulations as vehicles become more complex and the industry moves toward autonomous driving, electrification and connectivity.

The automaker may face penalties for utilising un-certified personnel during inspections, said Kenichi Hayashi, an official in the transport ministry.

The lapse was discovered by the ministry during a review at the company’s Shatai plant, Saikawa said.