Japan Auto Makers Struggle With Defect Recalls.

[j-kid]

Japan Auto Makers Struggle With Defect Recalls:

By Mack Chrysler and Roger Schreffler
WardsAuto.com, Nov 15, 2006 9:59 AM

TOKYO – A rash of recalls is likely to be more embarrassing than damaging for Japan’s vigorous automotive industry, but as yet nothing is certain.
Measured by traditional standards, the scope of the problem is staggering. Last year, recalls soared to 227, involving 5.4 million vehicles, up from 52 recalls and 52,880 vehicles in 1995. And that’s only for cars and trucks built in Japan........................


Click here for more on the full story

[Wendy]

Re: Japan Auto Makers Struggle With Defect Recalls.

[ QUOTE ]


TOKYO – A rash of recalls is likely to be more embarrassing than damaging for Japan’s vigorous automotive industry,


Click here for more on the full story

[/ QUOTE ]

That is in Ford's dream [img]/forums/images/graemlins/smirk.gif[/img] It will neva happen in dis life time [img]/forums/images/graemlins/70388-shameonyou.gif[/img] [img]/forums/images/graemlins/laugh.gif[/img]

[Tuff Gong]

Re: Japan Auto Makers Struggle With Defect Recalls.


Even if all the cars coming out of Japan has a defect it will still not redound to the benefit of the USA Automakers.

[squattaz]

Re: Japan Auto Makers Struggle With Defect Recalls.

dats a good quote u got dere tuffy.

[dahjah]

Re: Japan Auto Makers Struggle With Defect Recalls.

dats because ppl are blind bout the actual quality of todays cars. They move on belief rather than actual truth.

[j-kid]

Re: Japan Auto Makers Struggle With Defect Recalls.

The link not going through anymore. I will post the article Monday.

[j-kid]

Re: Japan Auto Makers Struggle With Defect Recalls.

Japan Auto Makers Struggle With Defect Recalls
By Mack Chrysler and Roger Schreffler
WardsAuto.com, Nov 15, 2006 9:59 AM


TOKYO – A rash of recalls is likely to be more embarrassing than damaging for Japan’s vigorous automotive industry, but as yet nothing is certain.

Measured by traditional standards, the scope of the problem is staggering. Last year, recalls soared to 227, involving 5.4 million vehicles, up from 52 recalls and 52,880 vehicles in 1995. And that’s only for cars and trucks built in Japan.

Of even greater concern is the lack of consensus on whether the peak has been reached or the problem will worsen. No Japanese auto maker has been immune from the explosive increase, although the current focus clearly is on Toyota Motor Corp.

As the nation’s No.1 auto maker and the industry’s perennial star in quality, Toyota experienced a giant leap – from four recalls in 2001, affecting just 45,899 vehicles, to 14 last year involving 1.9 million units.
As the number of recalls increased, the Japanese Land, Infrastructure and Transport Ministry reprimanded the company and demanded a report on the problem that was delivered in August with profuse apologies.

Analysts here are concerned, though less than they were a year ago.
“Recalls have become a big issue, but they are not devastating,” Credit Suisse Securities (Japan) Research Chief Koji Endo says. “Even though Toyota recalls were 1.9 million units last year, global sales continue to grow and there has been no direct impact on the bottom line.”

Fortunately for Toyota, it has not been subjected to a recall involving significant traffic fatalities as Ford Motor Co. was with the Explorer SUV.

Nevertheless, “Toyota’s reputation as a paragon of product quality has been called into question,” says Takaki Nakanishi, head of equity research at JP Morgan Securities Japan.

Nakanishi, who has tracked warranty costs for several years and authored a report on Japanese vehicle quality, believes the worst is over.

“Toyota appears to have the situation under control,” he says. “Their quality costs seem to be manageable. And, to be very precise, costs do not necessarily equate with recall numbers.”
Toyota’s quality problems have covered the automotive spectrum, from airbags and ball joints to headlight switching systems and windshield seals.

The defects are real enough, but the recall problem is distorted by changed circumstances and, therefore, may be misunderstood.

Until recently, Japanese auto makers customarily left it to their dealers to handle the replacement of faulty parts and necessary repairs with as little publicity as possible, under the guise of service campaigns or routine maintenance.

But in July 2000, the inattention to defects and years of cover-ups by Mitsubishi Motors Corp. were so widely publicized the auto maker teetered on bankruptcy.

The Mitsubishi scandal was a wakeup call for the country’s auto industry, and subsequently the defect pendulum swung to the other extreme, with recalls now routinely called for minor as well as major problems.

For example, in 2004, Toyota recalled 330,496 Hilux Surfs and Surf wagons built between 1988 and 1996 for defective steering parts. The same year, recalls totaled 643,715 for 10 models produced between 1989 and 2000 for rear taillights whose red color might have faded.
In the wake of the new reveal-all policy, the percentage of recalls in Japan has increased from a deceptively low 2%-3% of total vehicles produced in prior years to about 10% today, roughly the same as in the U.S.

When Toyota added recalls in the U.S., its numbers soared from 210,000 in 2003 to 1.1 million in 2004 and 2.2 million in 2005 – including vehicles built in Japan. As a result, the auto maker formed a new division to gather information from customers about defect issues.

“The world-class quality that we’ve built is our lifeline,” Toyota President Katsuaki Watanabe tells the media at a recent news conference. “There will be no growth without improvement in quality. This is the biggest task that our management team must undertake.”
Says Kurt Sanger, senior industry analyst with Macquarie Securities (Japan) Limited: “Toyota is taking the recall problem very seriously, and Toyota is most dangerous when it’s defensive.”

Defects tend to be the same for all the major auto makers here and are not difficult to identify. But the rules dictating what requires a recall have expanded dramatically.

So far, most have involved models made in the late 1980s and early 1990s, which have been on the road longer than their intended life expectancy of eight to 10 years.

Reflecting this trend, used-vehicle sales consistently have exceeded new-vehicle sales (excluding 0.6L minivehicles) by more than 30% for nearly a decade since vehicle-inspection standards were eased.

“Toyota’s recall rate is now so high because the standard for recalls has changed,” Nakanishi says. But there are other factors.
Faced with declining profits in the wake of the yen’s record surge against the dollar in the mid-1990s, Toyota short-staffed its product-development group, froze new hires and veteran retirees were not replaced.

The result, according to a Land, Infrastructure and Transport Ministry report, was that 70% of the auto maker’s defects were design-oriented and not manufacturing-related.

Toyota also expanded use of common components and systems across model lines, particularly electronics. Thus, the number of vehicles affected by a single defect multiplied widely.

A research official at Denso Corp., Toyota’s largest supplier, says part of the problem involved the auto maker’s failure to evaluate component performance under the most severe or extreme conditions.
If a component was shared between a passenger sedan and an off-road SUV, more tests should have been run for the SUV, he says.

Toyota Executive Vice President Kazuo Okamoto defends this change
in procedure from the days when Toyota developed individual models from the ground up as unavoidable.

“Without commonization of components, the cost of developing so many different models today would be prohibitive,” he says. Plus, “customer expectations have gone up considerably compared to the past.”

A case in point is navigation systems, which continue to evolve with new functions and features. Ten years ago, they employed CD-ROM drivers and, for the most part, were not linked to telematics.
Today, more than half of all Toyota cars sold in Japan have navigation systems linked to driver information services, while one-fourth are hard-disk types.

Another issue is Toyota suppliers have been stretched both to develop new components at lower cost and build them overseas.
With the steadily increasing sophistication of parts and components, coinciding with the switch to new, lighter materials, analysts suggest shortfalls in quality are unavoidable.

For example, Sanger says the new Camry launched in March incorporates software designed to assess the driving style of the owner and adapt vehicle behavior accordingly.
Unfortunately, the software leans toward docile driving that aggressive drivers abhor, with a resulting “hesitating transmission problem” that needed to be fixed.

This defect/recall merry-go-round is not likely to fade away any time soon. Tokyo analysts emphasize Toyota designers and engineers are overloaded and stressed out by the unprecedented pace of the auto maker’s global expansion.

Toyota’s worldwide production, including Daihatsu Motor Co. Ltd. and Hino Motors Ltd., has jumped 40% to 8.2 million units in the last five years and is on track to reach 9.8 million by 2008. Thus, analysts say, errors are inevitable.

As for problems in manufacturing, Seiji Sugiura, an industry expert with HSBC Securities (Japan), says simple mistakes are bound to occur when plants are operating at overcapacity, with 30% of workers temporary or part-timers.

At the same time, “managers are tightening their focus on quality,” he says. “Line inspections have increased. Temporary employees are becoming regular, and there is more worker training.”

At present, only 19,000 of Toyota’s 31,000 production workers are fulltime. To address this problem and standardize processes at its assembly plants around the world, the auto maker opened a Global Production Center in 2003 to help train its rapidly growing labor force.

Analysts point out perspective is essential. Despite Toyota’s soaring recall rate, for example, warranty costs per unit have not gone up and annual payouts have not exceeded sums set aside to cover warranties.

Moreover, Toyota’s chief volume competitors, Ford and General Motors Corp. have far more recalls annually, totaling 4 million and 6 million in 2005 and, in GM’s case, down from 10.8 million in 2004.
In Europe, there is no ready-made database from which to compare. “Most things in Europe are still done on a national basis,” says Marc Greven, director of legal affairs for the European Automobile Manufacturers Assn. in Brussels.

Still, the number of recalls has grown steadily. Even in Germany, home to DaimlerChrysler AG and BMW AG, the number has risen. In one 2005 recall, Mercedes-Benz identified 1.3 million cars that possibly needed alternator and brake repairs.

Endo maintains only one European auto maker might have better quality than Toyota, and that’s BMW. But Toyota continues to rank atop industry quality studies.

In this year’s Initial Quality Study by J.D. Power & Associates six of the top-10 models and four of the industry’s top-10 assembly plants were Toyota’s. However, the study only measures quality for the first three months, not 10 years.

“There has not been much damage so far,” says Kunihiko Shiohara, a managing director of Goldman, Sachs (Japan).

“Toyota is successfully defending the image of its brands. But defects and recalls pose a clear risk in the future if the car maker continues to rapidly grow bigger and bigger. Discipline can slip.”
What’s more, because Toyota’s cost-cutting moves were typical of those taken by Nissan Motor Co. Ltd., Mazda Motor Corp. and Mitsubishi, all of which made even deeper cuts, a new rash of Japanese recalls could occur toward the end of the current decade.


[image]http://subscribers.wardsauto.com/images/2006/11/toyota_camry_2007.jpg][/image]

[j-kid]

Re: Japan Auto Makers Struggle With Defect Recalls.

Mitsubishi Struggles With Loss of Face:

By Mack Chrysler
WardsAuto.com, Aug 9, 2004 12:00 PM



Mitsubishi Motors Corp., until recently Japan's fourth-largest vehicle maker, now is on a ¥496 billion ($4.5 billion) life-support system.

Industry experts in Tokyo figure the company's survival likely depends on how long Mitsubishi Group companies, the source of most the financial backing so far, are willing and able to prop up the automotive arm. (See related story: New Mitsubishi Scandal Results in More Cost Cuts)
Japanese car buyers, rapidly losing their taste for Mitsubishi cars, trucks and buses, are not expected to offer much help to the ailing auto maker. Sales of passenger cars (not counting minivehicles) plunged 56% in May and 64% in June and still are headed down.
In the U.S., MMC’s largest market, car sales were down 48% in June. Production at the Normal, IL, is set to be slashed by up to a third of installed capacity.

What is turning customers away from MMC dealerships in droves is a shock wave of confessions from former senior company executives that they falsified reports and concealed vehicular defects from authorities and the public for more than 20 years to avoid expensive and embarrassing recalls.
Another source of buyer discontent is difficult to measure. The Japanese traditionally have attached more importance to shame than sin and may be unwilling to forget-and-forgive MMC’s betrayal of public trust.

The auto maker already was deeply troubled in mid-2000 when DaimlerChrysler AG found so many things wrong after buying a 34% stake that the original purchase price was cut by 10% to $1.9 billion.

The following April, however, DC increased its ownership share to 37.3% by investing $300 million more, not realizing far worse remained hidden.

This spring, after a DC-designed revival plan failed to deliver, the German auto maker abruptly declined to put any more money into the struggling company. This crisis was exacerbated by more revelations and recalls. The cover-ups reportedly date back to1983 in what one angry DC executive calls "a culture of corporate concealment."
They involve a dramatic range of defects in everything from engines, fuel tanks and oil hoses to axle shafts, brakes and turn signals – causing at least 61 fires and numerous accidents.

To make matters worse, Mitsubishi Fuso Truck & Bus Co. Ltd. has been seriously infected by the epidemic of defects as well. Faulty clutch parts and axle hubs have caused dozens of accidents in recent years, including two fatalities, and led to the recall this year of more than 350,000 vehicles.

Seven former Fuso executives were arrested in May followed by six former MMC executives in June for systematically hiding defects.
Consequently, Japan's Ministry of Land, Infrastructure and Transport has ceased buying Mitsubishi vehicles and several prefectural and municipal governments have followed suit. (See related story: Japan May Order Mitsu Fuso Vehicles Off Road)
Although the problems are far from resolved, it already is apparent one of the biggest losers in the corporate fiasco is DaimlerChrysler.
Trucks, even more than cars, were the missing link in DC's expansion plans for Asian markets and, after Fuso was spun off in January 2003, the German auto maker ended up spending $1.25 billion for 65% of the truck operation, leaving MMC a minority shareholder, with only 20%.

These days, in the wake of the revelations, Fuso sales are slumping in
Japan, and it is not yet clear how much damage will be done in Southeast Asia, where the company leads the market with 52% of heavy-truck sales.
The cost of all the truck and car recalls has not been revealed nor, given the bit-by-bit way in which defects have been uncovered, is there any guarantee the epidemic is over. A new road hazard already is visible.

Insurance companies are reviewing accident records involving Mitsubishi vehicles and are poised to launch lawsuits if defective parts are found responsible.
The clouds overhanging the company continue to darken. A second revival plan, cobbled together in May, was barely one month old when new MMC CEO Yoichiro Okazaki announced a revised version he called "our last chance at survival as an auto maker."
A laundry list of additional measures in the revision include new cost cuts of ¥72.6 billion ($660 million) over the next two years designed among other things to reduce research and development expenditures and lower advertising budgets.

And to help restore trust, new cars will be sold with a 3-year, full-support program that includes 24-hour roadside service. Existing owners get a free 20-item inspection and oil change.
However, the trade-in value of Mitsubishi vehicles has plummeted to about 20% that of comparable rival products, according to one estimate, putting a damper on the sale of new and used vehicles.
And Tokyo analysts report no convincing evidence the ingrained culture of concealment has been abandoned.

"There has been a secretive atmosphere in Mitsubishi going back 40 years,” says Koji Endo, director and head of Equity Research, Credit Suisse First Boston Securities (Japan). “This kind of culture cannot be destroyed overnight. It will be extremely difficult for Mitsubishi
Motors to restore faith in its products."

Agrees Kunihiko Shiohara, managing director and senior analyst, Goldman Sachs (Japan): "It will be hard for MMC to win back consumer confidence and difficult for the company to turn around."
Industry experts in Tokyo foresee a loss of ¥300 billion ($2.7 billion) for MMC in the current fiscal year, which ends next March 31, following a loss of ¥215 billion ($1.95 billion) last year.
The second and final installment in the ¥496 billion ($4.5 billion) bailout was delivered in mid-July.

Shiohara notes that "in reality, most of the bailout money has come from The Bank of Tokyo-Mitsubishi, Mitsubishi Corp., Mitsubishi Heavy Industries and Mitsubishi-related companies."
He says Phoenix Capital, a turnaround fund that supplied ¥74 billion ($668 million), making it MMC’s largest shareholder with a 33% stake, is headed by a former Mitsubishi banker. The big exception is JPMorgan Chase, which paid ¥126 billion ($1.14 billion) for convertible preferred stock.

No one knows for sure whether the new investments will be enough to rescue the stricken auto maker or how much more will be needed or whether a turnaround is even possible.

The infusion of new money has decreased DC's ownership share in MMC to 25% and further dilution is possible. The German auto maker originally paid ¥400 ($4) a share for 500 million shares now worth around ¥110 ($1). Also in jeopardy is the $1.25 billion investment in the truck-making affiliate.

Shiohara concludes: "Mitsubishi Fuso's turnaround may be as difficult as Mitsubishi Motors’."
The biggest loser, of course, is MMC, its reputation in ruins and living on what may be borrowed time. Beset by executive arrests, spreading scandals, hundreds of thousands of recalls, slumping sales and mounting losses, the auto making arm of the powerful Mitsubishi Group may be doomed.

An alliance or partnership with another major auto maker might help if a candidate can be found. "The problem," says Endo, "is nobody seems to be interested. The situation at Mitsubishi Motors is probably worse now than before the revival plan was disclosed."
In mid-June, Standard & Poor’s reduced its rating on MMC bonds to junk status and questioned the company's viability. "It is increasingly unclear whether pending operational and financial restructuring measures will be sufficient to ensure MMC's survival," says S&P credit analyst Chizuko Satsukawa.

And she is not alone. "The Mitsubishi Group currently has no choice. (It) must be supported," says Shiohara, noting the depth and duration of that support will depend in large measure on the profitability of Group companies, in particular The Bank of Tokyo-Mitsubishi, one of the strongest in Japan.

But if the injuries are fatal, as many believe, there are limits to how long the crippled company can be kept alive.
Positive side effects are possible. Corporate accountability, independent directors and activist shareholders still are a novelty in Japan and the MMC scandals may help accelerate change.

An association of 1,160 employee Japanese pension funds with $73 billion in assets is campaigning against the appointment of tame directors and the award of over-generous executive retirement bonuses. The group is creating a special kitty to invest in 50 “good governance companies.”

[j-kid]

Re: Japan Auto Makers Struggle With Defect Recalls.


Transmission Problem Surfaces in New Camry

By Ward's Staff
WardsAuto.com, Apr 28, 2006 1:30 PM

Toyota Motor Corp. has discovered a problem in the 6-speed automatic transmissions fitted to some early-build V-6 versions of the all-new ’07 Camry sedan built in Georgetown, KY.

The auto maker says less than 1% of early production is affected by the issue, which stems from a faulty fastener in the transmission’s clutch pack that may cause the loss of second and sixth gears.
The problem does not affect the safety of the vehicle, as the transmission still will operate in the remaining four gears.

The cause of the condition, which usually occurs in the first 500 miles (805 km), has been pinpointed and corrected on current production models, Toyota says.

The National Highway Traffic Safety Admin. reportedly has received only one complaint about the issue. The agency has not started an investigation or asked for a recall of the vehicles.

Toyota is asking owners of affected vehicles to contact their dealers or the company through its customer-service line.

[j-kid]

Re: Japan Auto Makers Struggle With Defect Recalls.

http://www-odi.nhtsa.dot.gov/cars/problems/f_recalls/f_recallsearch.cfm