You Won’t Believe What This Japanese Metal Supplier Did And How It Affected the Automotive Market!


This just in, and it’s not good news!

A leading Japanese steel producer announced early this week that it had falsified data relating to strength and durability of certain aluminum and copper pieces used in car and plane manufacture, as reported by Bloomberg.

Image from:  Reuters

Image from: Reuters

The products of Kobe Steel were used in manufacturing car brands like Honda, Toyota and Subaru, among others who have not been identified publicly.

The falsification of durability data was discovered during a period starting in September 2016 through August 2017, which seems like a short timeframe, but it is believed that the company’s practices for production could go back a decade.

While this crisis is still in its early stages, automakers believe that they have enough data to trace the Kobe-supplied metal down to specific components and to evaluate their durability prior to ordering recalls, if any. Representatives from Kobe Steel have also indicated that only 4 percent of aluminum and copper parts are affected, although this remains to be confirmed.

Image from:  The Fiscal Times

Image from: The Fiscal Times

Still, automakers such as Mitsubishi, Toyota, Honda, Nissan and General Motors all purchase metal products from Kobe Steel, and beyond the immediate issue of specific parts whose durability figures were falsified, there is also the issue of trust in Japan's industry.

This ongoing scandal at Kobe Steel follows in the footsteps of other high profile crises in Japanese auto industry, in which data fabrication or efforts to limit the spread of information about faulty products played a role. Mitsubishi was nearly crippled by a scandal involving incorrect fuel economy verification tests last year, requiring Nissan to take a greater stake in the company to bail it out. Meanwhile, Takata's use of desiccant-free airbag propellant tablets sparked the single largest recall of automotive components, affecting tens of millions of vehicles.

While the damage to Kobe Steel appears calculable and survivable at this early stage despite the company losing a third of its stock value in a matter of days, there is unprecedented damage to Japanese industrial giants. Japanese automakers and suppliers do not need another scandal that involves fabricated data. While the immediate cash costs may not seem to have dealt too big of a blow to Kobe, it is the metals used in vehicles and aircrafts that may end up being the most serious one of all.

What do you think about this huge scandal? Leave a comment below!

The IndustryJoel Wong