Photo: AP/Katsumi Kasahara

Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: Nissan’s Shoddy Inspections Have Been Going On For A Long Time

Nissan has been struggling through a scandal involving unqualified employees conducting final vehicle inspections of Japanese-market vehicles—a practice that goes against the rules of Japan’s Transport Ministry. The company even had to recall 1.2 million cars and shut down domestic production.

Last week, we reported on a Reuters story that said Nissan had admitted to conducting inappropriate inspections for 20 years. Now Bloomberg writes that, according to its source, the number might actually be closer to 40:

Nissan Motor Co. had been conducting its current inspection process for vehicles sold in Japan — deemed faulty by the government last month — since at least 1979, according to a person familiar with the situation.

The finding will be part of a report from an external investigation team commissioned by the carmaker, said the person, who asked not to be identified because the information isn’t public. Nissan’s manufacturing division will likely take responsibility for the incident, the person said. The report will be submitted ahead of the Yokohama, Japan-based company’s results announcement scheduled for Nov. 8.

Advertisement

Luckily, the certification process doesn’t apply to cars shipped overseas. In Japan, though, whole thing is clearly a big deal.

2nd Gear: Subaru May Recall 255,000 Cars After Admitting Improper Final Inspection

Speaking of Japan’s “inspections scandal,” Subaru has just admitted it’s been handling inspections wrong, too, with Reuters reporting:

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

The automaker said it was therefore considering recalling about 255,000 vehicles including its Legacy, Forester and Impreza models produced at the complex and sold at home, at a cost of around 5 billion yen ($43.86 million).

Advertisement

Reuters reports that Yasuyuki Yoshinaga, Subaru’s CEO, said at a news conference that inspectors who were training to be certified for final sign-off duties were approving checks using their supervisors names for over 30 years, and that the company didn’t realize this went against ministry rules. Reuters reports Yoshinaga as saying:

The final inspection process is very important and we acknowledge that we did not meet requirements...It’s always been my goal to make this company good. This issue shows that we’re not there yet.

After Nissan’s scandal, the Transport Ministry instructed all Japanese automakers to investigate whether they were following proper inspection procedures. You can read about Subaru’s admissions in the company’s press release, but we’ll likely hear more when Subaru reports its findings to officials on Monday.

Advertisement

3rd Gear: Volkswagen’s Third Quarter Earnings Are Up

Speaking of scandals, Volkswagen has been embroiled in a huge one—Dieselgate—since September of 2015, spending tens of billions of dollars in fines, buybacks, fixes and other restitution to make up for the company’s use of defeat devices, which allowed its cars to cheat federal emissions tests.

But now, in its press release titled “Volkswagen Group continues its profitable growth – solid nine-month figures,” the company has lots of good news to share, including a 15 percent jump in earnings. Let Reuters break it down for you:

Quarterly group earnings before interest and taxes (EBIT) and before special items jumped to 4.31 billion euros ($5.01 billion) from 3.75 billion a year ago, VW said in a statement on Friday. Operating profit, including costs related to the emissions scandal, dropped 48 percent to 1.72 billion euros ($2 billion).

VW said it booked 2.6 billion euros in the three months ended Sept. 30 to fix diesel engines in the U.S., confirming an announcement made last month that will raise total provisions for its diesel scandal to 25.1 billion euros.

The automaker lifted its annual profit outlook. It now expects the group’s operating margin to moderately exceed a target corridor of between 6 percent and 7 percent, having previously forecast the margin hitting that range.

Advertisement

Member of Volkswagen Group’s board of management Frank Witter addressed the “diesel issue” directly, with VW’s press release saying:

“Earnings in the first nine months make us quite optimistic about the year as a whole...This is a strong foundation that we can build on. With net liquidity of around EUR 25 billion in the Automotive Division, we have an adequate financial cushion. It is important to remember, however, that in this year alone we have seen outflows of around EUR 14.5 billion for the diesel issue.” Witter also stressed that the diesel issue was nowhere near an end and would continue to necessitate great efforts throughout the entire Group. “Although there is still a lot to be done, we can definitely be satisfied with what we have achieved so far.”

It looks like cost cutting and its steady roll-out of money-printing SUVs are working to get the embattled company out of its deep hole.

Advertisement

4th Gear: Waymo Will Use Michigan’s Shitty Weather To Test Self-Driving Cars

Michigan’s weather between about November and April tends to be utterly miserable, generating ridiculous headlines like “Michiganders have barely seen the sun since December.” It’s dark, cold, snowy, slushy, and icy, and while that’s enough to make me want to move down south, it makes for the perfect test bed for self-driving cars whose sensors could be compromised by adverse weather conditions.

That’s why yesterday, John Krafcik, CEO of Waymo (formerly the Google self-driving car project), announced his team’s intent to start testing self-driving cars near its facility in Novi, Michigan. He talked in his blog entitled “Michigan is Waymo’s winter wonderland” about why Michigan’s conditions make sense for Waymo, lauding the state’s diverse forms of sadness-inducing precipitation:

Having weathered fourteen winters in Michigan, I can tell you firsthand that snow there comes in many different forms: light fall, dense flakes, powdery dust and even slanted sleet. As these different snowy forms fall from the sky, they create all kinds of conditions on the ground, from solid banks of snow lining the street to a slippery, icy layer coating the roads.

For human drivers, the mix of winter conditions can affect how well you can see, and the way your vehicle handles the road. The same is true for self-driving cars. At Waymo, our ultimate goal is for our fully self-driving cars to operate safely and smoothly in all kinds of environments.

Advertisement

He went on, discussing how this garbage weather will be a great test for Waymo’s sensors, saying:

...we’ll be giving our vehicles even more practice driving in snow, sleet and ice. This type of testing will give us the opportunity to assess the way our sensors perform in wet, cold conditions. And it will also build on the advanced driving skills we’ve developed over the last eight years by teaching our cars how to handle things like skidding on icy, unplowed roads.

Waymo’s 53,000 square foot building in Novi is a regional office that helps the company work with Michigan’s abundant supply of auto engineering firms, and it’s also where Waymo upfits Chrysler Pacifica minivans with Waymo’s suite of sensors. Now it will serve an addition function, putting autonomous vehicle sensors through arguably their most taxing conditions.

Advertisement

5th Gear: Tesla Is Opening Its First Gallery In Michigan Today Even Though It Can’t Sell Cars

Tesla is opening a 2,200 square foot gallery near the home of the Big Three today in the fancy Somerset Mall in Troy, Michigan. The Detroit Free Press says the gallery will include “video screens that explain battery-operated vehicles and the science involved” as well as explainers on things like autopilot, semi-autonomous driving, Ludicrous mode, and all sorts of other features found on Tesla models.

The gallery will also feature a Tesla Model S and Model X, but it will not include a sales division, because as the Detroit Free Press points out, Tesla can’t sell cars directly, saying:

It is illegal for Tesla to sell cars in Michigan, but Michigan residents may purchase or lease vehicles online or contact one of the stores in Chicago or Cleveland. The Tesla team in Michigan will not direct prospective customers through any sort of purchasing or leasing process.

Advertisement

Tesla continues to speak out against Michigan’s rule against direct sales, with a spokesperson telling the news site:

“It’s unfortunate that Michigan law takes away rights from consumers in order to protect local car dealers. Tesla continues to fight against that law so that Michigan consumers can enjoy the freedom to buy cars as they wish. We look forward to welcoming our fans, owners and reservation holders.”

I can’t agree more. This rule is dumb, though it’s cool to see that—despite this—Tesla is still cranking up its presence in Motor City.

Advertisement

Reverse: One Of The First Post-WW2 Car Shows Takes Place At Earl’s Court In London, Is A Huge Success

Neutral: Does Volkswagen Need To Suffer More?

There are some people out there—especially former TDI owners—who want to see Volkswagen on its knees. Recent stories about VW’s financial successes probably don’t sit too well with those folks. So the question is: considering its egregious Dieselgate scandal (which is, admittedly, still ongoing), should VW have been punished more severely?