Subaru Promises To Improve After Admitting To Decades Of Sloppy New-Car Inspections

Photo credit: Getty Images
Photo credit: Getty Images

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: Subaru Will Better Itself Personally, OK?

Subaru got caught in the same kind of inspection scandal Nissan did last month, which means it’s time for the apologies and sudden moral awakening. In the most recent of scandals in car-related manufacturing in Japan, Subaru admitted to having uncertified staff carry out final inspections of new cars for decades.

Nissan, Kobe Steel, Mitsubishi Materials and Toray Industries have all had similar issues in recent months, according to the report. Here’s more on the issue, from Reuters:

In October, Subaru revealed that uncertified technicians took part in final inspections at domestic plants for over 30 years. It also said some staff had cheated on tests to certify as technicians for the final inspections.

Subaru said last month it was recalling 395,000 vehicles in Japan and forecast 20 billion yen ($177 million) in related costs.

In its latest report to the government, Subaru said it would improve training for and monitoring of final inspections, and communicate the importance of compliance to staff.

Subaru told Reuters the root of problem was that “management and staff did not fully appreciate the importance” of final inspections on vehicles for the consumer market. Comforting.

2nd Gear: Dealers Want Automakers To Compensate For Used-Car Recalls

Car dealers are always getting the bad end of things, huh?

That was a slight bit of sarcasm my friends, but this time, they might be. Automotive News reports that dealers are upset about the increasing numbers of used cars on their lots that need recalls. Car companies are required to compensate dealers for new cars that have to sit on the lot unsold due to needing recall work, but that isn’t the case with used cars.


Dealers want lawmakers to change that, according to Automotive News:

Even though stop-sales usually affect just a fraction of a dealership’s used-car inventory, [dealer Rick] Jensen said, it is “frustrating” and costly.

“You can’t sell them. Then, someone comes to do a trade-in for another vehicle, and you really don’t want to do the trade-in,” said Jensen, owner of Jensen Motors in New Ulm, Minn. “That’s because you know you have to keep that trade on the lot while you wait for parts.”

Federal law requires automakers to give dealers monthly payments equal to 1 percent of the value of any new car that can’t be sold because of a recall. The money is compensation for depreciation and the costs of floorplanning, insurance and other expenses. But there is no law to address the problem on used vehicles under a stop-sale recall.


It’s basically a big fight between angry businesspeople, and if you’re into that kind of thing, Automotive News has more on the dynamics of it all here.

3rd Gear: Volkswagen’s Committed To This ‘The Future’ Thing

Volkswagen plans to install 2,800 charging stations for electric vehicles in the U.S. by June 2019, Reuters reports. They’ll go into about 500 different locations in 17 of the largest American cities, with 75 percent of the charging stations at workplaces and the rest at multifamily living areas like apartment buildings.


Volkswagen will put $800 million into charging stations in California and $2 billion into the plan across the U.S., according to the report. From Reuters:

Major automakers such as General Motors Co (GM.N) and Ford Motor Co (F.N) have announced plans to launch whole families of electric vehicles in the next few years in a direct challenge to money-losing Tesla Inc (F.N) which is struggling to get its more affordable, high-volume Model 3 released and recently reported its largest-ever quarterly loss.

One problem the auto industry must overcome for mass adoption of electric vehicles is a lack of national charging infrastructure for use by consumers.


So, while Volkswagen continues to deal with the effects of its diesel emissions scandal—billions in fines, executives in prison—everything’s going to look cheery and environmentally friendly on the outside. That sounds about right.

4th Gear: BMW Wants You To Please Clap

BMW sure is patting itself on the back, because the company announced this week that it met its goal of delivering 100,000 electrified vehicles to customers globally this year. Remember: The buzzword “electrified” does not mean fully electric. Instead, it means a range of electric power in cars—from (very) mild hybrids to fully electric vehicles.


But BMW is thrilled, and in true throwing-your-own-party-for-that-work-promotion fashion, the company is going to celebrate by making monuments for itself. From the announcement:

An eye-catching light installation will mark this milestone on the road to the mobility of the future, with the BMW Group headquarters, the world-famous “Four-Cylinder” in the north of Munich, transformed into a battery. The BMW Group selected this glowing symbol to represent the technological change taking place in mobility.

“We deliver on our promises,” said Harald Krüger, Chairman of the Board of Management of BMW AG. “This 99-metre-high signal is lighting the way into the era of electro-mobility. Selling 100,000 electrified cars in one year is an important milestone, but this is just the beginning for us. Since the introduction of the BMW i3 2013, we’ve delivered over 200,000 electrified cars to our customers and by 2025, we will offer 25 electrified models to our customers. ...”


Good job, BMW. But we’re only clapping if you catered this party.

5th Gear: Volkswagen’s Back, Back Again

Despite throwing billions at its diesel emissions scandal that surfaced more than two years ago now and may never end, Volkswagen’s stock price left its fellow German automakers in a different zip code at the end of this year. It’s been an even more unbelievable rebound than a sitcom writer could have scripted.


Volkswagen’s returns over the last five years trail that of Daimler and BMW by a whole lot, but, hey, the end of this year was good! From Bloomberg:

VW’s preference shares returned 23 percent this quarter through Friday, best among European auto stocks, while Daimler AG has gained 5.3 percent and BMW AG is little changed. Porsche Automobil Holding SE, which owns a majority of VW common shares, has done even better — advancing 31 percent.

Investors have piled in as VW made progress toward settling claims with the U.S. and European regulators after cheating on diesel engine pollution rules. The company has taken around $30 billion in provisions to cover the costs of penalties, legal claims and retrofits of vehicles since the scandal broke in September 2015. On Nov. 1, a week after the carmaker raised its 2017 profit forecast, the shares rose above the pre-scandal level for the first time. Analysts say there is more to come in 2018.


With more of a focus on efficiency and future technology (and a sudden, bitter dislike for diesel, for some reason), Bloomberg reports that some analysts think a Volkswagen stock buy is a great choice. Others aren’t so sold, and said there are plenty of uncertainties—arrogance within the company and potential future diesel fines included.

Reverse: Rolls-Royce Goes To BMW Power

On Dec. 19, 1994, the New York Times reported that Rolls-Royce announced its future cars would get key components from BMW. Mercedes-Benz was also in the running, but lost out.


The Times reported that BMW’s deal would include new engines for Rolls, to be ready for production “around the turn of the century.” Rolls wanted new V8 and V12 engines, and needed the partnership due to the high costs of development and “rigorous emissions and fuel-economy standards” in the United States, according to the Times.

Oh, what a time that must have been.

Neutral: Would You Take The Chance On Some Volkswagen Stock?

It seems risky and possibly expensive. But making money is all about risk, right? That’s what the gamblers like to say.



1st Gear: Subaru Will Better Itself Personally, OK?

As someone with over 20 years experience in Engineering and Manufacturing operations management, I struggle with this one. What do they classify as “Final Inspections”? Is it the car at the end of the line? If so, that is too late unless you want to catch something superficial like a piece of trim that is off, door seal not seated properly, or two different seats are installed (looking at you, Ford).

The whole reason that the Japanese took the lead in quality was controlling process, and the concept of doing it right and consistently the first time. Checking things after the fact is just covering for sloppy processes.