Nissan to suspend domestic production of cars for Japan market

TOKYO (Reuters) - Nissan Motor Co Ltd 7201.T is suspending domestic production of vehicles for the Japanese market for at least two weeks to address misconduct in its final inspection procedures that led to a major recall, it said on Thursday.

FILE PHOTO - Logo of the Nissan Motor Co. is displayed at the 44th Tokyo Motor Show in Tokyo, Japan, November 2, 2015. REUTERS/Issei Kato/File Photo

The issue has tarnished Nissan's brand at home, and along with a data falsification scandal at compatriot Kobe Steel Ltd 5406.T, has raised questions about compliance and quality control at Japanese manufacturers.

The country’s second-largest automaker said it would stop production of domestic market vehicles at all six of its Japanese assembly plants to consolidate their inspection lines to comply with the country’s transport ministry requirements.

Nissan produced roughly 79,300 passenger and commercial vehicles in Japan in August. Around 27,600 of these were made for the domestic market, representing around 6 percent of its global production.

The automaker admitted that uncertified technicians performed final checks for domestic market models because some inspection steps had been transferred to other inspection lines, in violation of ministry rules.

Checks by uncertified inspectors continued even after Nissan had said it had strengthened control of its inspection processes when the issue first came to light late last month.

“Our emergency measures were not enough. We were unable to change our bad habits,” CEO Hiroto Saikawa said at a briefing at its headquarters.

He added it appeared that a focus on increasing the efficiency of the inspection process had contributed to the issue, while poor communication between plant managers and foremen also may have been a factor.

The misconduct has already forced Nissan to recall all 1.2 million new passenger cars sold in Japan over the past three years for re-inspection. The company said on Thursday that around 34,000 additional cars would be re-inspected, probably expanding the recall by around 4,000 units.

Japan’s transport ministry said this month it had discovered that uncertified technicians at plants producing Nissan vehicles were using the stamps of certified technicians to sign off on final vehicle inspections, in violation of ministry guidelines.

Nissan will continue to produce vehicles for export in Japan, including its popular Rogue SUV crossover model and the battery-electric Leaf, as the certification process for final inspections does not apply to vehicles shipped overseas.

At 1415 GMT, shares in Nissan's alliance partner Renault RENA.PA were down 2.3 percent at 84.36 euros.

While Nissan has said the misconduct has no impact on the quality of its vehicles, it has raised questions about how closely rules are followed at its production plants, while also highlighting compliance issues at Japanese manufacturers.

Kobe Steel, Japan’s third-biggest steelmaker, admitted this month it had falsified specifications on the strength and durability of aluminum, copper and steel products, misconduct that may have stretched back more than 10 years.

Reporting by Naomi Tajitsu; Editing by Mark Potter and David Evans