Just a Bunch of Cheaters: Another Emissions Scandal

Written by John Peterson
Posted July 12, 2018 at 8:00PM

Well, who's next!?

The first automaker to suffer significant backlash from getting caught cheating on emissions was Volkswagen...

Then Subaru was engulfed in a similar scandal, followed by many other vehicle manufacturers, as well...

And now, we can add Nissan Motor Co. to that ever-growing list, too.

The number of automotive manufacturers jumping on the emissions scandal bandwagon is growing at a staggering rate.

The government entrusts automakers to ensure that their vehicles meet legal standards and their own catalog specifications before shipping.

With sample tests for calculating emissions levels, carmakers have an incredible amount of leeway in how many vehicles they have put through this time-consuming process and how often.

But that freedom appears to have bred cheating. Nissan admitted this past Monday that it had falsified emissions data at its domestic plants for years.

Nissan has officially announced that it discovered falsified data from tests performed at all of its production facilities in Japan, except the Nissan Motor Kyushu location.

The company said it would investigate the instances of misconduct that involve the falsified data about exhaust emissions and fuel economy. This is the second controversy in less than a year for the automaker. Its earlier vehicle inspection scandal led to the recall of about 1.2 million vehicles.

The data falsification, which occurred on 19 models across five plants in Japan, was discovered when the company was carrying out an internal check about employees conducting the final inspection of vehicles, Nissan said at its Yokohama headquarters on Monday.

The incident won't lead to any recalls because the vehicles meet catalog specifications for fuel economy and emissions.

But the automaker's behavior was "extremely regrettable," Japanese Transport Minister Keiichi Ishii said on Tuesday.

He added that the Japanese ministry would address these issues in a "strict manner."

And this is only the latest issue for Nissan CEO Hiroto Saikawa. Saikawa, the handpicked successor of former-Nissan CEO Carlos Ghosn, took charge of Nissan in April 2017. Within six months, he faced the first big test of his own: the vehicle inspection scandal. He and other executives took a significant pay cut last year with the scandal. The scandal also led to a vehicle recall in Japan and a reduction in its profit forecast.

Nissan shares rebounded in Tokyo on Tuesday. This was after investors deemed the incident, based on what had been disclosed, to be not as threatening as the emissions scandal that engulfed Volkswagen years ago.

"It's a domestic matter and foreign investors are not too concerned," said Seiji Sugiura, an analyst at Tokai Tokyo Research Center. "But Nissan will suffer from reputation damage at home."

Shares of the company regained 3% as of 11:12 a.m. on Tuesday in Tokyo. This was following a near 5% drop on Monday after Nissan invited reporters to a briefing on misconduct in emissions tests.

The press conference conveniently happened after the market closed for trading that day.

The testing of emissions has risen to prominence globally after Volkswagen was caught fitting devices on its diesel vehicles. These devices allowed the vehicles' systems to recognize when they were being tested in laboratory conditions and allowed them to reduce emissions to meet the acceptable levels.

Years after the notorious Volkswagen scandal, German authorities are still scrutinizing the automaker.

Daimler is also under investigation. Both companies are facing serious lawsuits in Germany and in the U.S. for their emissions cheating scandals.

Nissan's announcement is the latest in a string of compliance scandals that also include the likes of Mitsubishi and Subaru.

This string of allegations has significantly diminished the reputation of Japan's manufacturing sector as a whole.

Last year, Kobe Steel said it had sold products that failed quality control tests to over 500 companies.

Subaru, which admitted to manipulating emissions data records to match mileage submitted to the government, was also embroiled in a similar controversy to Nissan's current predicament.

As a result, Yasuyuki Yoshinaga stepped down as Subaru CEO earlier this year.

During the checks, Nissan found that employees had misrepresented temperature and humidity data in the testing chamber and manipulated carbon monoxide and carbon dioxide levels during the emissions tests.

But the automaker has hired a law firm to further investigate this matter in-house.

Nissan bailed out Mitsubishi in 2016 after the company was caught falsifying mileage estimates for several of its vehicles.

Suzuki Motor Corp. Chairman Osamu Suzuki ceded the role of CEO after the automaker admitted to using unapproved fuel economy-testing methods in 2016.

Unfortunately, this big list of cheating automakers will only continue growing larger.

Nissan won't be the last.

For the time being, Mazda appears to be one of the few companies to have avoided the emissions scandal with its SkyActiv diesel technology.

Volkswagen's falsifying techniques has thrust this issue into the mainstream spotlight.

Now, it seems like just about every automaker is being forced to come clean and admit their follies.

Which company will be next on the chopping block is anybody's guess.

That's all for now.

Until next time,

John Peterson
Pro Trader Today

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