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News Brief: Nissan Slumps After Safety Inspection Scandal

LC Hammer
Posted by LC Hammer on Dec 29, 2017 8:44:56 AM

Nissan has become bogged down in a scandal over its lax approach to safety inspections. The company admitted in September of 2017 that trainees had been allowed to carry out final inspections on a number of models. The revelations come after the practice was witnessed by members of the Transport Ministry during a surprise inspection.

It was revealed that trainees had been allowed to carry out final safety inspections that included checking the lights and brakes worked properly. Supervisors on duty would reportedly go as far as to disguise trainees as qualified inspectors during planned inspections. These trainees would be allowed to essentially rubber stamp cars through their inspections, stamping their reports with their manager's seal, the equivalent of a signature.

When the scandal broke Nissan immediately shut down production, initiated a recall of just over 1 million cars and informed the government they would carry out an internal investigation. But then, in October of 2017, Nissan said they would recall more than 30,000 more cars because the fraudulent inspections had carried on after the scandal came to light. In the end, Nissan has recalled roughly 2 million cars overall.

While this has had an immediate - and somewhat obvious - impact on new Nissan models, it has also impacted Nissan's used market as well. Used car dealerships report wholesale prices on the Nissan March, Note and other compacts had fallen between 10-20% following the scandal. At the same time, their contract ratios, the number of cars in an allotment that dealers can sell, has fallen from 70% to 50% since September.

Dealers have begun to reduce the price on models that might have been affected. This scandal comes on the heels of Nissan's diesel emissions scandal in 2016. Their UK- built Qashqai SUV had used a "defeat device" in order to disable the emissions reduction system at normal operating temperatures. While their emissions problem in 2016 remained contained since only one model was implicated - and Volkswagon's bigger scandal was attracting more attention - this latest safety issue is expected to have a much bigger impact on Nissan both as a company and a brand.

Topics: used car sales, safety issues, Industry News, Nissan, recalls

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