Kobe Steel Scandal Sparks Car And Train Checks


The company said the fabrications, which might have started a decade ago, could affect products sent to as many as 200 companies but it remained unclear whether the scandal affected product safety. The Ministry of Economy, Trade and Industry ordered Kobe Steel to report on the results of safety checks within about two weeks and the reasons for the tampering, along with prevention measures in under a month.

"Aluminum is one of Kobe Steel's key focus areas in the medium term as part of its strategy to help lighten vehicles, (and) this will certainly have a negative impact on the expansion", Matsumoto noted. He said he was not expecting to see recalls of cars or airplanes for now and none of the company's customers have canceled orders.

Since then the embattled firm has seen its shares plunge almost 40% - wiping more than $1.5bn (£1.1bn) off its market value. The shares were up 0.9 percent by around 0424 GMT, compared with an 0.5 percent gain in the Nikkei 225.

Kobe Steel's president, Hiroya Kawasaki, issued a formal apology, lamenting that "trust in our company has dropped to zero".

Concern has spread across a range of industries - including vehicle, train and aircraft manufacturers - that source materials from Kobe Steel.

Toyota, General Motors, Honda and Mazda are among the major automakers checking their models.

Kobe Steel Ltd parts used in Japan's iconic bullet trains failed industry standards, officials said Thursday, bringing to light fresh evidence of wrongdoing by the steelmaker as investors speculated that the crisis could trigger a breakup of the 100-year-old company. "Kobe Steel's technology is not something easily substitutable by others, and existing customers have nowhere else to go", said Yasuo Sakuma, Chief Investment Officer at Libra Investments in Tokyo. It said that about 4 percent of the company's output of those products from September 2016 to August this year had been affected, but that it was examining other possible episodes of data falsification going back 10 years.

Analysts say the announcement further tarnishes the reputation of Japan's globe-trotting manufacturers, long celebrated for their high-quality products.

There have been previous cases in Japan involving falsified data, including at Nissan Motor 7201.T , Mitsubishi Motors 7211.T and Takata, which filed for bankruptcy this year over faulty airbags that were blamed for 17 deaths and scores of injuries.

The corrosive business practices have raised broader questions over corporate governance in Japan, and cast doubt on the integrity of a manufacturing industry once the envy of the world.

Toshiba is still working to recover from an accounting scandal that began in 2015.