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Subaru Production Grinds To A Halt

Industry News / Comments

With sales struggling in Japan, this is the last thing Subaru needs right now.

Subaru has been having a hard time lately. While the company is enjoying considerable success in the US with sales predicted to grow in 2019, it's a different story in its home market of Japan. After Subaru was found guilty of falsifying emissions data in Japan, which led to a recall of 530,000 vehicles, sales dropped in the Japanese market by 16 percent.

Now, things have gone from bad to worse, as production at Subaru's Yajima factory, the company's sole factory in Japan that accounts for around 60 percent of the company's global production, has been halted after a possible defect was discovered in an electric power steering unit. With sales already struggling in Japan, this is the last thing Subaru needs right now.

Production at one of Subaru's two only factories was stopped on January 16 and has been shut down ever since. According to the automaker, the possible defect affects the Impreza, Forester and Crosstrek models. Consequently, this means production of all the other models has also stopped, including the Legacy, Outback, Revor, WRX, BRZ, and Toyota 86, since they all use the same assembly line.

"Based on the contribution margin per vehicle, we estimate that a complete shutdown of Japanese production lines for one week would dent operating profits by 13.5 billion yen ($122 million)," said Nomura Securities analyst Masataka Kunugimoto.

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According to an Asian newspaper, the impact on production is likely to exceed 10,000 units, which is already causing delays in customer deliveries. Subaru is currently investigating the cause of the defect, which could affect vehicles produced between December 2018 and January 16. If the defect occurs, it will cause the steering control unit light to come up in the instrument panel and a loss of power steering assistance, causing the steering to be heavier than normal. If this happens, Subaru advises to stop driving immediately and contact their local dealer.

Subaru says it will take "appropriate" action to ensure the safety of potentially affected vehicles. Production at Subaru's US plant is unaffected for now, but it is not yet known when production will resume at the Yajima factory.