Parts giant's fraud case reappears, Japanese car quality halo may accelerate loss

publish_time: 2021.02.22

          Following the Takata Airbag and Kobe Steel Incidents, another day the auto parts giant is experiencing a large-scale quality crisis.

          On February 16, Japanese auto parts giant Akebono Brake Industry Co., Ltd. issued an official statement, acknowledging that the quality inspection data of brake devices and parts produced in its Japanese factory was tampered with and fabricated, involving more than 114,000 data, of which The number of products that did not reach the agreed standard value with the automaker reached 5,000, and the data fraud discovered can be traced back to 2001.

         Yasuhiro Miyaji, President of Sugon Brake Industry responded that parts and components involved in data falsification eventually flowed into 10 Japanese car companies. The specific company names were inconvenient to disclose, but after re-examination, the car companies "all believed that there was no problem with product performance." And related car companies currently have no recall plans. As for whether the Chinese market is involved, Miyaji said that it is temporarily unable to confirm whether the parts are exported overseas after assembly.

         Although the statement finally emphasized that the large-scale data fraud is not expected to have a significant impact on the company's performance, due to the high number of products involved and the long time span, it was contacted by Takata Airbag and Denso, which caused a shock in the industry. This time, Sugon Brake Company will undoubtedly accelerate the loss of the "manufacturing" halo of Japanese cars.

Business decline has already begun

         Public information shows that in the past nearly a century, Sugon Brake Company has repeatedly seized the expansion opportunities of Japan's industrial manufacturing industry. On the eve of World War II, Sugon started with brake linings; in the 1960s, it formed a technical alliance with the well-known American brake pad manufacturer Bentex, laying the groundwork for its brake giant status. In the 1980s, Japanese cars were highly sought after in North America and other places. Sugon Brake took advantage of the momentum and established a joint venture with General Motors to establish its first overseas production base in the United States.


          Although the 2008 financial crisis severely hit multinational companies including Lehman Brothers, as far as Suguang Brake is concerned, it has become an opportunity for its business globalization to take a higher level. In 2010, Sugon took the opportunity to subordinate the revenue of the brake business under the doctoral group. The financial report showed that the overseas net sales of Sugon brakes surpassed that of Japan for the first time in the fiscal year, becoming the main revenue source.

         Since then, Sugon Brake completely acquired the remaining shares of its North American joint venture and merged its eight subsidiaries into one company, headquartered in North America, and divided the market into four major areas: North America, Japan, Europe, and Asia. As a giant in the supply of automotive brake devices, Sugon's products also cover motorcycles, rail trains, wind turbines, cranes and other fields.

        But in recent years, the decline in performance has become the main theme of Sugon Brake. The financial report shows that from FY2017 to FY2019, the total revenue of Sugon Brake was 264.9 billion yen (approximately 16.2 billion yuan), 243.7 billion yen (approximately 14.9 billion yuan), and 193.3 billion yen (approximately). (11.8 billion yuan). Among them, the performance decline in fiscal year 2019 was particularly significant. Sugon Brake explained that this was mainly due to the sudden drop in orders from several major automakers in North America and China. At the same time, several mainstream Chinese automakers stopped production of related models.

The "Takata Phenomenon" of Japanese automobile manufacturing?

          Data for the first three quarters of the 2020 fiscal year showed that the main customers of Sugon Brake Industry during the reporting period were Toyota, Nissan, GM, Honda, Volkswagen and many other multinational auto companies, and Japan and North America contributed 71% of the performance. In addition, Toyota also holds an 11% stake in the company.

         An industry insider told Auto that Japan is rich in monopolistic enterprises and multinational manufacturers, and business transactions between monopolistic enterprises are prone to exist, and the quality problems of individual enterprises are often prone to cause industry shocks. In particular, Japan’s manufacturing industry has been rumored in recent years to have many drawbacks, such as rigid system and persistent tails. The Japanese craftsmanship that was once a smash hit has now lost its reputation due to repeated fraud and quality crises.

         In 2017, Japanese car airbag manufacturer Takata Airbag declared bankruptcy in its US subsidiary due to fatal risks in its products. This was known as the largest bankruptcy case in the Japanese manufacturing market, followed by the largest automobile recall in global history. As of November 2020, the Takata airbag incident has involved 40 million cars and 63 million airbags.

         The recall caused by Takata airbags can be traced back to 2008, but the blow to related car companies and industries continues today. On February 19th, Ford said it would recall 3 million vehicles for the same reason.

         Another supplier giant Denso has caused more than five million car products to be recalled due to defective fuel pumps. China FAW Mazda, Changan Mazda, GAC Toyota, etc. are all implicated. Among them, GAC Toyota's two hot-selling cars, the Camry and Highlander, were not spared. After the "expanded recall" in November 2020, they were "recalled again" at the end of January this year.

        For more than half a century, Japan has turned from a small industrial country to a major automobile manufacturing country, and is world-famous for its product economy and high reliability. As the wave of intelligence and electrification is sweeping the global auto market, Japanese automakers are facing collective transformation challenges, and scandals arising from component quality problems will cast a shadow over the process.


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