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Scandal-hit Japan automakers eye return to 'golden age'

2017-10-26 08:39

UNDER PRESSURE: The Japanese government is urging steelmaker Kobe Steel to clarify the extent of manipulation of data on steel, aluminum and other metals used in a wide range of products, reportedly including rockets, aircraft and cars. Image: Kyodo News via AP

Tokyo - Repeated quality scandals, stiff foreign competition and lagging technology have knocked Japan's auto giants off pole position but analysts say the once world-beating sector could yet steer itself to a comeback.

Toyota, Nissan and small-car maker Suzuki were all showing off their next-generation wares at the Tokyo Motor Show this week, but the exhibition comes at a bad time for the industry.

Nissan is embroiled in a quality inspection crisis that has seen it recall more than 1.2-million vehicles and suspend production of cars sold in its home market, while Mitsubishi Motors last year was caught fudging fuel-economy tests to make its cars seem more efficient than they were.

The scandal at Nissan, meanwhile, has been compounded by a crisis at Kobe Steel, which falsified strength and quality data for products sold to Japan's automotive industry.

This summer, Tokyo-based Takata tumbled into bankruptcy as its defective airbags were blamed for the deaths of at least 17 people globally and sparked the biggest-ever auto safety recall.

'Golden Age'

Quality disasters have dogged the global auto industry for decades and they aren't unique to Japan, a point underscored by the massive diesel emissions scandal at Volkswagen.

But Japan's auto industry is a long way from the days when its just-in-time manufacturing and near-obsessive focus on constant improvement was the envy of the world.

"The golden age of Japan's automakers is over", German car expert Ferdinand Dudenhoeffer told AFP, adding that the scandals have "deeply undercut their reputation for quality."

The industry is already grappling with a shrinking domestic market as the country rapidly ages.

But their task is even tougher if they can't rely on a reputation for quality to compete globally, said Flavien Neuvy, director of the France-based Cetelem Observatory, which specialises in automotive research.

Neuvy said: "The Japanese have always been well positioned in sport utility vehicles and the premium segment. 

"But these are not niche areas any longer and many manufacturers have gotten into these sectors and surpassed them, like the Germans."

Toyota's Mirai, the world's first mass-market hydrogen fuel-cell car, has yet to enjoy the smash success of its gasoline-electric Prius hybrid, launched two decades ago.

"They are not innovative enough and they're too focused on Japan ... Since Toyota launched their hybrid technology 20 years ago, there's been nothing really remarkable" from Japanese automakers, Dudenhoeffer said.

"With the exception of Nissan, they don't have electric-only vehicles, which are becoming a key segment in China - the world's biggest vehicle market."

Some Japanese automakers are jumping into all-electric cars, including Honda and Suzuki, as well as autonomous driving.

But they're coming late to the party as US-based Tesla, Germany's Volkswagen and French auto giant Renault have been betting on electric for years.

"We don't have any doubt that 100% electric vehicles are going to be a key solution in the future," Toyota executive vice president Didier Leroy said at the show in Tokyo on Wednesday, after the carmaker recently joined forces with Mazda on an electric vehicle joint venture.

'Still the benchmark'

Japanese automakers should not be written off and even those that focused on hybrid cars like Toyota still have enough technological prowess to succeed in the fast-growing electric segment, some analysts say.

The Camry maker was also able to drive past a deadly accelerator defect scandal to become the world's biggest-selling automaker for several years before it was overtaken by Volkswagen in 2016.

"The last number of years have probably given the impression that technological innovation has disappeared" in Japan, said Guillaume Crunelle at consulting firm Deloitte.

"While it's clear that innovation is no longer just the preserve of Japanese firms alone, one should not underestimate their investment in research and development or their ability to adapt."

And they lead the pack when it comes to operational quality, Crunelle added.

"The Japanese are still the benchmark."

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