Pre-emptive communications could help Japan carmakers amid scandals

The opening of this year’s Tokyo Motor Show finds Japan’s automotive industry in a bigger state of flux than usual. As the world’s biggest carmaker, Toyota, rebrands itself as being more than a carmaker, rivals Nissan and Subaru are facing fallout from apparently less-than-thorough quality inspections.

Nissan is reported to have failed to meet Japanese regulations in its inspection procedure for nearly 40 years. It has also been reported that uncertified staff carried out quality checks at Subaru for more than 30 years.

Subaru said in a statement that a possible recall is still under consideration. A statement from Nissan says the company is conducting a non-compliance recall campaign on certain vehicles produced in Japan. A spokesperson for Nissan said the issue does not affect vehicles outside the country.

While these cases are Japan-specific, they are potentially damaging to the ‘Made in Japan’ brand, particularly in the context of the ongoing Kobe Steel crisis. That company has acknowledged that it faked data relating to the quality of its aluminium and copper, which the automotive sector uses along with other heavy industries.

Investigations into all cases are ongoing, so it's unclear how damaging they will be to the individual brands and to the broader reputation of Japanese manufacturing. While Japan Inc. has suffered numerous scandals in recent years, including the exploding airbags that led automotive parts manufacturer Takata to file for bankruptcy in June, Japanese companies are still broadly seen as high quality and dependable.

Steven Bleistein, the founder and CEO of Relansa, a Tokyo-based business-transformation consultancy, said it is critical for the companies affected to show that “malfeasance is the exception and not the rule”.

“That means that Nissan and Subaru must be timely and transparent in their communication, explain what they know, what they still need to find out what they are doing to address an issue or risks, and how they will protect their customers, without attempting to obfuscate or minimise” any potentially damaging facts.

Unaffected competitors would be wise to pre-empt negative fallout, if not actually turn the situation to their advantage. Taking into account the bigger picture of Japanese manufacturing, Bleistein said that companies that have not been implicated should take pre-emptive action and “demonstrate they have good processes with rigorous governance”.

Meanwhile Toyota, which survived a global recall crisis of its own between 2009 and 2010, aims to take its brand in a new direction. Facing challenges not only from the likes of Tesla but a diversifying ecosystem that also now includes Dyson, the company is focusing on the wider concept of mobility rather than cars. It is also exploring new revenue streams, as exemplified last with the launch of a casual rental service targeting Millennials who have little interest in owning cars.

Bleistein praised the strategy “because it focuses on the value Toyota provides the world as opposed to the specific product it happens to provide now”. But he noted that first and foremost, employees must fully embrace the new positioning in order for it to work.

“They need to be able to adapt to a new way of doing business even before the branding change occurs in the minds of consumers,” he said.