The news out of Japan just keeps getting worse. In another shocking development, automaker Nissan announced that:
Nissan Motor Co Ltd (7201.T) is suspending domestic production of vehicles for the Japanese market for at least two weeks to address misconduct in its final inspection procedures that led to a major recall, it said on Thursday. – via Reuters
The freeze on production is not only damaging to Nissan’s reputation, but to Japan’s as a whole. Since last week the world has been reeling form the scandal at Kobe Steel which implicates thousands of pieces of machinery and vehicles. This latest crisis will not do much to help the situation either.
These scandals could threaten to rattle already fragile investor confidence in the Japanese market. While Nissan’s stock has not felt the effects of this most recent announcement yet, the impact may be felt soon enough. The Telegraph writes that:
Nissan has already said it is recalling more than 1m cars for quality checks as a result of the discovery, which is likely to generate a hit to profits of hundreds of million of pounds.
The bottom line is that the credibility of Japan’s largest companies is coming into question. Investors may want to reexamine their Japanese investments and decide if they are as safe as they once believed. Do not forget that the Kobe Steel scandal is only in its infancy and that associated companies will be uncovering the depth of their exposure to the over-graded steel. Therefore, be sure to consider the risks around investing in Japan appropriately.
To read Reuters article on the Nissan production freeze, click here.
To read The Telegraph’s article on Nissan’s production freeze, click here.
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