EsAutomaker Subaru has had to halt production at its Japanese operations due to a defect in a key power steering component, Reuters reports. Subaru only produces vehicles in Japan and the U.S. – it isn’t yet clear whether the component’s issues may also lead to a cut-back in American production. The announcement follows a series of parts issues, according to the Wall Street Journal, including engine components in 2018.
The disruption follows a period of decline for the company which saw global production drop 5.0% in the 12 months to Nov. 30, Panjiva analysis of company data shows, to reach 1.02 million vehicles. The firm produces two-thirds of its vehicles in Japan of which four-fifths are exported to other markets.
Source: Panjiva
Subaru also faces potential challenges from the ongoing U.S. section 232 review of the automotive industry. In the near-term the review has been delayed by the U.S. government shutdown – a ruling from the Commerce Department is due by Feb. 17 – and Japan is in theory exempt from duties during free trade deal negotiations, as outlined in Panjiva’s Jan. 11 research.
The company’s factory in Indiana, which produces the Ascent, Impreza, Legacy and Outback vehicles, has seen a slowdown in imports with 4Q shipments, dominated by those from Japan, having fallen by 1.1% year over year in the fourth quarter Panjiva data shows. That followed a 16.9% surge in the first nine months of the year and likely reflects stalled U.S. auto sales.
It’s possible that the section 232 review and tariffs will focus on specific components rather than completed vehicles or generic items like body panels. That may raise an incentive for Subaru to end production in the U.S. and shift back to Japan or another lower cost market for complete production given that its imports take the form of complete knock-down kits.
Source: Panjiva
