Top Three Stories that shook the Automobile Industry in 2015

  • Dec 18, 2015

MANILA: This year witnessed a lot of ups and downs in the automobile industry across the world. Many automakers had to recall their models in order to test and rectify the problem. Apart from this a lot has happened concerning the productivity and loss ratio encountered by some the biggest conglomerates of the world. With the year 2015 reaching its shore, let’s get a bit more close to all these stories which have blown the hats of many with a single shot. Out of those big head turners, the big three of them have been discussed here which follow the VW, Takata and Mitsubishi covering the major decisions, roll overs and downs faced by them making year 2015 unlucky for them and others.

Takata’s massive airbag recall

Airbag recall

The Japanese automobile parts maker got involved in manufacturing defective inflator and propellant devices that created problem while deployment in case of any crash or rollover. During the test, the airbags were seen with minute metal fragments that potentially caused injury to the vehicle passengers. In the US, about 34 million affected vehicle were recalled, and all over, the figures went up with another 7 million affected vehicles globally. Takata initially announced the fault in 2013 but only six defective makes were identified. So, the matter didn’t made much buzz at that time. This year, Toyota recalled some vehicles with suspected Takata’s defective inflators and finally identified the root cause. This year in July, NHTSA prompted the automaker to remove the defective parts and sent it to Takata for review. In November 2015, U.S. federal regulators issued a fine of $70 million to Takata for the admittance of the fault.

Volkswagen Defeat Device Scandal

VW scandal

Volkswagen was accused of using a chest software in its vehicles that gave wrong carbon emission output figures. Around 11 million diesel cars globally were detected with the defeat device and the results revealed that the engines emitted 40 times more nitrogen oxide pollution in case the software gets off. Later on, the US Federal Trade Commission initiated a probe against the Volkswagen emissions-cheating scandal and ordered all other government agencies to look into the matter seriously and investigate Volkswagen. In the U.S, Volkswagen sold nearly 5 lac diesel cars that were equipped with the cheat software which costs around US$ 18 billion. VW has also started to cut its diesel variants across all models and assured that the gasoline-powered vehicles are less polluting. Due to the scandal, VW had to remove its CEO and keep 6.5 billion Euros (US$ 7.5 billion) aside for the recall purpose. The amount is meant to cover the whole repair cost, said the new CEO.

Mitsubishi shut down its US Plant


The renowned Japanese automaker, Mitsubishi Motors Corp. had to close its U.S manufacturing firm because of the drop in productivity and they were unable to find buyers. So, the company decided to close its sole operations in the U.S. The reports also revealed that the strengthening of the dollar and the soaring labour costs is also the major reason behind the downfall of the company in the U.S. The strengthening of dollar led to increase in the production cost and adversely affected Mitsubishi Motors. The workers were also raising issue against wage rise and the management was unable to handle the demands of the workers. Mitsubishi Motors is now seeking some possibilities in Russia and Southeast Asian countries to strengthen its market share. Due to the closure of the U.S plant, Mitsubishi Motors received an estimated tax benefit and concession of $250 million. In 2015, the automaker experienced a production drop of 64,000 units. Moreover, Daimler Chrysler purchased 34 percent stake in the Mitsubishi Motors North America and later on, sold it to Goldman Sachs after three years. Goldman Sachs resold the shares and made a profit of US$ 80 million.


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