Suzuki Motor chief to step down over scandal

Osamu Suzuki is stepping down as chief executive of Suzuki Motor after the company became embroiled in Japan's fuel economy testing scandal.

Following almost four decades running Suzuki Motor, Mr Suzuki, 86, conceded that a one-man band style of leadership was no longer fitting for a company that has grown to be Japan's fourth-largest carmaker.

Mr Suzuki, who will retain his role of Suzuki chairman, apologised for failing to spot how the company had used fuel testing methods that were not compliant with Japanese rules since 2010.

“Over the past few years, I have been thinking that it was becoming impossible to oversee everything on my own considering the company’s scale, and I believe this problem occurred as a result,” Mr Suzuki said on Wednesday.

Suzuki admitted last month that its fuel economy testing methods for certain vehicles breached local rules after Japanese transport ministry officials asked carmakers to review their procedures and results.

That request was made after Mitsubish Motors admitted in April that some of its employees overstated fuel economy by up to 15 per cent on four types of petrol-powered small cars sold in Japan, including two models built for Nissan.

Transport ministry officials raided Suzuki’s head office in Hamamatsu this month after a company probe found its fuel testing methods had not complied with Japanese rules on 2.1 million vehicles.

These included 14 types of Suzuki’s cars and 12 different models supplied to other manufacturers. None of Suzuki’s overseas models were affected.

A re-examination of Suzuki’s vehicles using approved testing methods showed that their fuel economy performance was about 1.6 per cent higher on average than the figures contained in advertisements.

Suzuki has previously said that it failed to provide adequate infrastructure and personnel to carry out the tests properly after the global financial crisis of 2008.

The industry-wide impact of the fuel economy testing scandal has been significant, with Nissan agreeing to inject $2.2bn into Mitsubishi, Japan's sixth-largest carmaker, in return for a 34 per cent stake.

Signs of change in Suzuki’s leadership had emerged before the scandal broke.

Last year, Toshihiro Suzuki, the 57-year-old son of Osamu Suzuki, took over as Suzuki president, marking the first change in this role since 1978.

Mr Suzuki’s successor as chief executive will be decided after Suzuki’s annual meeting this month.

“People often call me a dictator, but instead of doing everything on my own from the top, we’ll be going forward as a team. My role is to step back and determine whether the team’s direction is going OK,” said Mr Suzuki.

In addition to the chief executive change, Suzuki said Osamu Honda, a vice-president overseeing technology, will also step down at the end of June.

Suzuki managers will forgo summer bonuses and receive a pay cut of up to 40 per cent for six months because of the fuel economy testing scandal.

Mr Suzuki, who married into the company's founding family, is credited with expanding Suzuki's sales in Asia, particularly in India, where its Maruti Suzuki affiliate controls about half of the market.

But Suzuki’s strategy outside Asia has been less successful and the company has a poor record in cross-border alliances.

In 2009, Suzuki formed a partnership with Volkswagen, but that was followed by an acrimonious split only two years later.

- (Copyright The Financial Times Limited 2016)