Kobe Steel Ltd (KBSTY) shares plunged more 20% Tuesday after the group revealed it had falsified data on the strength and durability of copper and aluminium shipments to customers for as much as a decade.
The scandal, which is the latest in a series of corporate misdeeds from within the world's second-largest economy, could have implications for automakers and aerospace firms and could lead to recalls for the country's car industry after the Transport Ministry called for deeper safety checks in the wake of the revelations.
"A portion of the products traded with customers did not comply with the product specifications which were agreed between the Company and its customers," the company said in a statement. "Data in inspection certificates had been improperly rewritten etc., and the products were shipped as having met the specifications concerned."
Kobe Steel shares fell nearly 22% in Tokyo Tuesday, the first day of trading since the company published details of the scandal, to close at ¥1,068.00 each, the lowest since June 23.
The company said about 4% of shipments between September 2016 and August 2017 were impacted by the scandal, which was discovered by what it called an "emergency quality audit", but admitted the falsifications may have occurred over a period of ten years.
The group's steel and aluminium division had sales of ¥323.3 billion ($2.9 billion) in its last financial year, which ended in March, and has about 200 corporate and industrial customers, including Boeing Co. (BA - Get Report) , Ford Motor Co. (F - Get Report) and General Motors. (GM - Get Report)
"Causing this serious matter has brought overwhelming shame to the Company," Kobe Steel said in a statement. "The Company deeply regrets this incident and sincerely apologizes for the enormous worry and trouble this incident has caused to its customers and other related parties. The Company will report again as further progress of the investigation is made."
Toyota Motor Co. (TM - Get Report) and Honda Motor Co. (HMC - Get Report) are two of the group's biggest customers, and each said Tuesday that they have used copper and aluminium products that may have been falsified.
The scandal comes only days after Nissan Motor Co. was forced to recall around 1.2 million vehicles after discovering that they were signed-off during final safety inspections by non-qualified employees. Earlier this year, Takata Corp. filed for bankruptcy protection after misleading statements related to the quality of its airbag inflators led to the recall of 42 million vehicles, the largest in U.S. history.
More of What's Trending on TheStreet: