Daihatsu offices raided after scandal halts all car shipments

Daihatsu headquarters in Osaka. — Image from Tokumeigakarinoaoshima, CC0, via Wikimedia Commons

TOKYO: Daihatsu Motor Co.’s offices were raided by the Japanese government after an inspection scandal forced the Toyota Motor Corp. subsidiary to suspend all car shipments indefinitely.

The transport ministry’s on-site inspection of Daihatsu’s Osaka headquarters Thursday morning followed revelations that the carmaker and supplier manipulated the results of various collision safety tests dating as far back as 1989.

Daihatsu supplies cars and parts to a number of major brands, including Toyota, Mazda Motor Corp. and Subaru Corp., which could cause the scandal to ripple through the rest of Japan’s automotive industry.

For Toyota, rebuilding trust in its oversight will be a challenge, as this is the second time one of its major affiliates was caught red-handed after Hino Motor Co. admitted to falsifying data last year.

"As voluntary in-house inspections detected only one case where vehicle performance did not meet the legal requirements, we think the risk of an extensive recall is low,” analysts at Citi Research wrote in a note.

"However, if production is suspended for a lengthy period, Toyota could suffer an operating profit hit of hundreds of billions of yen.”

Toyota shares slumped as much as 5.6% in early Tokyo trading Thursday.

It’s been a tough week for the world’s biggest carmaker. Toyota recalled about one million cars sold in the US at risk of faulty passenger-side air bags, it said Wednesday.

Sensors in certain Toyota and Lexus brand sedans and SUVs could miscalculate passenger and prevent airbags from deploying when they should, the company said in a statement.

Daihatsu has been a wholly-owned subsidiary of Toyota since 2016 and accounts for roughly 4% of Toyota group’s global vehicle sales.

Daihatsu produced more than 1.7 million vehicles worldwide in fiscal 2022, around half of which were made in Japan.

It holds a roughly 30% market share for kei cars - pint-sized vehicles that have been snapped up for years by domestic customers - making it an industry leader along with rival Suzuki Motor Corp.

Outside of kei cars, Daihatsu, which is based in Osaka, is known for its line-up of lightweight vehicles and sedans that are popular across Japan and South-East Asia, include the Gran Max pickup and vans and Terios and Xenia passenger vehicles.
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