Toyota vows reform after affiliate Daihatsu caught in safety scandal

TOKYO: Toyota Motor Corp. pledged "fundamental reform” after subsidiary Daihatsu Motor Co. was forced to suspend all shipments - and now faces a government raid of its offices - following an investigation that found most of its vehicles weren’t properly tested for collision safety.

The situation presents a crisis of trust not only for the world’s largest carmaker, which suffered a another scandal last year with its other major unit Hino Motors Ltd., but also for the country’s automotive industry.

"It is honestly surprising,” Bloomberg Intelligence senior auto analyst Tatsuo Yoshida said, adding that it might be necessary for Daihatsu to suspend production as well due to the time it can take to reacquire certifications that were fraudulently obtained.

"Toyota won’t be exempt from management oversight responsibility.”

Toyota said in a statement Wednedsay that around 174 irregularities have been identified across 64 models, including in some cars sold under the Toyota brand.

The move to suspend Daihatsu’s shipments will affect vehicles produced in Japan and overseas, and not only at Toyota factories but possibly also at companies like Mazda Motor Corp. and Subaru Corp., considering Daihatsu provides manufacturing services to a range of other automakers.

Previously, only about half a dozen models were thought to be affected by the manipulated test results, but Toyota now says almost every car in Daihatsu’s line-up could be impacted. Japan’s transport ministry said it will conduct an on-site inspection of the company’s offices today.

The investigation centres around cars’ airbag control unit and found that the ones used during crash tests were different from the ones used in cars actually sold to the public.

While those other test units were later found to meet industry standards, side-collision test results of the Daihatsu Cast and Toyota Pixis models "may not comply with the law,” Toyota said.

Toyota said it’s not aware of any accidents or incidents related to the issue.

Daihatsu admitted in April that it fudged crash test results on 88,000 cars that were manufactured in Thailand and Malaysia and sold within the past year.

Third-party investigators, led by TÜV Rheinland Japan Ltd., said Wednesday the irregularities date back as far as 1989 but began to ramp up in 2014.

"Labour conditions resembled a black box where those in charge of manufacturing sites were under so much pressure to deliver good results that they couldn’t report issues further up the chain of command,” Makoto Kaiami, chair of the investigatory committee, told reporters at a press conference.

"That upper management wasn’t involved with workers is itself a problem.”

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 Southeast Asia, include the Gran Max pickup and vans and Terios and Xenia passenger vehicles.

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

"This will be an extremely significant task that cannot be accomplished overnight,” Toyota said in its statement.

"It will require not only a review of management and business operations but also a review of the organization and structure as well as a change in human resource development and awareness of each and every employee.”

No immediate management changes were announced Wednesday.
Last year, Toyota’s truck-making subsidiary, Hino Motors, admitted to falsifying emissions data. Hino, which is 50.5% owned by Toyota, said in August 2022 that engine exhaust values were falsified for vehicles that were manufactured as far back as 2003.

Those revelations came to light after a third-party panel submitted a report to Hino detailing its findings. The company vowed at the time to work on imposing measures that would stop anything happening again and said it would improve management and compliance.

In 2017, Japan’s Takata Corp. filed for bankruptcy after almost a decade of recalls and lawsuits related to its airbag inflators, which have been linked to several deaths and scores of injuries around the world because they can rupture and send metal fragments flying.

Denso Co., one of Toyota’s biggest suppliers, said this month that it’s been working since 2020 with six major Japanese carmakers to recall 3.8 million faulty fuel pumps.

Nissan Motor Co. earlier this year issued a recall of about 1.38 million vehicles including Note, Kicks, Serena and Leaf models and impacting vehicles in the US, Europe and Japan.

That recall involved several issues, including cars suddenly accelerating after exiting cruise control and a short circuit that can cause motors to stop while driving.
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