Toyota Motor’s small car unit Daihatsu Motor will compensate 423 domestic suppliers with which it has direct business relations after it idled its plants in Japan over a safety scandal. The small car specialist has halted production in Japan until the end of next month. The company is considering compensating suppliers based on past business volumes and is also working to assess the impact of the stoppage on its sprawling supplier network, a spokesperson told Reuters.
Last week, Daihatsu halted shipments of all its vehicles after a safety investigation found issues involving 64 models, including almost two dozen sold under Toyota’s brand. The company plans to begin working with its main suppliers to address the fallout from the scandal and may also help smaller subcontractors that do not receive compensation to access support funds from the industry ministry.
Daihatsu’s overseas operations focus heavily on Southeast Asia. The spokesperson said that the company has resumed production of Perodua brand cars at two joint venture plants it operates with Malaysian automaker Perodua after getting regulatory clearance. The company, which is fully owned by Toyota, said last week it had resumed shipments on Friday from its subsidiary in Indonesia, PT Astra Daihatsu Motor.
In terms of safety scandal, an independent panel investigating Daihatsu found that safety tests had been manipulated for almost all models currently in production, as well as some previously manufactured cars. This expands the scope of the scandal, posing potential risks to the automakers’ reputation for quality and safety. The affected models include those sold by Mazda and Subaru in Japan, as well as Toyota and Daihatsu models internationally.
Toyota acknowledged the need for “fundamental reform” to revitalize Daihatsu and announced a comprehensive review of certification operations. The company highlighted the substantial task ahead, emphasizing the necessity of evaluating not only management and business operations but also the overall organization and structure. The impact of these revelations extends beyond Daihatsu to potentially influence Toyota’s commitment to quality and safety.