Biplab Das 
Toyota Motor’s Daihatsu unit has announced a suspension of shipments for all its vehicles after an investigation uncovered safety issues in 64 models, including nearly two dozen under Toyota’s brand. The probe, initiated after Daihatsu admitted to rigged side-collision safety tests for 88,000 small cars, has now revealed a more extensive problem that impacts various models sold domestically and overseas.
Scope of the scandal widens
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.
Impact on Toyota and Daihatsu operations
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.
Market and shareholder implications
While Toyota shares remained flat following the announcement, the broader implications for the market and shareholders are significant. The revelations could lead to increased scrutiny of the entire Toyota group, potentially affecting consumer trust and investor confidence. Addressing the safety concerns will require a strategic and transparent approach to regain credibility.
Global reach of safety issues
The safety issues identified by the panel have global ramifications, affecting markets in Southeast Asia, including Thailand, Indonesia, Malaysia, Cambodia, and Vietnam, as well as Central and South American countries such as Mexico, Ecuador, Peru, Chile, Bolivia, and Uruguay. Toyota emphasized the need for a comprehensive review and reform, recognizing the substantial challenges posed by the extensive safety problems.
Daihatsu’s position in the Toyota group
Daihatsu, as Toyota’s small-car unit, plays a crucial role in the production of “kei” cars and trucks popular in Japan. The unit’s impact extends to Toyota’s global sales, accounting for 7% of the company’s total sales. The safety scandal places Daihatsu under scrutiny, prompting calls for structural changes and organizational reform to ensure a commitment to safety and quality.
Historical safety issues within the Toyota group
This incident is not the first safety challenge faced by the Toyota group. Previous cases, such as the engine data scandal at Hino Motors in 2022, resulted in resignations and pay cuts for managers. The history of safety issues within the group, including a high-profile safety crisis involving faulty accelerators in 2010, adds to the importance of addressing the current Daihatsu scandal transparently and effectively.
The safety scandal affecting Toyota’s Daihatsu unit underscores the challenges faced by the automaker in maintaining its commitment to safety and quality. The broad implications, both domestically and globally, necessitate a strategic response to rebuild trust among consumers and shareholders. The incident highlights the critical need for transparency and accountability in the automotive industry, particularly in addressing safety concerns that impact a wide range of models and markets.
