Daihatsu Halts Domestic Production Until End of January
Toyota Motor’s minicar subsidiary Daihatsu Motor announced on December 22nd that it has halted production at all of its domestic plants in Japan through the end of January due to an ongoing safety data manipulation scandal.
The halt affects factories in Kyoto, Osaka, and Shiga prefectures which produce minicars and auto parts, impacting production of not only Daihatsu vehicles but Toyota branded models as well. Daihatsu stated the factories would remain shuttered past the New Year’s holidays until January 31st.
This expands a previous December 16th announcement which paused shipments of Daihatsu and Toyota vehicles using Daihatsu-supplied components. The newly announced nationwide production stoppage reflects the widening scope of the data falsification issue as Japanese authorities continue investigating the company.
|Mira e:S minicar
Safety Inspection Data Manipulated for Over 30 Years
At the root of Daihatsu’s drastic actions lies the revelation in late November that the company had falsified fuel and emissions data related to new model safety inspections for over 30 years.
Daihatsu admitted inspectors had altered testing environments in subtle ways to achieve passing results since the early 1990s up through late 2022. This enabled new vehicles to be certified despite failing to actually meet Japanese safety and environmental regulations when conducted properly.
The systematic data manipulation went undetected for decades until an internal audit finally uncovered the issue. Daihatsu states about 135 new model types were impacted by the problem, though the scale remains unclear.
Japanese authorities including the transport ministry have launched extensive investigations into Daihatsu’s safety inspection practices in the aftermath. The company risks heavy fines or criminal charges depending on probe findings.
Toyota Group Braces for Ripple Effects
As an integral subsidiary responsible for Toyota’s minicar production and parts supply, Daihatsu’s operational shutdown threatens to severely impact automaking operations across the entire Toyota Group.
Analysts estimate over 30,000 Toyota dealerships and 420 parts suppliers now face inventory shortages and production issues of their own. And shipments of several Toyota vehicles including the Raize and Agya models have already been halted in Southeast Asia markets.
Even subsidiary Subaru in Japan relies in part on Daihatsu for manufacturing components, adding further uncertainty. It remains to be seen how extensively Daihatsu’s scandal will disrupt global supply chains as partners grapple with the supplier’s unknown timeline to resume full production.
To mitigate harm, Daihatsu has pledged financial assistance to affected suppliers and dealers. But shares of both Daihatsu and its parent Toyota sharply declined over 20% on news of the inspection scandal, demonstrating decreased market faith in the prominent automakers.
Timeline of Key Events
|Internal audit uncovers 30+ years of safety data manipulation
|Daihatsu halts shipments of Toyota co-produced models
|All domestic factories suspended through January 31st
The months ahead will prove crucial for Daihatsu and Toyota leadership to contain damages and restore confidence after safety standards were violated for decades right under their oversight. Both companies face swirling questions around how such large-scale misconduct evaded detection for so long.
Strict reassessments of inspection protocols and supplier relationships seem inevitable to prevent any repetition. And ironing out the extent of data falsification will enable a full picture of how many models and regions warrant re-inspection now that decades of Japanese safety certifications are under suspicion.
For a prominent player like Daihatsu supplying critical mini-vehicles across Asia, the bar to regain trust in affected markets will be set extremely high after this safety scandal broke open an issue rotting under the surface for 30+ years. The coming independent investigations could expose further surprises as authorities delve into decades of records.
How Toyota steers its vital subsidiary Daihatsu through ugly revelations in the months ahead may impact group perception for years. With supply chain uncertainty swirling, leadership must balance financial support for struggling partners against simply absorbing unquantified liabilities as the inspection scandal continues unfolding across regions and decades.
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