Toyota subsidiary shuts down production after admitting to decades of fraudulent safety test results

Japanese automotive company Daihatsu, a subsidiary of Toyota, has temporarily ceased operations in response to fraudulent safety testing allegations spanning decades. The company released a statement acknowledging the severity of the inconsistencies, their root causes, and the recommendations provided by an independent investigatory committee to prevent future instances. Daihatsu expressed its intent to implement widespread changes to its corporate culture, putting compliance at the forefront to avoid repeating past mistakes and to regain stakeholder trust.

One of Japan's earliest combustion engine manufacturers, Daihatsu was established in 1907. The company's immediate operational cessation directly affects countless auto parts makers, numerous employees, and deals a significant blow to local economies. Independent investigations into 64 Daihatsu vehicle models have unearthed 174 instances of inconsistencies in safety tests and procedures. These discrepancies range from safety test manipulation to the creation of false or forged test data, indicating seemingly deep-seated systematic issues at Daihatsu.

As the investigation continues, all shipments from the company have been halted, and Japan's Transport ministry has begun on-site inspections probing company issues dating back to 1989. This was around the time Daihatsu was attempting to enter the American market, an effort that ultimately fell flat due to strong competition. Toyota, a key competitor, had bought a 16.8% interest in Daihatsu in 1967, which later expanded to 33.4% in 1995 and became a controlling interest in 1998.

Daihatsu had been contracted to manufacture small vehicles for Toyota, a number of which were rebranded as Toyota models and sold in the American market even after Daihatsu withdrew from direct sales in the U.S. These models included the Toyota Cayla, Roomy, and Avanza, among others. Additionally, certain Daihatsu vehicles were rebranded and sold by Subaru, such as the latest Subaru Stella and Subaru Chiffon.

Daihatsu, which specializes in designing small cars and trucks favored in Japan and produced around 870,000 vehicles in fiscal 2022, didn't disclose when production would be resumed. Media reports, however, suggest the production lines will stay shut until at least the end of January. Toyota North America did not provide comment on this situation by the time of reporting.