Toyota Motor Corp announced Monday it is temporarily suspending shipment of some models in Japan due to improper engine certifications by subsidiary Daihatsu. The company apologized for the repeated compliance issues involving the diesel engines used in various Toyota and Lexus models.
Background
Daihatsu, a wholly owned Toyota subsidiary which specializes in small cars and engines, said it had improperly conducted testing on some diesel engines going back to 2018. Specifically, the company submitted false testing data related to fuel efficiency and emissions to Japan’s transport ministry.
This comes just a few years after previous scandals involving data falsification at other Toyota group companies. In 2016, truck manufacturer Hino admitted to faking fuel efficiency and emissions data. And in 2018, Daihatsu was found to have used unauthorized employees to sign off on inspections reports.
Toyota President Akio Toyoda offered a public apology, saying “We want to apologize to all those customers who are still waiting for their vehicles.” He promised to investigate the cause and prevent recurrences, saying regaining trust is a top priority.
Impact on Vehicle Shipments
Toyota said it is suspending shipment of the following 10 domestic models due to lacking proper engine certifications from Daihatsu:
- Land Cruiser Prado
- Land Cruiser
- Alphard
- Vellfire
- Noah
- Voxy
- Sienta
- C-HR
- Isis
- Corolla Touring Sports
The company said around 280,000 vehicles were impacted in Japan between 2018-2024. Further announcements related to overseas impacts are expected shortly.
This will temporarily halt deliveries of some of Toyota’s top selling models in Japan and overseas, resulting in major business impacts. For example, the RAV4 SUV and Camry sedan – two high volume Toyota models internationally – use similar diesel engines as the models suspended in Japan.
| Model | 2023 Japan Sales |
|---|---|
| Noah | 93,000 units |
| Voxy | 87,000 units |
| Corolla Touring | 74,000 units |
Expected Impacts and Developments
Experts say Toyota may need to recall and retest vehicles previously shipped if improper tests rendered their certifications invalid. This could be a lengthy and costly process.
This scandal also hurts Toyota’s reputation for quality control. The repeated compliance issues from group suppliers suggest deeper problems with oversight and accountability, despite Toyoda’s past promises to improve governance.
Going forward, Toyota will conduct investigations into the cause of the issue and whether vehicles not shipped also lack proper testing. Further action on impacted overseas models can be expected shortly.
In terms of financial impact, Toyota’s shares fell over 3% on the news Monday. And suspensions of popular models like the RAV4 and Camry for overseas markets could result in major lost sales and revenue if halted for an extended time.
Industry Reaction and Executive Changes
Other automakers emphasized the importance of compliance processes to prevent similar issues, and some analysts said the scandal could spur reforms across the sector.
Within Toyota, the company said it will penalize executives responsible once details are uncovered in its investigation. Daihatsu President Soichiro Okudaira said he did not consider resigning over the scandal, though some governance experts pushed Toyota to appoint new leadership to change its compliance culture.
Conclusion and Next Steps
In conclusion, Toyota finds itself in yet another compliance scandal which will impact shipments of over 280,000 vehicles in Japan alone. Investigations into the cause and overseas impacts are still developing, with recalls, further suspensions, financial losses, and executive changes possible depending on findings.
It represents a major black eye for Toyota’s quality control and governance policies. As President Toyoda said, “We want to apologize to all those customers who are still waiting for their vehicles.” The company now faces a lengthy process to investigate, resolve current shipment suspensions, and reform practices to rebuild customer trust after repeated issues.
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