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June 4, 2024

Toyota and Mazda Halt Shipments Amid Expanding Japanese Auto Safety Scandal

The auto industry in Japan is facing significant turmoil as a safety test scandal continues to unfold. On Monday, Toyota Motor Corporation and Mazda Motor Corporation announced the suspension of shipments for certain vehicle models. This decision followed revelations from Japan’s transport ministry, which discovered irregularities in certification applications from these automakers.

Broadening Scandal Impacts Multiple Automakers

The scandal isn’t limited to Toyota and Mazda. The transport ministry’s investigation also uncovered irregularities in applications from Honda, Suzuki, and Yamaha Motor. These automakers were found to have submitted incorrect or manipulated test data during their certification processes.

The ministry’s response was swift, ordering Toyota, Mazda, and Yamaha to halt shipments of specific vehicles immediately. An on-site inspection is scheduled for Tuesday at Toyota’s headquarters in Aichi Prefecture.

Historical Context and Wider Implications

The current wave of revelations is part of a broader effort that began in late January when the ministry asked automakers to review their certification processes. This request followed a safety test scandal at Toyota’s Daihatsu compact car unit, which came to light last year.

The timing of these developments is particularly sensitive for Toyota, as its annual general meeting is approaching later this month. Influential proxy advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis, have recommended that shareholders vote against the re-election of Akio Toyoda as chairman. ISS cited the “spate of certification irregularities” within the Toyota Group as a key reason for their recommendation.

Apologies and Admissions

In a press conference, Akio Toyoda, the grandson of Toyota’s founder and former chief executive, issued a public apology. “As the person in charge of the Toyota Group, I would like to sincerely apologize to our customers, car fans, and all stakeholders for this,” he said. Toyoda admitted that certain cars did not undergo the correct certification processes before being sold.

Toyota has temporarily halted shipments and sales of three car models manufactured in Japan. The company is also investigating issues related to vehicle fuel efficiency and emissions, aiming to complete this inquiry by the end of June. Notably, Toyota stated that there are no performance issues that violate regulations, and customers do not need to stop using their cars.

Government and Market Reactions

The scandal has become a sore point for the Japanese government, which has otherwise been praised for its corporate reforms. Yoshimasa Hayashi, Japan’s top government spokesperson, described the misconduct as “regrettable.”

The impact on the stock market was immediate. Toyota’s shares fell by 1.8%, underperforming the broader Topix index, which saw a 0.9% gain. Mazda shares experienced a sharper decline, dropping 3.3%.

Specific Irregularities at Toyota and Mazda

Toyota’s wrongdoings occurred during six different tests conducted in 2014, 2015, and 2020. The affected vehicles include three production models—the Corolla Fielder, Corolla Axio, and Yaris Cross—and discontinued versions of four popular models, including one sold under the Lexus luxury brand. For example, Toyota measured collision damage on only one side of a model’s bonnet instead of both sides as required.

Mazda, on the other hand, suspended shipments of its Roadster RF sports car and the Mazda2 hatchback after discovering that workers had modified engine control software test results. The company also found that crash tests for the now-discontinued Atenza and Axela models had been tampered with. A timer was used to set off airbags during some frontal collision tests, instead of relying on an on-board sensor to detect a hit.

Ongoing Investigations and Future Outlook

Both Toyota and Mazda are continuing their investigations into these irregularities. Toyota plans to complete its probe into fuel efficiency and emissions issues by the end of June. Meanwhile, the full scope and long-term impact of this expanding scandal on Japan’s auto industry remain to be seen. As the situation develops, the integrity of certification processes and the trust of consumers hang in the balance.

Read more Business related news on R9 News
Jhumpa Lahiri

Jhumpa Lahiri

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