The controversy over quality certification fraud at a subsidiary of Toyota Motor Company in Japan is spreading. In Japan, factory operations were virtually halted indefinitely, and product shipments were halted not only in Japan but also in Southeast Asia, one of the company’s main markets. For Toyota, controversy is growing as large-scale accidents that shake the foundation of product reliability occur one after another. It is pointed out that this will be a major blow to the brand influence of Toyota, the world’s largest automobile company and one of the leading companies in quality management.
This incident occurred at Daihatsu Kogyo, a subsidiary of Toyota’s light and compact vehicles. In April of this year, when irregularities were confirmed in the side collision safety certification process for vehicles for overseas export, the company formed a ‘third party committee’ and began a full investigation. Daihatsu, which accounts for 30% of Japan’s light vehicle market, sold approximately 360,000 vehicles worldwide in the first half of this year (April to September).
As a result of the investigation, 174 cases of manipulation and fraud were discovered in 25 items, including crash tests, exhaust emissions, fuel efficiency, airbag quality, and headrest performance. The tactics were bold, including altering airbag crash data and manipulating emissions data. There were some areas where manipulation had continued since 1989. Manipulation and fraud occurred in a total of 64 car models, including all 28 car models currently being produced and developed by Daihatsu and 22 car models by parent company Toyota, which received engines.
Daihatsu President Soichiro Okudaira (奥平総一郎) said, “We did not realize that it would have been difficult to make the right sound on site. “It is entirely the management’s responsibility,” he said, bowing his head. Minister of Land, Infrastructure and Transport Tetsuo Saito, head of Japan’s automobile regulatory authority, said, “This is an act that has shaken the foundation of the automobile certification system and can never be tolerated.” The Ministry of Land, Infrastructure, Transport and Tourism has launched a full-scale investigation into Daihatsu.
Daihatsu halted shipments of all models at home and abroad and suspended operations at all factories in Japan indefinitely. Toyota stopped shipping six types of compact cars, including the ‘Tanto’, in five Southeast Asian countries, including Thailand, Indonesia, Malaysia, Vietnam, and Cambodia. This amounts to 5% of Toyota’s Asian-produced vehicles. Southeast Asia is particularly sensitive to the ‘Daihatsu incident’ as the market share of Japanese cars such as Toyota reaches 80% and compact cars are especially popular.
Since automobiles are directly related to life, the impact of quality denial is very large. Problems with Toyota’s accelerator pedal and electronic control unit defects that occurred in 2009 led to the largest ever recall of more than 10 million vehicles in the U.S. and other countries, resulting in tens of trillions of won in losses. The 2015 German Volkswagen emissions scandal, also known as ‘Dieselgate’, caused a loss of tens of trillions of won and caused a ‘butterfly effect’ in the subsequent withdrawal of internal combustion engines and the spread of electric vehicles.
Last year, it was revealed that Toyota’s bus and truck subsidiary Hino Motors had been manipulating fuel efficiency and emissions for 20 years. In the aftermath, vehicle shipments within the country were completely halted and stock prices fell by more than 40%. Recently, Toyota’s stock price fell 5.6% during the day on the Japanese stock market due to the Daihatsu incident and the recall of 1 million Toyota vehicles in the United States.
Some argue that the Korean automobile industry, a competitor, may benefit from this incident. Hyundai Motor Company and Kia significantly increased their U.S. market share during the Toyota recall in 2009. There are claims that Toyota is not active in Southeast Asia, where the market is rapidly changing to electric vehicles, and that this incident will loosen Toyota’s grip.
An official in the domestic automobile industry said, “It could be an opportunity for Hyundai Motor Group, which has a competitive edge in electric vehicles compared to Japan, but it is too early to make a hasty judgment because Southeast Asia’s preference for Japanese cars is so high.”
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.