Starting December 20, 2023, Daihatsu – a subsidiary brand of the Toyota group – has halted production of cars due to a safety testing scandal. According to estimates from Nikkei Asia, the Japanese brand could face damages of over 100 billion yen (approximately 700 million USD) for closing down its factories and compensating financial losses to suppliers.
Currently, Daihatsu has not announced the timeline for the resumption of car assembly lines in Japan. Previously, its factory was expected to remain closed until the end of January next year. Meanwhile, production and distribution processes in Indonesia and Malaysia have already been restored.
Aside from losing domestic market sales in Japan, Daihatsu is also in negotiations with accessory suppliers for compensation due to lost revenue. The expected amount of compensation for these suppliers is not small.
In addition, Daihatsu incurs many costs for investigations and additional safety tests. The Japanese Ministry of Transport has initiated an investigation into Daihatsu and ordered the company to stop manufacturing cars until they are certified to be safe. This investigation process could last several months, causing significant damage. Not to mention the penalties that Daihatsu may face for the safety testing scandal.
In the financial year 2022, from April 2022 to March 2023, Daihatsu achieved operating profits of 141.8 billion yen (approximately 1.005 trillion USD) while net profit reached 102.2 billion yen (724.6 million USD). With this scandal, Daihatsu may experience its largest loss in the past 30 years.
As previously reported, on December 20, 2023, Daihatsu received the investigation results from an independent committee regarding abnormalities in the brand’s vehicle certification procedures. The investigation was conducted on 64 car models currently produced and developed by Daihatsu. These cars include those under the Daihatsu, Toyota, Mazda, and Subaru brands.
Subsequently, the independent committee and Daihatsu/Toyota held separate press conferences on this matter. Daihatsu also announced the suspension of production and shipment of all its car models worldwide. The affected car models include those for the Southeast Asian markets such as Vietnam, Thailand, Indonesia, Malaysia, and Cambodia. Moreover, car models in Central and South America such as Mexico, Ecuador, Peru, Chile, Bolivia, and Uruguay are also affected.
In Vietnam, only one car model is affected by Daihatsu’s scandal, the Avanza Premio. On December 21, 2023, Toyota Vietnam also announced the temporary suspension of deliveries for the Avanza Premio manual transmission version. However, Toyota Vietnam affirmed that no recalls will be conducted for this model, as the Avanza Premio MT is only affected by emission and fuel consumption tests, not related to safety testing.
“In Vietnam, the Avanza Premio models comply with testing regulations and are certified to meet the standards according to Vietnam’s regulations. Toyota Vietnam confirms that at the present time, customers using these models can continue to use their vehicles normally, and no product recalls will be conducted as no product defects have been detected,” Toyota Vietnam responded on its official fan page.
Daihatsu could face up to $700 million in damages following safety test scandal
Daihatsu acknowledges that it has manipulated data on some car models over the past 30 years. By shutting down the factory and compensating suppliers, Daihatsu could potentially face losses of up to $700 million.
Daihatsu halts global production and distribution amid testing scandal
Toyota’s subsidiary, Daihatsu, recently made the announcement to temporarily halt all distribution activities in domestic and international markets. This decision came after uncovering a scandal involving the manipulation of safety test results in the majority of the company’s car models.
