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Updated December 21st, 2023 at 08:15 IST

Toyota shares fall as Daihatsu's safety scandal widens

Daihatsu revealed that an independent committee identified issues in 64 models, including nearly two dozen sold under Toyota's brand.

Business Desk
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Toyota Motor Corporation shares fell more than 4 per cent on Thursday following the announcement by its subsidiary, Daihatsu Motor, that it would suspend shipments of all its vehicles indefinitely. The decision comes in the wake of the discovery of additional safety-inspection irregularities, deepening the safety scandal that has plagued the small-car unit.

Daihatsu revealed that an independent committee identified issues in 64 models, including nearly two dozen sold under Toyota's brand. The committee had been investigating the unlisted car maker since April, when Daihatsu admitted to manipulating side-collision safety tests conducted on 88,000 small cars.

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The severity of the situation has prompted Japan's transport ministry to consider administrative penalties against Daihatsu, potentially including the revocation of its production certification, depending on the outcomes of its own investigation, as reported by the Nikkei business daily.

Daihatsu, unable to determine when it will resume shipments, acknowledged that the impact on its earnings would be substantial. Toyota Motor's shares reflected investor concerns, registering a notable decline.

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In a separate development, Toyota announced on Wednesday a global recall of 1.12 million vehicles due to a sensor-related fault that could lead to airbags not deploying as designed. The recall, affecting 1 million vehicles in the US, raised concerns about potential safety issues across a significant portion of Toyota's global vehicle fleet.

This development also impacted shares in Aisin Corp, the parts supplier responsible for manufacturing the airbags. Aisin Corp's shares were down around 3 per cent in morning trading, highlighting the broader repercussions of the recall on the automotive supply chain.

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On the market front, Daihatsu's main rival in Japan's mini vehicle market, Suzuki Motor, experienced a contrasting effect with a rise of around 2 per cent in its shares. The overall sentiment in Tokyo's benchmark Nikkei average saw a 1.6 per cent decline.

The unfolding safety concerns surrounding Daihatsu and the subsequent impact on Toyota underscore the challenges faced by major automakers in maintaining the integrity of their supply chains and ensuring the safety of their vehicles. The situation will undoubtedly draw heightened scrutiny from regulatory authorities and consumers alike.

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(With Reuters inputs)

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Published December 21st, 2023 at 08:00 IST

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