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Safety is a top priority for most car buyers. They justifiably assume manufacturers have tested features such as airbags and crumple zones scrupulously. Daihatsu Motor may have failed in this duty of care. Toyota has suspended all shipments from its subsidiary after a probe revealed manipulated test results.
As with so many corporate scandals, the damage may spread much further than first expected.
When suspected wrongdoings first emerged in April, they appeared limited. Six models were thought to be affected by manipulated test results.
Daihatsu admitted it had fudged crash test results on 88,000 cars manufactured in the past year. The risks created by that appeared manageable. The company produced more than 1.7mn cars in fiscal 2022, accounting for about 4 per cent of Toyota group’s sales.
Since then, more than 170 irregularities have been identified, dating back as far as 1989. Nearly every car in Daihatsu’s line-up could be affected. Japan’s transport ministry is set to conduct an on-site inspection this week.
It is one thing to cheat on pollution emissions tests as VW did. But Toyota says collision test results for the Daihatsu Cast and Toyota Pixis models “may not comply with the law”. The optics of that are dreadful.
Airbags are also involved. Cars used for crash tests were fitted with different airbag control units to those in vehicles sold to the public. Later tests showed all units met industry standards. But Daihatsu’s reputation has still taken a big hit.
A quick fix is unlikely. The list of cars subject to improper testing has expanded to 64 models. They include vehicles manufactured for Toyota, Mazda and Subaru.
Toyota has been betting on south-east Asia, which it hopes will propel growth. Daihatsu’s affordable lightweight vehicles are widely popular in Indonesia and Malaysia. The testing scandal will reduce returns on investments there.
Toyota shares have risen 47 per cent this year, reflecting strong domestic sales. At 9 times forward earnings, the stock trades at twice the level of rival VW.
In an example of the present rhyming with the past, airbags also featured in another big Japanese product scandal. Widescale, expensive recalls resulted in the bankruptcy of manufacturer Takata in 2017.
That would hardly happen to Toyota. But investors should assume that clearing up this mess will cost the company dearly.
The Lex team is interested in hearing more from readers. Please tell us what you think of the Daihatsu safety testing scandal in the comments section below