Toyota's Small Car Maker Daihatsu Shuts Down 4 Factories in Japan: Here's Why

Daihatsu, a subsidiary of Japanese automaker Toyota Motor Corp., has ceased production in all four of its factories in Japan as officials from the transport ministry conduct investigations into improper safety certification tests.

According to the Associated Press, this shutdown, effective as of Tuesday, follows Daihatsu Motor Co.'s announcement last week regarding suspending all vehicle shipments within and outside Japan after discovering irregular testing practices involving 64 models.

In response, transport ministry officials initiated a comprehensive inquiry into the systemic problems that seem to have persisted for decades.

Temporary Halt in Daihatsu Production

According to AP, the temporary halt in production is anticipated to impact numerous auto parts manufacturers and their employees, potentially dealing a significant blow to local economies.

Earlier this year, safety test irregularities prompted an independent panel investigation, which revealed widespread and systematic issues at Daihatsu.

This incident is the latest in a series of safety or regulatory violations identified in at least five major Japanese automakers in the past few years. However, AP noted that so far, no accidents or fatalities related to the falsified tests have been reported.

Daihatsu, recognized for producing Hijet trucks, vans, and Mira hatchbacks, initiated the closure of select production lines on Monday, resulting in a complete cessation of operations across all four facilities situated in Shiga, Kyoto, and Oita prefectures, in addition to its headquarters in Osaka.

Although the company has not disclosed a specific timeline for the resumption of production, media reports indicated that the suspension of production lines is anticipated to extend at least through January.

Intricate Supply Chains

Teikoku Databank, a market research company, reported that Daihatsu's factories have intricate supply chains involving 8,136 companies throughout Japan, generating sales totaling 2.2 trillion yen ($15.53 billion).

An analysis from Teikoku Databank expressed apprehension regarding the potential ramifications on company revenue, employment, and the local economy, underscoring that an extended suspension of shipments could compound these concerns.

The identified issues affected 64 models and three vehicle engines, encompassing 22 models and an engine distributed by Toyota. Mazda Motor Corp. and Subaru Corp. also encountered challenges with specific models sold in Japan, along with reported issues about Toyota and Daihatsu models distributed internationally.

Daihatsu's internal investigation uncovered 174 cases of irregularities in safety tests and other procedures across 25 test categories, apart from the problems reported earlier.

The controversy first surfaced in April when Daihatsu revealed irregularities in testing door linings. Following this, additional problems in side collision testing came to light in May, accompanied by revelations of data falsifications and the utilization of unauthorized testing procedures.

In a recent media briefing, Daihatsu President Soichiro Okudaira openly acknowledged the lapses in safety testing and procedural misconduct, framing it as a neglect of safety certificates.

Okudaira attributed these issues to the immense pressure exerted on workers to meet demanding deadlines for development projects.