Toyota has announced the suspension of shipments for 10 vehicle models, including popular models such as the Hilux truck and Land Cruiser 300 SUV. The decision comes because of the irregularities discovered in certification tests for diesel engines developed by its affiliate, Toyota Industries.
The irregularities were brought by a special investigative committee that found discrepancies during horsepower output testing for the certification of three diesel engine models.
These affected engines are utilized in ten models globally, encompassing vehicles like the Hiace van, Fortuner SUV, Innova multi-purpose vehicle, and the Lexus-branded LX500D SUV.
Toyota Industries, the affiliate responsible for the development of these engines, admitted to using software that manipulated horsepower output values to appear smoother and with less variation.
The company claimed that despite the irregularities, the affected engines and vehicles still meet the required performance output standards, alleviating concerns about safety or functionality.
The suspension of shipments is expected to have an impact on Toyota’s global operations. Approximately 36,500 vehicles, equipped with the affected diesel engines, are produced every month.
This disruption in production is likely to result in financial repercussions for the automaker, affecting its revenue and market share.
The company’s admission that it used 36,000 of the affected engine models worldwide each month questions about the scale of the issue.
Toyota’s spokesperson could not immediately provide details on how many affected vehicles the company has sold over the years, leaving investors and consumers uncertain about the problem.
Japan’s transport ministry has reacted to the revelation, announcing plans to conduct an on-site investigation of Toyota Industries’ Hekinan plant, where the affected engines are manufactured.
Toyota, in response, has pledged to cooperate fully with authorities and take corrective measures. The company plans to run new engine certification tests in the presence of regulators to ensure transparency with regulatory standards.
Toyota Industries President Koichi Ito acknowledged a lack of communication with Toyota Motor and addressed the need for improved coordination in testing processes and procedures.
The company has been seeking resolutions for a case involving rigged collision safety tests at its subsidiary, Daihatsu.
The recalls and production shutdowns in December, including the recall of one million vehicles in the United States due to airbag issues, have already tarnished Toyota’s reputation.
The admission of irregularities in diesel engine certification concerns about the company’s internal controls and oversight mechanisms.
The fact that Toyota Industries, a Toyota group company in which Toyota holds a near 25% stake, allowed such irregularities to occur questions about the overall governance structure within the Toyota group.
Shares in Toyota Industries sank by 4% shortly after the news broke, showing investor concerns about the financial and reputational damage.
On the other hand, Toyota Motor shares closed 3.1% higher, a response from investors who may be reassured by Toyota’s acknowledgment of the issue and commitment to corrective actions.
The scandal comes at a time when Japanese auto companies, including Toyota, are facing one of their most challenges since becoming global giants in the 1980s.
Toyota now faces challenges in keeping up with changing consumer preferences and global initiatives to reduce fossil fuel consumption. Last year, China surpassed Japan as the world’s largest exporter of cars.