Toyota Faces Scrutiny as Government Probes Vehicle Certification Irregularities pen_spark

Boston Brand Media brings you the latest - Toyota is under investigation by Japanese authorities due to irregularities in their vehicle certification process. Government officials have inspected Toyota's headquarters, raising concerns about the safety and compliance of their vehicles. The investigation could have significant implications for Toyota's reputation and future sales. The company is cooperating with authorities and working to resolve the issues promptly.

TOKYO, June 4 (Reuters) - Officials from Japan's transport ministry initiated an inspection at Toyota Motor's main office on Tuesday following the discovery of inconsistencies in their vehicle certification applications. The escalating issue concerning certification tests originated from a safety test controversy at Toyota's subsidiary, Daihatsu, and has now affected other Japanese car manufacturers after the ministry mandated industry-wide reviews of certification procedures.

Boston Brand Media also found that Toyota, Mazda, Honda, Suzuki, and Yamaha Motor admitted to submitting inaccurate or altered data during vehicle certification applications. Toyota, the leading automaker in Japan, was the initial company to be inspected, as indicated by the ministry on Monday. 

The remaining four automakers are also scheduled for inspections, according to a ministry official. Although some analysts believe Toyota will face increased pressure to enhance governance, others suggest the effect on sales will be minimal due to the limited suspension of only three models and the fact that many of its domestic competitors also failed to meet ministry standards.

James Hong, the leader of mobility research at Macquarie, believes that the impact on Toyota's sales in Japan will be minimal or easily controlled, as Japanese consumers have limited options when it comes to car brands.

Hong also predicts that Toyota Chairman Akio Toyoda will face increased scrutiny. Institutional Shareholder Services and Glass Lewis, two influential proxy advisory firms, have advised shareholders to oppose Toyoda's re-election at the upcoming annual general meeting. Although his approval rating may decline further, it is unlikely that he will lose his position.

Although Toyota and Mazda halted sales of certain models, they assured that there were no performance problems violating regulations and customers can continue using their vehicles safely. Toyota provided instances of their misconduct, including assessing collision damage on only one side of a model's hood instead of both as required, and conducting some tests under stricter conditions than those specified by the ministry, which still didn't meet government standards. 

Past safety test controversies have caused production halts at Toyota group companies. These recent revelations could potentially disrupt production at subcontractors and smaller businesses within Japan's extensive automotive supply chain. 

Toshihiro Nagahama, executive chief economist at Dai-ichi Life Research Institute, warned that this could have a ripple effect on Japan's economy, potentially affecting economic growth this quarter if subcontractors experience disruptions and consumers become more reluctant to purchase cars. Shares in Toyota, Honda, and Mazda have decreased by almost 3% since Friday's close, while Yamaha's shares have fallen by 1.3%, and Suzuki's shares remain unchanged.

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Source: Reuters‍