Daniel Leussink
TOKYO (Reuters) – Japan’s transport ministry officials have launched an on-site investigation. Toyota Motor (NYSE:) headquarters Tuesday after irregularities were discovered in its applications to certify certain vehicle models.
The growing fallout from certification testing comes as the safety testing scandal at Toyota’s Daihatsu compact car unit also ensnared other Japanese automakers after the ministry ordered industry-wide reviews of certification practices.
Toyota, Mazda, Honda (NYSE:), Suzuki and Yamaha Motor said they provided either incorrect or fraudulent data when applying for vehicle certification.
Toyota, Japan’s largest automaker, was the first to undergo the review, which the ministry announced on Monday. The remaining four automakers will also be inspected, a ministry spokesman said.
While some analysts say Toyota will be under more pressure to strengthen management, others say the impact on sales is likely to be limited given that the company is only suspending sales of three models and many of its domestic competitors are also suspending sales. do not meet ministry standards.
“When it comes to actual sales in the Japanese market, the damage will be manageable or very small as consumers in Japan have little alternative,” said James Hong, head of mobility research at Macquarie.
Hong added that Toyota Chairman Akio Toyoda would likely come under even more pressure. Trusted advisory firms Institutional Shareholder Services and Glass Lewis have recommended shareholders vote against Toyoda’s re-election at the upcoming annual general meeting. But while his approval rating could fall further, he is not expected to lose his seat.
Both Toyota and Mazda suspended sales of some models but said there were no performance issues that violated the rules and customers do not need to stop using their cars.
Examples of violations Toyota cited included measuring crash damage on one side of a model’s hood when it should have been done on both sides, and conducting some tests under more stringent conditions than those set by the ministry, but which did not meet government requirements. .
Safety testing scandals have previously halted production at Toyota group companies, and the latest revelations could disrupt production at subcontractors and smaller companies in Japan’s vast auto supply chain.
That could have a negative impact on Japan’s economy, said Toshihiro Nagahama, executive chief economist at Dai-ichi Life Research Institute.
“The impact cannot be ignored,” he said, adding that it could hurt Japan’s economic growth this quarter if subcontractors experience disruptions and consumers become more hesitant about buying cars.
Shares of Toyota, Honda and Mazda have lost nearly 3% since Friday’s close, while Yamaha shares fell 1.3% and Suzuki shares were unchanged.