Toyota increases supervision of troubled Daihatsu small car unit in wake of scandal

TOKYO — Japan’s Daihatsu Motor announced on Monday that it will be restructuring the way it reports on development and certification to Toyota Motor, as the parent company increases oversight of its compact car division in the wake of a safety test certification scandal.

This decision comes shortly after a new president from Toyota assumed leadership at Daihatsu, with the task of revitalizing the small-car unit.

Daihatsu will still be responsible for actual vehicle development, but will now be a part of a “mobility company centered on mini vehicles,” according to a company statement.

As part of the restructuring, the Emerging-market Compact Car Company (ECC) will be dissolved, a unit that previously connected Toyota and Daihatsu.

Daihatsu will now report its development and certification to a different segment at Toyota that focuses on compact cars, with changes made according to model changeover schedules.

Daihatsu President Masahiro Inoue also mentioned that Toyota will oversee resource management and optimization related to Daihatsu’s business and product planning.

Daihatsu aims to introduce a battery-powered “kei car” in the future, though a specific timeframe was not provided.

In February, Toyota’s domestic sales declined by a third due to production halts at Daihatsu, as well as the repercussions from the safety certification issues at Daihatsu.

Toyota, the world’s largest automaker by volume, has also encountered governance problems at Hino Motors and Toyota Industries.

The controversies at the three companies prompted Toyota Chairman Akio Toyoda to issue an apology in January.

In terms of sales, Daihatsu made up 4% of Toyota’s total group sales in the first two months of the year, down from 7% in 2023, including sales from the Lexus brand and Hino Motors.

Prior to his current role, Daihatsu President Inoue served as Toyota’s CEO for the Latin America and Caribbean region.