Japanese compact car manufacturer Daihatsu announced on Monday its intentions to overhaul its reporting processes concerning development and certification activities to its parent company, Toyota. This decision comes in the wake of a safety test certification scandal, as Daihatsu strives to restore trust and stability in its operations.
The restructuring of reporting mechanisms follows the appointment of a new president from Toyota to lead Daihatsu, indicating a concerted effort to steer the company back onto a path of growth and reliability.
While Daihatsu will maintain its responsibility for actual vehicle development under Toyota’s commission, the company underscored its commitment to transforming into a “mobility company centered on mini vehicles.”
As part of the business restructuring, Daihatsu will dissolve the Emerging-market Compact Car Company (ECC), previously pivotal in facilitating communication between Toyota and Daihatsu. The reporting line for development and certification will transition to another Toyota segment specializing in compact cars, aligning with model changeover schedules.
Furthermore, Toyota will assume responsibility for resource management and optimization of Daihatsu’s business and product planning, according to Daihatsu President Masahiro Inoue. He expressed Daihatsu’s ambition to delve into producing battery-powered “kei cars,” smaller and less powerful vehicles, although no specific timeline was provided.
The ramifications of the safety certification lapses at Daihatsu have impacted Toyota’s domestic sales, witnessing a notable decline in February due to production disruptions at Daihatsu, which manufactures some Toyota-branded cars. Additionally, reputational damage has ensued from the safety certification issues.
The governance concerns extend beyond Daihatsu, with separate issues emerging at Toyota’s truck maker, Hino Motors, and affiliate Toyota Industries. These challenges prompted Toyota Chairman Akio Toyoda to issue a rare apology in January.
In volume terms, Daihatsu’s contribution to Toyota’s overall group sales has decreased to 4% in the first two months of the year, down from 7% in the previous year. Masahiro Inoue, previously Toyota’s CEO for the Latin America and Caribbean region, assumed his role as Daihatsu President on March 1, indicating a strategic realignment within the company’s leadership to navigate through these turbulent times.
