Japan’s top carmakers caught in widening testing scandal

A government investigation has uncovered faulty testing data at five of Japan’s leading carmakers including Toyota and Honda in a widening scandal that has forced the suspension of some vehicle shipments.

Akio Toyoda, chair of the world’s largest carmaker, was forced on Monday to apologise for the second time this year following the transport ministry’s investigation of 85 companies in the industry.

The results of the probe, which were released on Monday, found fault with Toyota, Honda, Mazda, Suzuki and Yamaha Motor. The investigation was triggered by a string of improper testing incidents that hit Toyota subsidiaries, including Daihatsu Motor.

“As someone responsible for the Toyota group, I extend my sincerest apology to our customers, car fans and all stakeholders,” said Toyoda, who has put himself front and centre of the deepening scandal. 

At a separate news conference on Monday, Toshihiro Mibe, the chief executive of Honda, said there was no intention to falsify the testing data to misrepresent the performance of its cars. “It was a lack of awareness in the area of compliance,” he added. 

Japan’s transport ministry said the problems were found in applications to certify models. In the case of Toyota, they related to issues such as pedestrian safety tests and luggage displacement tests, while engine control software was an issue for Mazda.

“It is extremely disappointing that we have discovered new improper behaviour,” the transport ministry said, adding that the improper data would “shake the very foundation” of the certification system. 

Authorities are expected to raid various carmakers as soon as Tuesday, according to people familiar with the matter.

The companies involved said that the faulty data did not affect the safety of their cars and that they involved a small number of certification issues out of thousands. 

A total of six models, three of which are Toyota’s, have had shipments and sales suspended in Japan. Toyota’s share price closed down 1.8 per cent and Mazda fell 3.3 per cent.

The widening scandal is expected to increase pressure to overhaul Toyota’s governance structure. Despite the company making record profits, Toyoda faces a significant haemorrhaging of shareholder support at the carmaker’s annual meeting later this month.

Last week, the world’s two most influential proxy advisers — ISS and Glass Lewis — recommended a vote against the reappointment of Toyoda to hold him accountable for the issues that had already come to light with vehicle testing and emissions data at the group’s subsidiaries.

In its report, ISS said that although Toyota had claimed that it was reforming its corporate culture, there was a suspicion that everything was “business as usual”. 

“The company’s propensity to preserve its corporate culture is in fact suspected, and Toyoda should be held accountable for that,” ISS noted.

Toyota said in response that it was “aware that US proxy advisory firms, Glass Lewis and ISS, recommended against our proposal for the election of directors. We plan to respond to their opinion in due course.” 

Several fund managers have told the Financial Times that they plan to vote against the reappointment of Toyoda, and had intended to do so before the proxy advice was issued. 

Toyoda has already seen backing from shareholders erode. Toyoda’s received support from 85.7 per cent of investors last year, down from 96 per cent in 2022.