Toyota Shares Slump On Daihatsu Raid, US Million-Car Recall

(Bloomberg) -- Toyota Motor Corp. shares slumped the most in more than 18 months Thursday as subsidiary Daihatsu Motor Co.’s offices were raided over a safety scandal and the automaker recalled 1 million cars in the US. 

The world’s biggest carmaker fell as much as 5.6% in early trading, the biggest intra-day decline since May 2022. The stock was trading down 4.1% at 9:31 a.m. Tokyo time.  

The transport ministry’s raid of Daihatsu’s Osaka headquarters Thursday morning came after revelations that the carmaker and supplier manipulated the results of collision safety tests dating as far back as 1989, forcing it to halt all shipments.  

Daihatsu supplies cars and parts to a number of major brands, including Toyota, Mazda Motor Corp. and Subaru Corp., which could cause the scandal to ripple through the rest of Japan’s auto industry. For Toyota, rebuilding trust in its oversight will be a challenge, as it’s the second time one of its major affiliates has been caught red-handed after Hino Motor Co. admitted to falsifying emissions data last year.

“As voluntary in-house inspections detected only one case where vehicle performance did not meet the legal requirements, we think the risk of an extensive recall is low,” analysts at Citi Research wrote in a note. “However, if production is suspended for a lengthy period, Toyota could suffer an operating profit hit of hundreds of billions of yen.”

It’s been a tough week for the world’s biggest carmaker. Toyota recalled about 1 million cars sold in the US at risk of faulty passenger-side air bags, it said Wednesday. Sensors in certain Toyota and Lexus brand sedans and SUVs could miscalculate passenger and prevent airbags from deploying when they should, the company said in a statement.

Daihatsu has been a wholly-owned subsidiary of Toyota since 2016 and accounts for roughly 4% of Toyota group’s global vehicle sales.

Daihatsu produced more than 1.7 million vehicles worldwide in fiscal 2022, around half of which were made in Japan. It holds a roughly 30% market share for cars — pint-sized vehicles that have been snapped up for years by domestic customers — making it an industry leader along with rival Suzuki Motor Corp.

Outside of cars, Daihatsu, which is based in Osaka, is known for its line-up of lightweight vehicles and sedans that are popular across Japan and Southeast Asia, include the Gran Max pickup and vans and Terios and Xenia passenger vehicles.

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