Japanese car manufacturer Toyota Motor Corp. faced a setback as Japanese transport officials raided a Toyota-affiliated plant on Tuesday after the company admitted to cheating on engine testing. The raid took place at Toyota Industries Corp.'s plant in Hekinan, Aichi Prefecture, central Japan. Despite this scandal, Toyota managed to retain its status as the world's top car manufacturer, reporting the sale of over 11 million vehicles in 2023.
In response to the probe, Toyota Chair Akio Toyoda expressed his determination to steer the company out of the scandal and ensure that all group companies prioritize the production of 'good cars.' Toyoda, while deeply bowing and offering his sincere apologies, emphasized that the vision of the company is rooted in the ideas of the founding Toyoda family: empowering the workers on the plant floor to create superior vehicles that bring happiness to people's lives.
These revelations come at a time when Toyota has otherwise been performing exceptionally well. With popular models such as the Camry sedan, Prius hybrid, and Lexus luxury vehicles, the company achieved record global vehicle sales in 2023, selling a total of 11.22 million vehicles. This figure reflects a 7% increase from the previous year and surpassed the global sales of Volkswagen AG, reaching 9.2 million vehicles.
During a livestreamed news conference from a memorial hall in Nagoya, which serves as a museum for the founding family, Toyoda spoke about the importance of the crisis. The recent scandals involving Toyota Industries Corp. and other group companies have raised concerns about the overall management and communication within the Toyota group. Toyoda's successor as CEO, Koji Sato, had previously acknowledged the need for improved communication and education to ensure compliance with rules and regulations.
The latest cheating scandal affects certain models, including the Land Cruiser and Hilux sport utility vehicles sold in various regions, excluding North America. Fortunately, no major accidents have been reported in connection with the cheating. However, production has been halted for some affected models, including the 10 models impacted by the recent revelations.
According to Japan's business daily, Nikkei, the alleged violations at Toyota Industries Corp. may have arisen due to management's failure to heed the concerns raised by workers regarding an overly aggressive development plan for engines. This suggests that improved communication between management and the employees involved in the development process is necessary to avoid such issues in the future.
In addition to the testing scandal, Toyota and General Motors Co. issued an urgent warning to owners of approximately 61,000 older Corolla, Matrix, RAV4, and Pontiac Vibe models. These vehicles, primarily in the United States, were instructed to cease driving due to the risk of Takata air bag inflators exploding and spreading shrapnel. Models affected by this warning include certain Corolla compact cars and Matrix hatchbacks from the 2003 and 2004 model years, as well as the RAV4 small SUV from 2004 and 2005. Around 11,000 Pontiac Vibes from 2003 and 2004, which are essentially identical to the Matrix, were also included in the warning.
Analysts believe that the issues faced by Toyota's group companies are unlikely to have a significant impact on Toyota's overall earnings. While the sales and profits of these group companies are only a fraction of Toyota's global earnings, the company still recognizes the need for a concrete plan of action to restore trust in its brand and operations.
Toyoda, however, focused on the humble beginnings of his family business and the importance of believing in invention to navigate through turbulent times. Though no concrete plan was presented during the news conference, Toyoda stressed the significance of not losing sight of the company's roots as they move forward.
The recent scandals undoubtedly pose a challenge for Toyota, but the company's commitment to addressing the issues and upholding its principles of producing quality vehicles will be vital to recovering the trust of customers and stakeholders alike.
