Loading
Search
▼ Data Rigging Scandals Threaten To Undermine Toyota's Growth
- Category:Other
Behind Toyota Motor Corp's record earnings announced last Tuesday are its relentless efforts to make its vehicles reliable and operations leaner. A series of data fraud scandals at the auto group have put part of its success formula at risk of collapse.
Data rigging in vehicle certification tests within the Toyota group reflects a shift in the group's strategy and a lack of close communication between the parent and group companies, analysts say.
Toyota reported an all-time high net profit of 3.95 trillion yen for the April-December period and expects the bottom line to reach a record high for the full year, while it is forecast to become the first Japanese company to post annual sales of more than 40 trillion yen.
Still, its upbeat earnings will do little to address longer-term quality control challenges for the group, analysts say.
Toyota's affiliate Toyota Industries Corp said recently that third-party investigations found engine data had been falsified for years, while it was discovered that safety data had been manipulated for decades at the parent company's small-car specialist Daihatsu Motor Co.
The misconduct follows similar cases of cheating on emission and fuel efficiency data at Toyota's truck-manufacturing subsidiary Hino Motors Ltd, revealed in 2022.
In the auto industry, vehicles are expected to become more connected, autonomous, shared and electric, or CASE. Toyota aims to operate more effectively in cooperation with its subsidiaries and affiliates to respond promptly to rapid changes in customer demand.
The automaker is putting more focus on developing environmental and safety technologies while asking its sister companies to play a greater role in the conventional vehicle business.
"Toyota is the biggest business partner for its group companies. They might have been under more pressure" than the parent company had thought, Seiji Sugiura, a senior analyst at the Tokai Tokyo Research Institute, said.
Toyota Executive Vice President Hiroki Nakajima said at a press conference in December that his company had been unaware Daihatsu engineers had been under increasing pressure to speed up the development of new models for Toyota.
The wholly owned unit had to work on product development "under an extremely tight and rigid schedule," according to a third-party probe set up by Daihatsu.
Hino and Toyota Industries were also obliged to make engines that would be more fuel-efficient and improve driving performance in a limited period of time.
The three companies found it hard to meet Toyota's requests but orders from the world's largest carmaker were too large to decline for their entire businesses, analysts say.
Toyota acknowledges that the power balance between itself and its group of suppliers has been delicate. The hierarchical relationship has likely hindered open discussions between them, analysts say.
Some group companies "might find it difficult to express their opinions freely to Toyota, as in most cases Toyota makes the orders," Toyota chairman Akio Toyoda said at a press conference last week.
"There should have been more communication between Toyota and its group companies," said Masahiro Fukuda, a senior researcher at auto research firm Fourin Inc. The key is to create a sense of "psychological safety" so that everyone can have open and candid discussions.
A shortage of engineers also added pressure on the three companies in their efforts to respond promptly to requests from Toyota, analysts say.
"The scandals' biggest cause is that the group firms lacked the necessary resources to match the amount of work they had to do," Fukuda said.
Toyota once found itself overstretching as its annual global production approached an unprecedented level of 10 million vehicles. It remains a top priority for the automaker to ensure it has enough talent and resources to pursue both higher volumes and reliable vehicles sustainably.
Toyota group companies are also feeling the pinch in keeping pace with the highest volumes produced by the automaker.
"From the suppliers' point of view, they can't say they won't be able to meet the production schedule as Toyota is their biggest customer," Tokai Tokyo's Sugiura said.
© KYODO
Data rigging in vehicle certification tests within the Toyota group reflects a shift in the group's strategy and a lack of close communication between the parent and group companies, analysts say.
Toyota reported an all-time high net profit of 3.95 trillion yen for the April-December period and expects the bottom line to reach a record high for the full year, while it is forecast to become the first Japanese company to post annual sales of more than 40 trillion yen.
Still, its upbeat earnings will do little to address longer-term quality control challenges for the group, analysts say.
Toyota's affiliate Toyota Industries Corp said recently that third-party investigations found engine data had been falsified for years, while it was discovered that safety data had been manipulated for decades at the parent company's small-car specialist Daihatsu Motor Co.
The misconduct follows similar cases of cheating on emission and fuel efficiency data at Toyota's truck-manufacturing subsidiary Hino Motors Ltd, revealed in 2022.
In the auto industry, vehicles are expected to become more connected, autonomous, shared and electric, or CASE. Toyota aims to operate more effectively in cooperation with its subsidiaries and affiliates to respond promptly to rapid changes in customer demand.
The automaker is putting more focus on developing environmental and safety technologies while asking its sister companies to play a greater role in the conventional vehicle business.
"Toyota is the biggest business partner for its group companies. They might have been under more pressure" than the parent company had thought, Seiji Sugiura, a senior analyst at the Tokai Tokyo Research Institute, said.
Toyota Executive Vice President Hiroki Nakajima said at a press conference in December that his company had been unaware Daihatsu engineers had been under increasing pressure to speed up the development of new models for Toyota.
The wholly owned unit had to work on product development "under an extremely tight and rigid schedule," according to a third-party probe set up by Daihatsu.
Hino and Toyota Industries were also obliged to make engines that would be more fuel-efficient and improve driving performance in a limited period of time.
The three companies found it hard to meet Toyota's requests but orders from the world's largest carmaker were too large to decline for their entire businesses, analysts say.
Toyota acknowledges that the power balance between itself and its group of suppliers has been delicate. The hierarchical relationship has likely hindered open discussions between them, analysts say.
Some group companies "might find it difficult to express their opinions freely to Toyota, as in most cases Toyota makes the orders," Toyota chairman Akio Toyoda said at a press conference last week.
"There should have been more communication between Toyota and its group companies," said Masahiro Fukuda, a senior researcher at auto research firm Fourin Inc. The key is to create a sense of "psychological safety" so that everyone can have open and candid discussions.
A shortage of engineers also added pressure on the three companies in their efforts to respond promptly to requests from Toyota, analysts say.
"The scandals' biggest cause is that the group firms lacked the necessary resources to match the amount of work they had to do," Fukuda said.
Toyota once found itself overstretching as its annual global production approached an unprecedented level of 10 million vehicles. It remains a top priority for the automaker to ensure it has enough talent and resources to pursue both higher volumes and reliable vehicles sustainably.
Toyota group companies are also feeling the pinch in keeping pace with the highest volumes produced by the automaker.
"From the suppliers' point of view, they can't say they won't be able to meet the production schedule as Toyota is their biggest customer," Tokai Tokyo's Sugiura said.
© KYODO
- February 13, 2024
- Comment (0)
- Trackback(0)