EDITORIAL | Can Toyota Break the Chain of Fraudulent Practices?

There are revelations of more irregularities at the Toyota Motor Group concerning national quality certification tests. This time they involve Toyota Industries Corporation, the original Toyota company founded by Sakichi Toyoda.

The company fabricated data for exhaust gas performance tests for three types of engines produced by the company for various Toyota vehicles. Following the revelation, Toyota announced that it has halted shipments of its Land Cruiser 300 and nine other models. 

Similar fraudulent practices were uncovered earlier at Toyota subsidiaries Hino Motors Ltd and Daihatsu Motor Co. Is this an indication that legal compliance was treated lightly throughout the entire Toyota Group? Toyota is one of the flagship companies in Japan's automotive industry and this is an extremely situation. 

Fixing Corporate Governance

Toyota management must recognize that the chain of fraud will not be broken unless corporate governance within the group is drastically overhauled.

The initial discovery of abusive practices at Toyota Industries came in March of 2023. Those had to do with engines used in forklifts. A special investigation team looking into that issue found that test data for passenger car engines had also been manipulated. According to the allegations, the volume of fuel injected was adjusted to yield better results during output tests.

Separate investigations of Toyota Industries, Hino, and Daihatsu also revealed commonalities that led to the allegations of fraud. 

There was, for example, an unrealistic development timeline and a lack of manpower to conduct proper certification tests. Furthermore, as production and sales expanded for the Toyota Group, the burden on development sites increased. Moreover, all three companies shared a corporate culture in which subordinates were not free to voice their opinions to superiors, even if a problem arose. 

Toyota's Leadership Responsibility

If Daihatsu and Hino are included, the Toyota Group ranked first in the number of vehicles sold worldwide in 2023. That was for the fourth consecutive year. 

A major reason why drivers around the world have chosen Toyota vehicles is their sterling reputation for product reliability. The root causes of repeated cheating within the Toyota Group must be corrected. They need to be promptly addressed or a loss of trust in Toyota itself will become inevitable.

The irregularities involving Hino engines first were discovered in March 2022. Since then, cases of fraud within the group have continued to be uncovered one after the next. That alone indicates that Toyota’s response has been inadequate.

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At a January 30 press conference, Toyota chairman Akio Toyota repeatedly apologized for the certification irregularities. He also stated that as the person with ultimate responsibility at Toyota, he would take the "lead in making changes." 

However, why was there so little mention of specific measures designed to achieve these changes? No wonder the likelihood of real change remains in doubt. Consequently, there is severe questioning of the resolve of top management to root out fraud at Toyota.

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(Read the editorial in Japanese.)

Author: Editorial Board, The Sankei Shimbun