Toyota plans more oversight of subsidiary Daihatsu after safety testing scandal

Toyota Motor Corporation (Toyota) and Daihatsu Motor Co. announced their decision on Monday to reform the overseas business structure of both companies following a safety scandal.

The goal is to create an implementation structure to thoroughly prevent the recurrence of procedural irregularities at Daihatsu, in line with Daihatsu's resources and actual conditions, aiming to make ever-better cars and realize a mobility society by leveraging Daihatsu's strengths.

As part of the reset, Toyota (NYSE:TM) will take responsibility for overseas businesses from development to certification, and Daihatsu will be commissioned to handle the actual development. This change will be made sequentially, following model changeover schedules.

Of note, production at Daihatsu was halted by a government order until proper tests could be done and a system set up to prevent a recurrence. Only some production has since resumed. While no major accidents have been reported in connection with the cheating issue, the story has been a negative for Daihatsu, which is wholly owned by Toyota (TM).

In response to consumer backlash, Daihatsu Motor Chief Masahiro Inoue apologized and said he has visited plants, dealers, and suppliers, trying to encourage better communication among the ranks. He also acknowledged that trying to deliver products quickly to keep up with demand was one reason for the misconduct.

"All of Daihatsu, as one team, will work hard so people can feel our vehicles are safe. We are about to make a big change," stated Inoue on the road ahead.

Shares of Toyota Motor (TM) were up 1.15% in premarket trading on Monday.