Japan auto safety scandal widens, Toyota halts some shipments

By Daniel Leussink

TOKYO (Reuters) - A safety test scandal at Japanese automakers widened on Monday, with Toyota Motor and Mazda both halting shipments of some vehicles after Japan's transport ministry found irregularities in applications to certify certain models.

The irregularities were also found in applications from Honda, Suzuki and Yamaha Motor, the ministry said. The automakers were found to have submitted incorrect or manipulated test data when they applied for certification of the vehicles.

The ministry ordered Toyota, Mazda and Yamaha to suspend shipments of some vehicles. It said it will conduct an on-site inspection at Toyota's central Aichi prefecture headquarters on Tuesday.

The latest revelations came after the ministry requested automakers in late January to investigate certification applications following a safety test scandal at Toyota's Daihatsu compact car unit that emerged last year.

Monday's developments are also likely to heighten focus on Toyota's annual general meeting later this month. Influential proxy advisory firms Institutional Shareholder Services and Glass Lewis have recommended shareholders vote against re-electing Akio Toyoda as chairman at the meeting.

In a report to shareholders, ISS singled out the "spate of certification irregularities" at the Toyota Group.

"As the person in charge of the Toyota Group, I would like to sincerely apologise to our customers, to car fans, and all stakeholders for this," Toyoda, the grandson of the automaker's founder and its former chief executive, told a press conference.

He said the cars did not go through the correct certification process before being sold. The world's biggest automaker by volume said it temporarily halted shipments and sales of three car models made in Japan.

The scandals at the automakers are proving to be a sore point for the government, which has otherwise earned praise from investors and executives for its corporate reforms. Yoshimasa Hayashi, Japan's top government spokesperson, called the misconduct "regrettable".

SHARES FALL

Toyota said its wrongdoing occurred during six different tests conducted in 2014, 2015, and 2020. Affected vehicles were three production models - the Corolla Fielder, Corolla Axio and Yaris Cross - and discontinued versions of four popular models, including one sold under the Lexus luxury brand.

In one example, it had measured collision damage on one side of a model's bonnet while it was required to do so on both sides.

In other instances, it said it conducted certain tests through development testing under more strict conditions than those set out by the ministry that did not meet the government's requirements.

Toyota said it is still investigating issues related to vehicle fuel efficiency and emissions, and aimed to complete that inquiry by the end of June.

It added there were no performance issues that violated regulations and customers did not need to stop using their cars.

Toyota shares closed down 1.8%, underperforming a 0.9% gain in the broad Topix index.

Mazda suspended shipments of its Roadster RF sports car and the Mazda2 hatchback from Thursday last week after finding workers had modified engine control software test results, it said in a statement.

It also found crash tests of the Atenza and Axela models, which are no longer in production, had been tampered with by using a timer to set off airbags during some frontal collision tests, instead of relying on an on-board sensor to detect a hit.

Mazda shares fell 3.3%.

Yamaha said it had halted shipments of a sports motorcycle.

Honda said it had found wrongdoing in noise and output tests over a period of more than eight years to October 2017 on some two dozen models that are no longer being produced.

(This story has been corrected to remove the word 'safety' to make it clear that the testing issues in question were not only safety-related in paragraph 2)

(Reporting by Daniel Leussink and Rocky Swift; Additional reporting by Kaori Kaneko and Satoshi Sugiyama; Editing by Edwina Gibbs, David Dolan and Muralikumar Anantharaman)