Toyota scores record sales but is confronted with its own ‘dieselgate’

Toyota Motor Corp. said today its group sold more cars than any other automaker in 2023, maintaining its lead for the fourth consecutive year as it ramped up production amid an easing chip shortage.

The automaker sold a record 11.23 million vehicles globally last year, including those produced by the group’s mini-vehicle maker, Daihatsu Motor Co., and truck manufacturer, Hino Motors Ltd., up 7.2% from the previous year.

Archrival Volkswagen AG of Germany sold 9.24 million cars in the year. The Japanese automaker’s previous high was 10.74 million vehicles in 2019.

The group’s worldwide production increased 8.6 % to a record 11.52 million vehicles, helped by robust demand in Japan, North America, and Europe.

Toyota alone sold 10.31 million vehicles worldwide, up 7.7%, while its global output grew 11.1% to 10.03 million cars, both annual figures exceeding the 10 million mark for the first time.

Hybrid popularity

The record figures were partly driven by brisk sales of hybrid cars, which jumped 31.4% to 3.42 million vehicles. Its electric vehicle sales also made significant headway in percentage, increasing 4.3-fold to 104,018 units, but they started at near zero in absolute figures. “Achieving top sales is not our goal. We hope to continue to build cars with safety and quality as our top priority,” Toyota said.

Unfortunately, quality problems and outright fraud have recently plagued the group. Last month, Daihatsu stopped all shipments at home and abroad due to safety test rigging. At the same time, Toyota Industries Corp., a Toyota affiliate, said Monday it had fabricated data on diesel engines it produces for the automaker, resulting in the partial halt of Toyota car shipments.

Toyota quality scandal widens

Toyota Motor Corp. said Monday that power output data had been manipulated for ten of its models sold globally. This is a new blow to the world’s biggest automaker group, plagued by several quality control issues in recent years.

Toyota said its affiliate Toyota Industries Corp. fabricated the data on diesel engines it makes and supplies for the automaker. Toyota will suspend shipment of the affected vehicles, including the Land Cruiser 300 and the Hilux.

“We sincerely apologize for causing tremendous trouble to our customers,” Toyota CEO Koji Sato told reporters in Tokyo, adding the automaker will do all it can to resolve the problem as quickly as possible.

Accumulation of quality issues

The revelation comes as several quality issues have been shaking the group’s foundation. Toyota’s small-car unit Daihatsu Motor Co. stopped all shipments at home and abroad last month after a third-party investigation found that safety tests for most of its models were rigged.

Another Toyota subsidiary, Hino Motors Ltd., admitted in March 2022 to submitting fraudulent emissions and fuel economy data to transport authorities. The ten models include the Hiace, the Fortuner, and the Innova. The cars were sold in Japan, Europe, and the Middle East, among other markets. Toyota Industries said the output data rigging dates back to 2017.

“We feel deeply responsible for the misconduct, which persisted for a long time, and for failing to discover and rectify it,” Toyota Industries President Koichi Ito said at a press conference. “We will do our utmost to rebuild the company with legal compliance as our top priority.”

It said that Toyota has decided to stop six production lines at four of its domestic factories until February 1st due to the shipment halt.

Credibility at stake

According to a report by a third-party panel, Toyota Industries doctored the volume of fuel injection in engine output tests to make the engines’ torque, or rotational force, appear better than it was.

The panel blamed the company’s corporate culture, saying it lacked the will to actively increase compliance amid an environment where it felt secure in its position as a Toyota supplier. “Its data compliance has grown lax,” Hiroshi Inoue, the panel’s head, said at a press conference.

Toyota confirmed the affected engines and said that following a reevaluation after the rigging was discovered, the vehicles now comply with engine output standards.

Japan’s Ministry of Economy, Trade, and Industry said the problem shakes the foundation of the automobile certification system and instructed Toyota Industries to find the cause of the problem. The Ministry of Land, Infrastructure, Transport, and Tourism also said it will launch an on-site inspection at the company’s factory in Aichi Prefecture on Tuesday.

Monday’s announcement followed a revelation in March last year when Toyota Industries admitted to falsifying emissions data for its forklift engines. The third-party panel has been investigating the issue. On Monday, Toyota Industries said the data rigging was found in more of its forklift engines, and it has stopped shipment of all the affected products.

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