On Tuesday, Toyota Motor Corp. said that the president of its small-car manufacturing unit, Daihatsu Motor Co., will step down over a safety testing scandal. The parent company will send new executives to take the lead in revamping the unit to bolster its governance.

Masahiro Inoue, chief of Toyota’s operations in Latin America and the Caribbean, will replace Soichiro Okudaira as president, effective March 1st. Daihatsu Chairman Sunao Matsubayashi will leave his position, with the post to be eliminated, Daihatsu said.

Masanori Kuwata, who is in charge of electrification projects for the Lexus brand, will serve as Daihatsu’s executive vice president. At the same time, Keiko Yanagi, deputy chief officer at Toyota Customer First Promotion Group, will be a director at the small car unit.

The data rigging in vehicle safety tests led to the temporary suspension of all Daihatsu shipments at home and abroad, highlighting the deteriorating quality control at the world’s biggest auto-making group.

The new savior

During a press conference, Toyota President Koji Sato said that Inoue has extensive experience in turning around businesses in Latin America, such as Brazil and Argentina. “He has propelled reforms through intensive dialogue with local employees,” Sato said of Inoue. “He is tasked with pushing forward with the rebirth of Daihatsu as a leader on the ground.”

At the same press conference, Inoue said that Daihatsu had failed to recognize the strains on its employees while experiencing rapid increases in production volume. “People never open up to you unless you open up first,” Inoue explained. “I hope to have an honest dialogue with Daihatsu’s employees by actively communicating with them.”

The new Toyota-led management reflects a historical trend of appointing Toyota executives as presidents of Daihatsu, including Okudaira, who took up the top role in 2017. “We will reform management, corporate culture, and manufacturing so that similar problems do not happen again,” Inoue said.

It remains to be seen if Inoue will succeed where Okudaira failed. He seems to have had a positive track record in solving complicated problems, but apparently, the problems at Daihatsu date back to 1989.

Longer development time, more testing

On task sharing between the two companies, Toyota said Daihatsu will focus on its mainstay mini-vehicle business, and the parent company will help the unit in its vehicle development and production operations for overseas markets to reduce its workload.

The management reshuffle follows Daihatsu’s submission last week to Japan’s transport ministry of measures to prevent the recurrence of similar misconduct. The measures include lengthening the lead time for vehicle development by 1.4 times and increasing the number of testing staff sevenfold.

That is not the only problem

Toyota Chairman Akio Toyoda last month vowed to lead efforts to reorganize operations at the Toyota group. Daihatsu admitted in December to safety test rigging for most of its models, which a third-party investigation found dated back to 1989. The panel blamed “an extremely tight and rigid development schedule” for the misconduct.

That was followed by another scandal at Toyota Industries. This Toyota affiliate said last month it fabricated data on the torque output of diesel engines it makes and supplies to Toyota. It resulted in a partial halt of shipments of Toyota vehicles.

In March 2022, Hino Motors Ltd., Toyota’s truck-making subsidiary, admitted to submitting fraudulent emissions and fuel economy data to transport authorities.

The chairman and Toyoda heir will have much to care for in the coming months. Apparently, the rigorous top-down decision-makiobediencedocility of all subordinates, and the company’s sheer size have brought significant problems to Toyota’s internal functioning.