Japan automaker Daihatsu reports 1st loss in 31 years amid certification scandal

Japanese automaker Daihatsu Motor Co. has reported its first red ink in 31 years, amid a downturn due to a series of certification violations and subsequent production halt.

For the fiscal year 2023 which concluded in March 2024, the company posted an operating loss of 5 billion yen (US$32 million), its first operating loss since fiscal 1992.

The carmaker was forced to halt the shipment of all models in production after a third-party committee discovered 174 instances of regulatory non-compliance last December. This led to a temporary shutdown of all four of its domestic plants, with production only resuming in early May.

The financial repercussions were significant. Daihatsu's sales revenue for the fiscal year dropped to 1.181 trillion yen, marking a decline of 20.9 percent year on year, Jiji Press reported, citing the government's official gazette published on Thursday.

It booked a special loss of 70 billion yen to compensate affected parts manufacturers, according to Jiji.

Daihatsu's sales of new mini-vehicles in Japan fell 21.6 percent to about 443,000 units in fiscal 2023, and Suzuki Motor Corp. overtook it as the country's top seller of mini-vehicles for the first time in 18 years, the report added, citing industry data.

The company was also reported to have submitted documents to the Ministry of Land, Infrastructure, Transport and Tourism on Thursday to recall 44,827 light vehicles manufactured between September 2022 and April 2024 due to parts that did not meet regulatory standards.

Founded in Osaka in 1907, the company specializing in the manufacture of small cars is a subsidiary of Toyota Motor Corporation, which is also mired in a brewing test data scandal.

The country's five major automakers – Toyota, Honda Motor, Mazda, Yamaha Motor and Suzuki Motor – have been implicated in illegal fraudulent practices during their mass production certification applications, affecting a total of 38 models and causing wide concern for the country's auto industry.