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Hino’s Widening Engine Scandal Becomes Big Headache for Toyota

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A widening scandal at Hino Motors over falsification of engine data has become a headache that will not go away for parent Toyota, adding to a difficult year already complicated by multiple production halts.

Hino, Toyota’s truck and bus unit, said on Monday it would suspend shipments of small trucks after a transport ministry investigation revealed that about 76,000 of its small trucks sold since 2019 had not been subject to the required number of engine tests. According to Hino, the small trucks are not being recalled because they do not violate emissions standards, however the automaker has now almost completely halted sales in its domestic market.

Related: Toyota Subsidiary Hino Admits Yearslong Use of Fraudulent Emissions Data

About 19,000 of Toyota’s Dyna and Toyoace trucks use the Hino engine and were also impacted, Toyota said. Monday’s revelation was the latest sign of the scandal worsening for Hino since it first announced the data falsification affecting some of its bigger trucks in March. Since then, it has said it falsified data on some engines going back as far as 2003, at least a decade earlier than originally indicated. All told, around 640,000 vehicles have been affected, or more than five times the figure initially revealed.

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The issue has also thrown a spotlight on Toyota, which is Hino’s 50.1% owner, with some analysts questioning whether the parent should have done more to oversee standards at the smaller company. According to Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute, “Toyota had responsibility for the corporate culture at Hino.”

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Hino became Toyota’s subsidiary in 2001 and nearly all presidents since then have been those who previously worked for Toyota. Although Toyota has done necessary tasks as a parent company in terms of approving important matters and giving advice on governance, it could not directly intervene in Hino’s management, said Toyota’s Chief Communications Officer Jun Nagata.

Related: Toyota Shares Sink After Fraudulent Emissions Data Scandal

The woes come in a difficult year for Toyota, after vehicle output fell 10% short of its original plan in the April-June quarter, hit by a global semiconductor shortage and supply chain disruptions because of China’s COVID-19 lockdowns.

Even though the engine for the small trucks was supposed to be tested at least two times at each measurement point, it was only tested once at each site, said Hino. A company-commissioned panel said in a report earlier this month that Hino had falsified emissions data on some engines going back to at least 2003, or more than a decade earlier than previously indicated.

Related: Probe Finds Hino Falsified Emissions Data Since 2003

Hino blamed an inward-looking corporate culture and a management failure to engage sufficiently with workers that led to an environment that put greater priority on achieving schedules and numerical targets than following processes.

Japan has seen a series of data manipulation scandals by automakers and other manufacturing firms in recent years, exposing flaws in their corporate culture and internal controls. Electronics conglomerate Mitsubishi Electric admitted last year to inspection lapses on air conditioners for train carriages, with data fabrication spanning more than 30 years. In 2017, Toray Industries Inc. said its subsidiary Toray Hybrid Cord Inc., which manufactures reinforcing materials for tires and other products, had falsified data for around 8 years. The firm had been aware of the matter for over a year but failed to report it.

In the auto sector, Mitsubishi admitted in 2016 to using favorable data for its cars to exaggerate fuel economy. Suzuki, Mazda and Yamaha admitted in 2018 to conducting improper fuel-economy inspections. Nissan has also been engaged multiple times in falsifying emissions and fuel economy data scandal.

Source: AutoNews

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