Toyota's Daihatsu to Compensate 423 Domestic Suppliers Affected by Safety Scandal

On Monday, Toyota Motor's subsidiary, Daihatsu Motor, announced that it will compensate 423 domestic suppliers as its plants in Japan remain idle due to a safety scandal. The small car specialist has temporarily halted production until the end of next month.

Daihatsu's spokesperson, according to Reuters, revealed that the compensation will be based on past business volumes as the company works to assess the impact of the production stoppage on its extensive supplier network.

Temporary Production Halt Impacts Supplier Compensation

Dunya News reported that following a safety investigation that discovered issues in 64 models, including Toyota-branded vehicles, Daihatsu ceased shipments of all its cars. The company will collaborate with its leading suppliers to address the scandal's aftermath. Additionally, Daihatsu aims to assist smaller subcontractors who do not receive compensation in accessing support funds from the industry ministry.

Despite the production halt in Japan, Daihatsu's overseas operations in Southeast Asia continue without disruption. The company has resumed production of Perodua brand cars at its joint venture plants with Malaysian automaker Perodua. Regulatory clearance was obtained, allowing production to continue at these facilities.

Domestic Production Suspension Extends Until the End of January

Daihatsu announced on Monday that domestic production will be suspended until at least the end of January. The company, which has undergone inspection by Japan's transport ministry, remains uncertain about the resumption of shipments or production. All of its factories in Japan will cease production by Tuesday, leading to significant challenges for thousands of suppliers.

The suspension of Daihatsu's domestic production severely blows its extensive supplier network. According to credit research firm Teikoku Databank Ltd., over 8,000 Japanese firms directly or indirectly supply products or services to Daihatsu, generating approximately 2.2 trillion yen ($15 billion) in combined annual sales. The compensation to the affected suppliers aims to mitigate the economic impact caused by the production halt.

Commitment to Address Industry Challenges

Daihatsu remains committed to resolving the fallout from the safety scandal and supporting its suppliers during this challenging period. The company plans to collaborate with its leading suppliers to navigate the crisis. Moreover, Daihatsu is exploring avenues to assist smaller subcontractors in accessing support funds provided by the industry ministry.

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