It is pointed out that moral hazard is widespread throughout the Toyota Group in that it is not just one affiliate but a group-level denial. Toyota is in a position to maintain quality by reducing the plant’s operating time by 30 minutes to prevent a recurrence, but critics say that the fundamental problem will continue unless the company has dealt with the rigid vertical organizational culture for decades. According to major Japanese media on the 4th, there are lamentations that the myth of “Made in Japan” is shaking as a series of quality denial issues such as Toyota Motor Corp., Daihatsu, and Hino Motors, which are Toyota’s affiliates, have been caught cheating in the process of output tests for quality certification. On January 30, Toyota said it was found that Toyota Motor Corp., an affiliate in charge of diesel engine development, had committed irregularities in the process of output tests for quality certification. Toyota has decided to suspend shipments of 10 models, including Land Cruiser, Prado, and Hiace. Amid the controversy over the rigging of engine exhaust tests for forklifts, irregularities were also found in three types of automobile engines. Daihatsu, Toyota’s subsidiary of the light vehicle division, also conducted further investigations after the issue of quality certification was raised in April last year and found 174 irregularities have been made in the process of collisions, exhaust gas, and fuel consumption tests of 64 models since 1989. The 35-year-old quality fraud has finally been revealed. Due to the problem, four of Daihatsu’s plants in Japan have been shut down since December last year. Daihatsu is under extensive investigation by the Ministry of Land, Infrastructure and Transport.
In 2022, Toyota’s Hino Motor Company was found to have manipulated emissions and fuel efficiency, which led to the cancellation of its designation. At the end of last month, Toyota reported a recall of 790,000 units for three models, the Yaris, the Aqua, and the Xienta, due to durability of parts. Toyota recalled 590,000 vehicles in June last year due to defective parts. Until the denial by Hino and Daihatsu, which became affiliates after Toyota acquired the company, Toyota, the parent company of the company, apologized only for the “responsibility for poor management of affiliates.” As Toyota Motor Corp., the group’s birthplace, is also involved in fraudulent issues, problems are brewing due to serious defects in the group’s entire process. Toyota is a company that is loved nationwide for its pride in its manufacturing sector, so it is in a state of shock of betrayal.
Toyota Chairman Akio Toyoda, the fourth-generation founder of Toyota’s family, said in a recent press conference, “We lost values and priorities to be valued. We accept it as a serious matter that betrays customer trust and shakes the foundation of the certification system. As the head of the company, I will lead the change of the group.”
As irregularities have been repeatedly caught, Japanese society is criticized for having problems with Toyota’s in-house culture itself. Majority of the opinion is that unless the unique rigid organizational culture changes, the problem will be repeated. They say that the organizational culture that has to meet the delivery date regardless of the reason when Toyota, the highest-ranking company, places an order with its affiliates is the essence that caused this incident. In fact, even in an internal Toyota investigation report, employees testified that “delaying production schedules will damage the company” or “Although development was not progressing properly, they were forced to cheat.”
The Nihon Keizai Shimbun said in an editorial, “Although Toyoda apologized, there was little mention of how to specifically eradicate fraud that is prevalent in the group as the chief executive officer,” adding, “As far as I know, he only said ‘no’ to the possibility of further corruption.” Nikkei said, “The management led by Toyoda should lead the group’s reform rather than leave it to each company to solve the problem,” adding, “Comprehensive measures such as a comprehensive governance system reorganization are needed to prevent a recurrence.” As part of the improvement measures, Toyota has announced that it will “make every effort to ensure quality by producing slowly and meticulously.” Toyota has decided to reduce the overall operating hours of its finished car plant in Japan by 30 minutes this year. It aims to maintain quality by allowing people to work at production sites with ease.
Toyota plants in Japan generally operate on two shifts a day, working eight hours a day and working overtime depending on the volume. The upper limit of operating hours is set for each production line according to the production plan, and among them, the upper limit of overtime hours is to be shortened by 30 minutes. The Yomiuri Shimbun said that popular cars are produced by overtime work in addition to regular hours, and it is unusual to reduce operating hours during normal hours without any problems or lack of parts. The shortened 30 minutes can be used for employees to leave work early or to check and train equipment. In line with shorter operating hours, the company plans to devise flexible measures to respond to demand, such as producing popular cars in other factory lines with low operating rates. Toyota has also begun to review some of its development plans, including extending the development period of new cars a little more, as it believes that the tight development schedule has been linked to the denial of quality certification. The entire Toyota Group, including its subsidiaries, is also considering allowing global new car sales to be reduced by about 10 percent from 11.23 million units last year.
SOPHIA KIM
US ASIA JOURNAL
