Daihatsu Offers Compensation To Suppliers Amid Safety Test Scandal-Driven Production Halt

Japanese automaker Toyota Motor Corp‘s TM subsidiary Daihatsu has reportedly opted to compensate its 423 domestic suppliers in Japan due to the ongoing production halt.

What Happened: Reuters reported that Daihatsu has ceased its production in Japan until the end of the following month. This decision came after a safety investigation uncovered safety test manipulations in 64 models, some of which were marketed under the Toyota brand. The report said the compensation will be calculated based on the suppliers’ past business volumes.

Daihatsu is in the process of evaluating the effects of the production halt on its vast supplier network. Furthermore, the report added that it is contemplating assisting smaller subcontractors who do not receive compensation by helping them secure support funds from the industry ministry.

Why It Matters: Daihatsu, which Toyota entirely owns, said it would put a stop to all vehicle shipments on Wednesday after a third-party investigation exposed safety test manipulation involving 64 models. These models include domestic ones like the Pixis Epoch and Raize and 16 overseas models currently in production or development.

However, production of Perodua brand cars at two joint venture plants Daihatsu operates with Malaysian automaker Perodua has resumed after receiving regulatory clearance. The company also confirmed to Reuters last week that it had resumed shipments from its subsidiary in Indonesia, PT Astra Daihatsu Motor.

Photo Courtesy: Mulad Images On Shutterstock

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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