Growing Hino engine scandal is a stubborn headache for Toyota

The logo of Hino Motors is pictured at the 45th Tokyo Motor Show in Tokyo, Japan October 27, 2017. REUTERS/Kim Kyung-Hoon

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TOKYO, Aug 23 (Reuters) – The growing scandal at Hino Motors (7205.T) in Japan over falsification of engine data has become a headache that will not go away for parent company Toyota Motor Corp (7203.T) , adding to a difficult year already complicated by multiple production stoppages.

Hino, the truck and bus unit of Toyota, said on Monday it would suspend shipments of small trucks after a Department of Transportation investigation found some 76,000 of its small trucks sold since 2019 had not been subjected to the required number of engine tests.

The small trucks aren’t being recalled because they don’t violate emissions standards, Hino said, but it has now almost completely halted domestic market sales. About 19,000 Toyota Dyna and Toyoace trucks use the Hino engine and were also affected, Toyota said.

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Monday’s revelation was the latest sign of a deepening scandal for Hino since it first announced data tampering affecting some of its largest trucks in March. Since then, he said he falsified data on some engines dating back to 2003, at least a decade earlier than originally thought. In total, some 640,000 vehicles were affected, more than five times the number originally disclosed. Read more

The issue has also thrown the spotlight on Toyota, the 50.1% owner of Hino, with some analysts questioning whether the parent company should have done more to oversee small business standards.

“Toyota’s responsibility is serious,” said Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute, adding that Toyota was responsible for corporate culture at Hino.

Hino became Toyota’s subsidiary in 2001 and almost all presidents since then are those who previously worked for Toyota.

Although Toyota performed the necessary tasks as a parent company in terms of approving important matters and advising on governance, it could not intervene directly in Hino’s management, said Toyota’s communications director, Jun Nagata.

“I don’t think we were able to intervene,” Nagata said, adding that it would be up to Hino to restructure the business and protect its brand.

Hino shares fell 5.9% in mid-afternoon trading on Tuesday.

The automaker said that although the small trucks’ engine was supposed to be tested at least twice at each measurement point, it was only tested once at each site. Read more

A company-appointed panel said in a report this month that Hino had falsified emissions data for some engines dating back to at least 2003, more than a decade earlier than previously reported. Read more

Hino blamed an inward-looking company culture and an inability by management to engage enough with workers, which led to an environment that places a higher priority on meeting schedules and targets. as well as process monitoring.

($1 = 137.3800 yen)

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Reporting by Satoshi Sugiyama; Editing by David Dolan and Shri Navaratnam

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