Toyota shares sink after Daihatsu suspension, US recall

TOKYO

Shares in Japanese auto titan Toyota dived yesterday as a rigged safety test scandal builds at subsidiary Daihatsu, and after it recalled a million vehicles in the United States over airbag safety concerns.

Daihatsu said on Dec. 20 it would suspend domestic and overseas shipments of all its vehicles in light of an independent panel's report that found it had been manipulating tests as long ago as 1989.

Japanese officials visited the firm's headquarters yesterday to carry out an inspection.

Hours after the Daihatsu report was released, Toyota announced the massive recall of Toyota and Lexus vehicles in the United States, warning that there were concerns about airbag sensors in the front passenger seats.

The vehicles include some of the manufacturing giant's popular Camry, Corolla, and Highlander lines.

These sensors "could have been improperly manufactured, causing a short circuit," and as a result "the airbag may not deploy as designed in certain crashes, increasing the risk of injury", the company said in a statement.

Shares in Toyota sank as much as 5.6 percent in Tokyo - the most in 18 months - before clawing back some of the losses later in the day.

Still, Bloomberg Intelligence auto analyst Tatsuo Yoshida told AFP that the recall would likely have a limited impact on the firm as the number of vehicles involved is small compared with the firm's production.

"Also, recalling vehicles to fix a defect is not necessarily a bad thing if it is properly filed and executed, as vehicle recalls are an everyday thing in the auto industry," he added.

However, he said the Daihatsu matter could hurt Toyota financially, and the reforms at the subsidiary could take time as "this (safety) certification issue looks deeply rooted in the company's culture".