Toyota shares slide 3% amid Daihatsu safety scandal

Investing.com-- Shares of Toyota Motor Corp (TYO:7203)- Japan’s biggest automaker- slid over 3% on Thursday after it said its Daihatsu unit will halt shipments of all its vehicles in light of a safety investigation revealing issues with several models sold by the firm. 

Toyota’s Tokyo shares fell 3.3% to 2,557.0 yen by 20:32 ET (05:32 GMT), and were among the worst performers on the Nikkei 225 index. They were also the biggest weight on the index, which fell 1.6%. 

Overnight, Toyota's American Depository Receipts (NYSE:TM) sank 2.2%.

The findings of an independent panel showed that Daihatsu- which is Toyota’s small-car unit, had faked safety tests on a much larger scale than initially reported, with instances of misconduct stretching as far back as 1989. About 64 models produced by the unit- many of which were sold under Toyota branding- were found to have safety issues. 

The findings also showed issues with some models sold by  Mazda Motor Corp (TYO:7261) and Subaru Corp (TYO:7270), given that Daihatsu produces some vehicles for the two automakers. 

Mazda and Subaru shares sank between 2.7% and 4%, while shares of peer Nissan Motor Co., Ltd. (TYO:7201) lost 3.1%.

Daihatsu makes smaller-sized cars and trucks which are popular in the Japanese market. The firm had said in April that it faked side-collision safety tests for over 80,000 cars- which had spurred a broader probe into the  firm. 

The April revelation also came in the wake of a whistleblower report on the misconduct. 

Toyota did not specify the financial impact of the suspension, and said that it will review certification operations and undertake a “fundamental reform” to revitalize Daihatsu. The automaker also did not specify whether vehicle recalls will be issued in light of the new findings. 

Daihatsu accounts for about 7% of Toyota’s overall sales, with the affected models consisting of sales largely in Southeast Asia and South America. The firm will suspend all shipments until it receives regulatory clearance, with Japanese authorities now set to conduct a deeper investigation into the automaker.