Daihatsu scandal: Company could lose up to USD 700 million; troubles are only beginning
Arvind · Dec 29, 2023 03:30 PM
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In the aftermath of the Daihatsu safety scandal, one estimate pegs that company could suffer financial loses of up to USD 700 million taking into account plants stoppages, loss of sales and recently confirmed compensation to suppliers.
According to a report by Nikkei Asia, the estimated losses also include expenses for investigations, additional safety tests, and other individual negotiations with suppliers.
"Depending on the scale of the compensation, Daihatsu's losses could total JPY 100 billion or more," said Seiji Sugiura at the Tokai Tokyo Research Institute.
If the impact of the scandal results in consolidated earnings turning negative, it would be Daihatsu's first such losses in the last 30 years.
Shipments to Indonesia and crucially Malaysia have resumed, sighting approvals by the respective government ministries, but production for Japan and other international markets remain suspended, at least until end-January 2024 according to earlier reports.
The Japanese market accounts for about 60 percent of the 1.42 million vehicles manufactured by Daihatsu annually, inclusive of Perodua and Toyota models such as the Toyota Vios and Rush.
The Toyota Rush are amongst the parent company's models also affected by the Daihatsu scandal
The same report doesn’t expect Daihatsu Motors to face any immediate cashflow problems, given its solid liquidity. However, such substantial losses could still put a dent in the circa JPY 4.5 trillion operating profit (growth of 65 percent year-on-year) parent company Toyota is expected to rake in as of end-2023.
But this could just be early times – as Japan’s Transport Ministry has also halted shipments of Daihatsu vehicles while it conducts its own investigation into the issue.
Arvind can't remember a time when he didn't wheel around a HotWheels car. This love evolved into an interest in Tamiya and RC cars and finally the real deal 1:1 scale stuff. Passion finally lead to formal training in Mechanical Engineering. Instead of the bigger picture, he obsesses with the final drive ratio and spring rates of cars and spends the weekends wondering why a Perodua Myvi is so fast.
