Thursday saw a sharp decline in the value of shares of Toyota Motor, as the transport ministry of Japan investigated a subsidiary about security issues dating back several decades and the world's best-selling carmaker separately issued a recall of 1.1 million cars.
Compared to the benchmark Nikkei average, which dropped 1.6%, shares of the largest automaker in Japan ended the day down 4.0%.
After finding more inconsistencies in safety inspections, Daihatsu Motor, the small-car division of Toyota, announced a day earlier that it would suspend shipments of all cars indefinitely.
A committee operating independently reported that it had discovered problems with 64 models, nearly two dozen of which were sold under the Toyota brand. After the automaker claimed that it had falsified side-collision security tests for 88,000 small cars in April, the panel began looking into the issue.
On Wednesday, Daihatsu stated that its earnings would be significantly impacted, but it wasn't sure when it was going to resume shipments.
Analysts predicted that because of the size of the parent company, the influence on Toyota's income would probably be minimal. Perhaps the suppliers to Daihatsu will be more affected. Its supply chain within Japan comprises 8,316 businesses that generated 2.21 trillion yen in sales from Daihatsu, according to a report from Teikoku Databank.
A 10% decline was seen in the shares of Daihatsu-affiliated parts maker Metalart.
After receiving complaints about Daihatsu's infraction, the government announced that, depending on the results of its investigation, it might think about administrative penalties, which could include withdrawing Daihatsu's production license, saying that it is a truly terrible instance of misconduct that damages the confidence of car owners and jeopardizes the fundamental basis of the automotive certification system.
Daihatsu has declared that it will take into account compensatory damages and provide monetary assistance to its suppliers.
In a related announcement, Toyota stated it would recall globally about 1.12 million cars, primarily in the US, to replace a defective sensor that might prevent air bags from deploying as designed.
The sensors were manufactured by Aisin, a major provider to Daihatsu and a Toyota affiliate, and its shares saw a 3.9% decline.
Meanwhile, the main competitor of Daihatsu in the Japanese market of mini vehicles, Suzuki Motor, saw a 2.1% increase in shares.