“… The problems were found in 64 models and three vehicle engines, including 22 models and an engine sold by Toyota, Daihatsu said in a statement. The investigation also found the problems affected some models of Mazda Motor Corp. and Subaru Corp. sold in Japan, and Toyota and Daihatsu models sold abroad. …” [1]
The full scope is currently unclear and being investigated; it may be a broad as every vehicle that Daihatsu designed.
> An independent panel has been investigating Daihatsu after it said in April it had rigged side-collision safety tests carried out for 88,000 small cars, most of those sold as Toyotas.
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> But the latest revelations suggest the scope of the scandal is far greater and went back much further than previously thought and could potentially tarnish the automakers' reputation for quality and safety.
Here's a list of models and years, straight from the manufacturer.
Note that most (but not all) were not deliberate attempts to pass off known unsafe problems, but were rather a culture of doing things like running a test of the driver's side, then copying the same results for certification on both the driver and passenger side.
A corporation is made of people. Fraud and reckless endangerment are crimes, even when you do them on company time. And once you have middle managers convicted, there are gang-related laws that allow you to easily travel up the chain of command.
The legal frameworks exist. There is just no will to enforce laws if the crime is done on company time.
Corporations are organized to dilute responsibility.
In corporations, nobody knows what the other employees really do, nobody know where the decisions are coming from and why. Employees and managers make stupid decisions under pressure. You can find who is responsible legally but you’ll never grab the people who profit from the wrong culture they established that incentivize bad behaviors and punish employees that are just here to do their job.
> You can find who is responsible legally but you’ll never grab the people who profit from the wrong culture they established that incentivize bad behaviors and punish employees that are just here to do their job.
Sure you can: if you have accounting fraud the CFO is liable, and the only question is whether it’s for deliberate fraud or negligence but in either case the buck stops at the top. The reason why such charges are uncommon is because those people tend to be politically well-connected, not because it’s impossible to come up with a regulatory solution.
That’s why we have different crimes. If your business sells unsafe food, you don’t get off unscathed if they can’t prove that you intentionally poisoned the victims. If nothing else, any officer of the company who claims to have no idea what the people under them are doing should be worried about reconciling that with their fiduciary duties – it’s possible that they could be carefully scammed, of course, but that still requires them to show that their controls met a minimum level which seems infeasible in many cases.
Not sure if you mean difficult politically or technically. Politically I have no answers, but technically, I assume that you would not need that many fines that wipe out shareholder equity, most of corporate debt and all of board/C-suite wealth before corporations would take law seriously. I think there are states that are fond of three strikes and out type laws, maybe those could be applied to corps as well?
Fire the board and the C-suite, wipe out all the shareholders and run an IPO, take the proceeds as a fine or restitution for those affected.
Or if you’re feeling particularly mean just deny the corporate entity’s rights (and parents) to do business at all, force the owners to run a fire sale for any value they can grab.
You penalize corporations with fines proportional to their total value, removing permissions to operate in certain ways, break them apart, or just legally dissolve them entirely.
The problem is all too often fines are like 30 seconds of revenue. Make it 50% of market cap forcing them to raise cash or pay the fine in stock.
None that make a significant dent in the benefits. The societal benefits of getting companies to actually abide by the law on a wide scale are much larger than any realistic consequence. Including the death of a few big companies, which yes, may mean unemployment for all of their employees. And if you want to prevent this, nationalization (which can be temporary) is always an option, as was seen in many countries with banks around 2008-2009.
You end up punishing the wrong people, i.e. you punish people who might have unknowingly gained from this, but did not cause it.
You also end up punishing ordinary people who did nothing wrong.
A better punishment is putting the company under receivership whose goal is reforming the behavior of the company.
If you can identify the right people you can fire them, but it's not always possible: The manager pressures the employees to deliver better results, the employee cheats "a little", and doesn't tell the manager that that's how he got results.
In that scenario who is responsible? The manager will say "I didn't tell him to cheat, and I didn't know he did it", the employee will say "it's not my fault, the manager set such expectations that he forced me to cheat".
There's no clear answer, so instead focus on reforming the culture.
Punish the investors by forcing them to price the risk of enforcement by having enforcement apply meaningful financial punishment. On the flip side this rewards well behaving competition giving a real market advantage.
For FAANG this means fines need to be on the order of $100B for something significant.
You might have to do this once or twice but once the risk is real investors will put appropriate pressure on boards, and influential employees paid in stock will have personal motivation.
That won't work because the investors that actually have influence with the board also know exactly the right time to jump ship before slow moving regulators manage to do anything.
The “chickenshit” arguments against this is that it will hurt employees of the fined company or investors who didn’t know any better. Grandma’s IRA is full of index stocks, she didn’t choose any of this and shouldn’t be punished. It’s not so hard to motivate media to spread this message.
The problem with that argument is that it makes it so nobody is ever responsible, competition must act the same or risk losing to the misbehaving competitors, and all you have to do to be above the law is have employees, investors, and misbehavior complicated enough to be difficult to understand who is responsible.
For one, corporate executives signing off on these cost cutting measures need to be jailed. Customers that own impacted models need to be compensated and vehicles bought back by Toyota at retail price (not depreciated, current value). Countries need to hold corporations accountable by blacklisting import of their vehicles for X amount of years. State and local governments need to issue multibillion dollar fines.
Japanese executives don't have incredible salaries, and Japan already has well defined cultural expectations for what companies should do if there's a scandal.
(It involves the execs crying at press conferences.)
Require more accountability if a company wants to enjoy the benefits of incorporation. Decision processes have to be documented and responsibilities clearly delineated. Employees have the opportunity and duty to ensure their work is correctly described.
The current system isn't working, it's producing too much abuse.
Or, we collectively decide that it’s unlikely scandals of this scope did not previously pass the CEO’s desk at some point in the timeline and start with penalties at the top, and then move down the line.
My argument can be expanded to the fact that if a “rogue underling” did this without C-level input that leadership at the company is negligent at the least, or attempting to abstract responsibility and hide the issue behind deniability at the worst.
Addendum: I should have picked a better phrase to start with. I agree that the legal process is the correct way to proceed, but once a determination of culpability is made, hiding behind layers of leadership should not be the defacto norm.
Really? That’s an interesting take and one that I hadn’t considered. I need to think about how I feel regarding the underlying premise but I can certainly see where you can make the argument. I agree that jumping to lynch mob reactions aren’t helpful.
My original point—-which was likely not worded well—is that the humans which make up “society” need to reach a point where they can recognize that corporations make and follow-through on decisions because they are supported by sign-off from our fellow humans, not because of an abstract corporate mechanism.
How is that any different to emissions fraud? Emissions fraud kills people, albeit slowly/statistically, and you can't pinpoint the exact people affected.
>The investigation found that the airbag control units used by Daihatsu in airbag tests for some models were different from the ones used in cars sold to the public, including Toyota's Town Ace and Pixis Joy models and the Mazda Bongo.
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>The misconduct also included false reports on headrest impact tests and test speeds for some models. The investigation found cases of misconduct were particularly prevalent after 2014 and, for one already-discontinued Daihatsu vehicle, went back as far as 1989.
We can't trust foreign companies for various reasons. The solution seems to be to do the testing locally, not using vehicles provided by the manufacturer for testing purposes. Which seems to be what happens in Australia: https://www.racv.com.au/royalauto/transport/cars/ancap-faqs....
(The loophole would be using premium parts in early shipments, until testing has commenced, and switching components in later shipments. Not sure if we would catch that in components like airbags. We have already had Toyota recalls due to dodgy airbags.)
Also found a report about another problem they cheated on tests to pass:
"They said the door trim on the affected vehicles had been modified with a "notch" to minimise the risk in testing that the door interior could break with a sharp edge and cause injury to an occupant when the side airbag deployed in an accident."
Stupid question: why didn't they add that part to the actual production cars? It doesn't sound like a complex system or problem (compared to say, reducing emissions versus just cheating in emission testing) especially since they already seem like they know exactly what they had to fix.
Even then I'd understand if it was a one time thing (rush in production or design, no time to redesign) but this is systematic and across a wide range of models. I guess the other models in question had more deeply rooted design issues that can't be fixed with a less intricate tweak?
The strange thing about that modification is that it appears on the surface to be a legitimate safety improvement. Could the underlying test be subpar?
why would that call into question the underlying test? Rather it calls into questions the design decision of the daihatsu team to know they could create a safer product but decide to not do so, and fake it on the safety tests.
I wonder what models are affected. I bought a Hijet at an auction that is waiting to board a ship in Japan. Not that I expect any sort of safety in a crash to begin with with a kei truck, but I am curious if they're included in the scam. Hopefully this also frees up some ro-ro space so it finally gets a spot on board. It's been a very long 3 month wait so far.
It was manufactured in August 2008. The regulation where I am is 15 years, so I'm just under the wire (or would have been had it shipped right when I bought it in September)
The article didn't mention how far back this goes. I'd love to see a list.
I used to own a Daihatsu and always wondered how they made such a small car comply with the safety standards of larger vehicles. Cheating. The answer was cheating on the test.
https://www.usnews.com/news/business/articles/2023-12-20/toy...
Does anybody know the exact list of models impacted? I am not familiar with “Daihatsu” and Toyota relationship.
Neither US News or CNBC article mention exact manufacturer and model names