Daihatsu could lose RM3.2 bil from production halt – Japan’s transport ministry starts its own investigation

Daihatsu’s complete production halt following the additional fallout from its safety test scandal is set to hurt the automaker financially. According to a Nikkei Asia news report, it is estimated that the company could suffer over 100 billion yen (RM3.2 billion) in losses stemming from its plant shutdown as well as from providing financial compensation to suppliers.

The brand hasn’t provided a date as to when domestic production will resume, but earlier news reports indicated that it said the production halt would last at least until the end of January. As for Indonesia and Malaysia, production and shipments have resumed.

On top of its own lost domestic sales, Daihatsu is due to negotiate with suppliers about compensating them for lost income, and this is expected to be costly. On top of all this, further expenses stemming from investigations and additional safety tests are also set to come into the equation.

Daihatsu could lose RM3.2 bil from production halt – Japan’s transport ministry starts its own investigation

For fiscal 2022, the automaker reported a consolidated operating profit of 141.8 billion yen (RM4.6 billion) and a net profit of 102.2 billion yen (RM3.3 billion), but it isn’t looking as rosy now. Should the impact of the scandal push consolidated earnings into the red, it would mark the first such losses the company has faced in 30 years, the report added.

It looks unlikely to face any cash flow problems right away, because as of the end of March, the company’s liquid assets minus liabilities to be repaid came to just over 500 billion yen (RM16.2 billion). However, production and sales aren’t the only things the company has to worry about, because the scandal – which resurfaced after a safety investigation carried out by an independent panel found issues involving 64 models – has caught the attention of regulators.

Japan’s transport ministry is conducting its own investigation and has directed Daihatsu to halt shipments until the safety of its vehicles can be verified, a process that might draw out for months. Additionally, the company could face other penalties, including revocation of the certification required for mass production.

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Tags: Daihatsu Safety Scandal 2023

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