Toyota Motor Corp. said Tuesday the president of its small-car manufacturing unit Daihatsu Motor Co. will step down over a safety testing scandal, as the parent company will send new executives to take the lead in revamping the unit to bolster its governance.

Masahiro Inoue, chief of Toyota's operations in the Latin America and Caribbean region, will replace Soichiro Okudaira as president, effective March 1. Daihatsu Chairman Sunao Matsubayashi will leave his position, with the post to be eliminated, Daihatsu said.

Masanori Kuwata, who is in charge of electrification projects for the Lexus brand, will serve as Daihatsu's executive vice president, while Keiko Yanagi, deputy chief officer at Toyota Customer First Promotion Group, will be a director at the small car unit.

The data rigging in vehicle safety tests led to a temporary suspension of all Daihatsu shipments at home and abroad, highlighting the deteriorating quality control at the world's biggest auto-making group.

Toyota President Koji Sato told a press conference that Inoue has extensive experience in turning around businesses in Latin America such as in Brazil and Argentina.

Masahiro Inoue (R), head of Toyota Motor Corp.'s operations in the Latin America and Caribbean region, attends a press conference in Tokyo on Feb. 13, 2024, after being appointed as Daihatsu Motor Co.'s new president. Toyota President Koji Sato is seen on the left. (Kyodo) ==Kyodo

"He has propelled reforms through intensive dialogue with local employees," Sato said of Inoue. "He is tasked with pushing forward with the rebirth of Daihatsu as a leader on the ground."

Inoue said at the same press conference that Daihatsu had failed to recognize the strains on its employees while experiencing rapid increases in production volume.

"People never open up to you unless you open up first," Inoue said. "I hope to have honest dialogue with Daihatsu's employees by actively communicating with them."

The new Toyota-led management reflects a historical trend of appointing Toyota executives as presidents of Daihatsu, including Okudaira, who took up the top role in 2017.

"We will reform the management, corporate culture and manufacturing so that similar problems will not happen again," Inoue said.

Masahiro Inoue, head of Toyota Motor Corp.'s operations in the Latin America and Caribbean region, attends a press conference in Tokyo on Feb. 13, 2024, after being appointed as Daihatsu Motor Co.'s new president. (Kyodo) ==Kyodo

On task sharing between the two companies, Toyota said Daihatsu will focus on its mainstay mini-vehicle business and the parent company will help the unit in its vehicle development and production operations for overseas markets, with the aim of reducing its workload.

The management reshuffle follows Daihatsu's submission last week to Japan's transport ministry of measures to prevent the recurrence of similar misconduct. The measures include lengthening the lead time for vehicle development by 1.4 times and increasing the number of testing staff sevenfold.

Toyota Chairman Akio Toyoda last month vowed to lead efforts to reorganize operations at the Toyota group.

Daihatsu in December admitted to safety test rigging for most of its models, which a third-party investigation found dated back as far as 1989. The panel blamed "an extremely tight and rigid development schedule" for the misconduct.

That was followed by another scandal at Toyota Industries Corp., a Toyota affiliate, which said last month it fabricated data on the torque output of diesel engines it makes and supplies to Toyota. It resulted in a partial halt of shipments of Toyota vehicles.

Hino Motors Ltd., Toyota's truck-making subsidiary, admitted in March 2022 to submitting fraudulent emissions and fuel economy data to transport authorities.

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