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Toyota (TM) Halts Production of 3 Models Over Testing Issues

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Toyota’s (TM - Free Report) investigation into its testing and certification methods revealed wrongdoing in relation to seven different models. Two years ago, the company identified similar issues at Toyota Group companies, including Hino Motors and Daihatsu, that led to an internal investigation. The company made an apology for the issue concerning the certification tests.

Following the investigation, Toyota halted shipments and suspended the production of three models, including the Corolla Fielder, Axio and Yaris Cross. The other four models that were part of the erroneous testing were Crown, Isis, Sienta and RX, all of which have been discontinued.

Toyota emphasized that there are no safety concerns with the affected vehicles and they comply with all relevant laws and regulations.

The investigation found that inadequate or outdated data was used in collision tests, and errors were made in testing airbag inflation and rear-seat damage in crashes. Falsifications were also found in engine power tests.

In January, the government of Japan initiated an investigation into Toyota. The issue will not have any impact on Toyota’s overseas production. TM currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Toyota’s Japan-based rival Mazda Motor Corporation (MZDAY - Free Report) also reported irregularities in its certification testing and halted production of the Roadster and Mazda 2. Per the company, unsuitable engine control software was used in the tests. It also found issues with crash tests on three discontinued models but assured that these issues do not affect its vehicle safety.

Similarly, Honda Motor Co. (HMC - Free Report) issued an apology for improper tests, including those on noise levels and torque, affecting older versions of models such as the Accord, Odyssey, and Fit. However, it confirmed that the vehicles’ safety remains uncompromised.

Per Toyota, the company may have got overly enthusiastic about getting the tests done and shortened them due to rising model varieties.   

Per Toyoda, the grandson of the company’s founder, certain certification standards could be excessively strict, leading to variations in testing protocols around the world. However, he never backed the violations.

Every year, Toyota sells more than 10 million vehicles worldwide.

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