Published on April 9th, 2024 | by Subhash Nair


Daihatsu Is Being Re-Formed, Toyota Will Take Over Emerging-Market Compact Car Company

Toyota and Daihatsu rethink their relationship with regards to joint product development.

Last year, one of the biggest automotive scandals involved Toyota and Perodua by way of vehicles engineered by Daihatsu. Now, the investigation into the root cause of the issue is over and a solution has been reached by Toyota and Daihatsu. But before we get into the solution, here’s a summary of what happened:

MIROS crash testing the Toyota Veloz

In a nutshell, a whistle-blower came forward and revealed “procedural irregularities” happening at Daihatsu that compromised the safety ratings of vehicles engineered there that were being re-badged as Peroduas and Toyotas. For context, Daihatsu has been Perodua’s technical partner from the start and over the years, Toyota has been absorbing more and more of Daihatsu and had a kind of joint venture with the called the Emerging-Market Compact Car Company. Following the incident, production and sale of affected models was halted until retesting could be done (except in Malaysia where named Perodua and Toyota models were miraculously unaffected). The models were re-tested and re-certified and an independent investigation into Daihatsu’s practices was put into place.

Solution For Daihatsu

Toyota Daihatsu joint development asean

The investigation found that the root cause of the problems was the Daihatsu placed a burden on its workplaces that exceeded their capacities. Under the existing structure between Toyota and Daihatsu, the Emerging-market Compact Car Company and Emerging-market Compact Car Manufacturing Division (Business and Sales Planning) spanned both organizations. Given that Toyota and Daihatsu are both very different companies in terms of scale and capability, this stretched the resources of Daihatsu too thin and created compromises.

The solution is to take some of these responsibilities away from Daihatsu and treat Daihatsu as a contract manufacturer while Toyota handles just about every aspect of car development. Toyota will also be carrying out business and product management functions. Even in areas related to subcontracting, including resource management and optimization, Daihatsu will have to report to Toyota.

The Emerging-market Compact Car Company will be dissolved. New management is being put in place on the front lines and they are being tasked with restoring sovereignty to the workplace. The new management will determine the future of Daihatsu’s business and structure from the chief officer downward. During the new fiscal year, Daihatsu will have the opportunity to explain their new structure and management direction.


On Toyota’s side, a new entity called Toyota Motor Asia (TMA) will be formed and this will house Toyota Daihatsu Engineering & Manufacturing Co., Ltd (TDEM) and Toyota Motor Asia Pacific Pte Ltd. This will be the Asia regional headquarters for Toyota and will become more self-reliant with an upcoming structural change.


What Does This Mean For ASEAN Cars?

The Toyota-Daihatsu partnership currently defines many ASEAN-exclusive models like the Toyota Veloz/Daihatsu Xenia/Perodua Alza, Toyota Vios/Yaris Ativ, and Toyota Raize/Daihatsu Rocky/Perodua Ativa. It’s clear that Toyota and Daihatsu have created a formula that has benefited both companies to a large extent.

While some will take this change in structure to mean the end of ASEAN-exclusive models and the start of more global models for the region, our take is a bit different. We suspect that there has been a bit of pushback from Toyota customers in the region against the “Daihatsufication” of the brand’s bread and butter products like the Vios. Instead, we will get more products built to the standard of the Corolla Cross and Innova Zenix at Perodua and Daihatsu plants.

We suspect putting Toyota fully in charge of development will lead to a more uniform product line-up and better products for Daihatsu and Perodua and perhaps an even bigger distinguishing factor between the three brands in terms of part selection, quality and pricing.

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Written work on @subhashtag on instagram. Autophiles Malaysia on Youtube.

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