"A disgrace to Japan" - President Akio Toyoda expels Hino from commercial vehicle tie-up

Earlier this month, it was revealed that Hino had falsified emissions data on some of its truck engines since 2003. However, unlike Volkswagen’s Dieselgate, the matter was revealed by the company’s own audit.

Earlier in March this year, Hino had suspended sales of some of medium- and heavy-duty trucks in Japan after the company found that fraudulent emissions testing data for certain engines had been submitted to the Japanese government.

Following the revelation, the company had put together an investigative committee headed by former head prosecutor for the Osaka district, Kazuo Sakakibara. The committee found out that the cheating had started since 2003, nearly a decade earlier than suspected.

The cause of the cheating was very similar to Volkswagen’s Dieselgate – engineers were coerced into doing something illegal, out of fear for their job’s safety.

"The organisation has become an ill-organized one where people are unable to say what they cannot do," former prosecutor and committee lead Sakakibara told Reuters.

However, unlike Volkswagen’s case, the probe committee found no evidence to suggest that Hino’s management were aware of the misconduct, and that it was limited to the powertrain team. At least that’s what the committee says.

“The division requires high expertise, which hindered personnel changes and allowed misconduct to continue,” said committee member Makoto Shimamoto.

"Misconducts have been passed down within the unit, but there were no monitoring functions in other units, which is a major issue," he said. "Even if there was no personnel movement within the organization, these issues should have been found."

Ironically, Hino is now lead by Satoshi Ogiso, better known as the father of the Toyota Prius. Ogiso was sent from Toyota to take over the role of President at Hino, which Toyota has a 50.1 percent stake, last year.

Ogiso said the company had put quality, compliance and talent development on the backburner as it sought to expand its scale and volume starting around 2000.

As a result, numerical targets, such as product development schedules and fuel efficiency, were prioritised over working according to proper processes, he said.

Hino has been a subsidiary of Toyota since 2001.

Ogiso also said that Toyota President Akio Toyoda had contacted him, telling him that Hino’s misconduct had betrayed the trust of all shareholders.

Today, President Toyoda announced that he is expelling Hino from the ‘Team Japan’ commercial vehicles partnership CJPT (Commercial Japan Partnership Technologies Corporation), which also counts Isuzu, Suzuki, and Daihatsu as members.

The typically polite President Toyoda chose very strong words, going as far as calling Hino a company that cannot be recognized as part of Japan's 5.5 million people-strong automotive industry.

CJPT was established in 2021 with the goal of pulling together resources for Japanese truck makers, including kei minitruck makers like Suzuki and Daihatsu – which sells more than half of all commercial vehicles sold in Japan – to develop solutions for electrified and connected commercial vehicles.

On Hino’s expulsion from CJPT, President Akio Toyoda said:

"As the parent company and a shareholder of Hino, we are extremely disappointed with the company's misconduct in relation to the certification testing, which has greatly undermined the trust of our customers and all other stakeholders. Hino has committed misconduct in engine certification for a long period of time, and the company is in a situation where it is not to be recognized as one of the 5.5 million individuals in the Japanese automotive industry.

“CJPT is a project to build the future together, based on Japan's CASE technology. As of now, we believe that Hino's participation will cause inconvenience to stakeholders, and we have decided that it is appropriate to expel Hino from CJPT. This conclusion was reached after discussions with the companies involved. We will continue to work with our partners on the project to solve the issues facing the transportation industry and contribute to achieving a carbon neutral society."

As result of the expulsion, Hino will be excluded from all agreements, including the joint planning agreement, and Hino's equity stake (10%) in CJPT will be transferred to Toyota.

To be clear, Hino will still be part of the Toyota Motor group, and Toyota's 50.1 percent stake in Hino will remain unchanged. What has changed is Hino's participation in CJPT. 

Of course, it could also be said the the move is just a pre-emptive smoke screen, because Hino will still benefit from CJPT via Toyota.

Hino's move to recruit an ex-prosecutor to head its probe committee is akin to an Asian child who knows he has messed up, and instead of waiting for the whopping, is presenting the father with a cane, head bowed. It has worked to placate the Japanese public and investors community, and so far, the fallout from USA seems controlled, thus saving the company from the problems faced by Volkswagen, whose denial and use of combative legal measures angered prosecutors further.