The Japanese transport ministry has commenced an investigation at Toyota Motor's headquarters, uncovering irregularities in the company's vehicle certification applications. This probe, ignited by a safety test scandal at Toyota's Daihatsu division, has led to a comprehensive review of certification processes across the Japanese auto industry.

Toyota, along with Mazda, Honda, Suzuki, and Yamaha Motor, has acknowledged submitting incorrect or manipulated data in their certification applications. Toyota, Japan's leading automaker, was the first to undergo inspection, with ministry officials flagging issues earlier this week. The other automakers are also slated for inspection soon.

Market analysts suggest that while Toyota may face increased pressure to enhance its governance, the impact on sales could be minimal. James Hong, head of mobility research at Macquarie, stated, "Sales damage in Japan will be manageable or quite small because Japanese consumers have limited alternatives."

Toyota Chairman Akio Toyoda is likely to come under more scrutiny. Proxy advisory firms Institutional Shareholder Services and Glass Lewis have advised shareholders to vote against Toyoda’s re-election at the forthcoming annual general meeting, though he is still expected to retain his seat.

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Despite suspending sales of some models, Toyota and Mazda have assured that there are no performance issues violating regulations, allowing customers to continue using their cars. Toyota disclosed instances of non-compliance, including incomplete collision damage assessments and conducting tests under conditions stricter than required by the ministry.

Chairman Toyoda issued a heartfelt apology, stating, "On January 26 this year, we received instructions from Japan's Ministry of Land, Infrastructure, Transport and Tourism to conduct an investigation on type designation applications, which we followed. The investigation is still ongoing, but it identified that seven models, including those that have already ended production since 2014, were tested using methods that differ from the standards defined by the national authorities, and we reported this to the Ministry on May 31. This matter involves two companies, Toyota Motor Corporation and Toyota Motor East Japan. As the person responsible for the Toyota Group, I would like to extend my sincere apologies to our customers, car enthusiasts, and all stakeholders for this issue, following Hino, Daihatsu, and Toyota Industries Corporation. I am truly sorry."

Past safety test scandals have caused production halts in Toyota's group companies. The current revelations could disrupt production among subcontractors and smaller companies in Japan's vast automotive supply chain, potentially impacting the economy. Toshihiro Nagahama, executive chief economist at Dai-ichi Life Research Institute, remarked, "The impact can't be ignored," highlighting possible economic repercussions if disruptions continue and consumer confidence wanes.

Since last Friday, shares in Toyota, Honda, and Mazda have dropped nearly 3%, Yamaha's shares have decreased by 1.3%, while Suzuki's shares have remained stable.

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