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March 7, 2022

Hino share price plunges following engine performance probe

Falsified emissions and fuel economy data led to sales stop.

By Graeme Roberts

Hino Motors announced it had suspended sales of a significant number of medium- and heavy-duty vehicle models in Japan after admitting to having submitted fraudulent performance data to obtain emissions and fuel economy certifications.

The Japanese commercial vehicle manufacturer had reported its decision to suspend sales of vehicles fitted with three key engine models to the country’s Ministry of Land, Infrastructure, Transport and Tourism and Ministry of Economy, Trade and Industry. The company also said the engines in question, the A05C (HC-SCR), A09C and E13C model, also had performance problems.

The company also said it had identified a problem concerning the fuel economy performance of its N04C (Urea-SCR) engine, but that it had so far not identified any misconduct in relation to its certification.

Hino said as much as 35% of its current domestic sales could be subject to the suspension. The company’s share price had plunged by 28% since the emissions scandal was announced on Friday.

Fraudulent data was said to have been used since 2016 or earlier and that at least 115,000 vehicles were reported to have been sold so far fitted with engines certified by the government using false data, including vehicles sold under the Toyota and Isuzu brands.

Hino said it deeply apologised for any inconvenience caused to its customers, shareholders, investors and other stakeholders and added it was still investigating the impact of these matters on its earnings outlook and will disclose any updates as they become available.

Hino confirmed it first identified potential issues regarding certification testing to determine the emissions performance of on-road engines for the North American market. It then voluntarily launched an investigation led by outside counsel and provided an initial report of its findings to the relevant regulators. The US Department of Justice subsequently commenced its own investigation.

Hino then expanded the scope of the investigation to include a review of emissions certification procedures for engines certified to Japanese regulatory standards. In conjunction with that investigation, Hino had also conducted verification testing of engine performance including emissions and fuel economy.

Hino subsequently identified misconduct related to the certification procedures for multiple engine models with regard to 2016 emissions regulations and fuel economy standards in Japan and found problems in engine performance.

Hino president Satoshi Ogiso said at a news conference “employees felt pressured to follow strict schedules and meet numerical targets”.

Hino had already begun working on improving its governance system, including organisational restructuring and commencing a review of internal processes and procedures. In addition, it would proceed to promote the compliance awareness of each employee.

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