How a century-old engine maker became a global giant’s secret compact car specialist
Born from a university project to power stationary plants, Daihatsu evolved into a master of the kei car. Now a wholly-owned subsidiary of Toyota, the brand has navigated decades of global expansion, strategic retreats, and recent safety scandals to remain a vital, if complex, cog in the automotive world.
Founded in 1907 as Hatsudoki Seizo Co., Ltd, the company originally focused on steam engines for the Japanese National Railways. It was not until 1951 that it was officially incorporated as Daihatsu Motor Co., Ltd. The name itself is a linguistic hybrid, combining the first kanji of Osaka with the term for engine manufacture. By the 1930s, the firm pivoted toward three-wheeled vehicles, setting the stage for its eventual dominance in Japan’s unique kei car segment, where 70 percent of its drivers are female.
Daihatsu’s relationship with Toyota began in 1967, a move encouraged by the Japanese government to open the domestic market. Toyota gradually increased its stake, acquiring 33.4 percent in 1995 and 51.2 percent by 1998, before finally making Daihatsu a wholly-owned subsidiary in 2016. This integration allowed Daihatsu to focus on compact vehicle planning, even as it faced significant international headwinds. The company famously withdrew from the US market in 1992 and exited Europe by 2013, citing the persistently strong yen and shifting market preferences.
Despite its technical prowess, the company faced a major crisis in 2023. Investigations revealed that Daihatsu had falsified safety test results for 88,000 vehicles, with misconduct involving airbag control units and impact testing dating back to 1989. The scandal forced a temporary halt to shipments of 64 models and a shutdown of all four Japanese manufacturing plants. Today, while its branding has been subsumed into Toyota’s wider Asian operations, Daihatsu remains a critical player in emerging markets like Indonesia and Malaysia, where it continues to leverage its expertise in small-car architecture.
Source: Daihatsu
