Toyo Tire & Rubber Co. said an internal probe found that it failed to test the quality of some rubber products and data was manipulated in other cases.
The products, including those used for ships and trains, were supplied to 18 customers over a period of 10 years, the tire-maker said Wednesday.
The company's shares dropped the most in more than four years after the Nikkei newspaper reported the company had failed to test some products.
Toyo's previous chairman and president announced their resignations in June following a similar incident in which the company admitted to selling substandard rubber products as quake-resistance components for buildings. The testing failure announced Wednesday was discovered after internal compliance training, Toyo said in a statement.
The company has yet to collect enough information to estimate the effect on its earnings, according to its statement.
The shares plummeted 13 percent, the most since March 2011, at the close in Tokyo.