TOYOTA Motor Company chairman Akio Toyoda has proposed a $A65.6 billion buyout of one of the company’s biggest shareholders, Toyota Industries, that will bring one of its key shareholders under the wing of the automotive business. 

In a filing to the Tokyo Stock Exchange, Toyota Motor Company (TMC) said it is considering partial investment in the company as part of a proposal to privatise Toyota Industries. 

Toyota Industries issued a separate notice to the stock exchange on the same day, confirming it had received several proposals, including one to take the company private through a special purpose company. 

But Toyota Industries denied it had been approached by the Toyoda family or a Toyota Group company. Both TMC and Toyota Industries said no decisions have been made.Toyota Industries was in hot water last year over doubtful performance levels declared for diesel engines it makes for Toyota.

The proposal has led to Toyota Industries forming a special committee and hiring advisers to examine the offer. 

Mr Toyoda, the grandson of the car-maker’s founder (and great grandson of the founder of the Toyoda manufacturing empire), is said to be seeking greater control for TMC over suppliers, investments and some allied companies, including rival automotive businesses.

Toyota Industries is a major parts supplier that manufactures a diverse range of components and products including car engines, stamping dies, electronics, and weaving machines. 

In automotive, it also assembles the Toyota RAV4 for TMC, makes Toyota forklifts and diesel engines, EV components including motors and batteries for EVs and hybrids.

Japan’s complex cross-shareholding of businesses, which almost totally eliminates takeovers of Japanese companies by foreign entities, is reflected in TMC’s 24 per cent ownership of Toyota Industries and vice-versa, Toyota Industries’ 7.5 per cent stake in TMC.

Respected industry newspaper Automotive News (AN) said it believes that aside from grouping Toyota’s key suppliers under one parent, it will also give TMC more control.

Akio Toyoda

This is now seen as being critical to TMC because it was Toyota Industries’ alleged misrepresentations over diesel engine emissions that triggered a crisis in 2024.

AN said that in January 2024, TMC was forced to suspend shipments of 10 nameplates after it was found Toyota Industries incorrectly certified the horsepower output of some engines.

TMC halted shipments of several popular vehicles with the engines, including the Toyota HiAce van, Hilux and Fortuner SUVs, and Land Cruiser 300 and Lexus LX 500d SUVs.

AN said that the suspensions “were another embarrassment for TMC, on the heels of similar certification problems at its Daihatsu minicar subsidiary and Hino truck unit.”“Months later, it was also revealed that Toyota Motor suffered similar lapses in its own vehicle certification.

“The rash of problems across Toyota Group companies spurred an investor backlash and calls for Mr Toyoda’s resignation at the annual shareholders meeting, though he easily won reappointment.”

It said that in January 2024, Mr Toyoda summoned the leaders of the 17 group affiliates to a meeting in Nagoya and outlined a new ‘global vision’ to refocus their priorities. 

According to the AN report, Mr Toyoda told them that the Toyota Group had lost sight of its founding principles and urged a ‘back-to-basics’ shift including concentrating more on product.

Mr Toyoda and TMC then spent much of 2024 dealing with the aftermath of the certification problems and undertook several countermeasures and improvements aimed at improving accountability, processes and governance.

Toyota Industries was founded in 1926 by Akio Toyoda’s great-grandfather Sakichi Toyoda. It was originally named Toyoda Automatic Loom Works. It changed its name to Toyota Industries Corporation in 2001 to reflect the vast array of businesses it had branched into over the decades.