Investor Calls for Overhaul at Toyota’s Largest Subsidiary Amid Data Scandals

A significant investor in Toyota Industries Corporation (TIC), the leading global manufacturer of forklift trucks with additional interests in automobiles, textiles, and electronics, has pointed to the complex structure of the Toyota Group as a contributing factor to recent data falsification scandals. GMO, managing assets worth $60 billion and holding shares in TIC for over a decade, has issued a call for sweeping governance reforms and the dissolution of “corrosive” cross-shareholdings within the group.

The investor’s concerns were detailed in a letter, where GMO criticized TIC for a culture of compliance that fails to challenge the overarching demands of the Toyota Group, potentially leading to the compromised integrity of engine data for vehicles and machinery. Drew Edwards, GMO’s head of Japan equities, highlighted the broader issue of inadequate corporate governance and culture across the Toyota Group, emphasizing the need for adherence to guidelines aimed at enhancing corporate governance in Japan.

This call for change comes in the wake of admissions by TIC and other Toyota subsidiaries, including Hino Motors and Daihatsu, regarding widespread discrepancies in testing data. Toyota’s chairman, Akio Toyoda, has accepted full responsibility and outlined steps to address these issues, including personal attendance at annual meetings to oversee the implementation of corrective measures.

Further action was seen with Toyota’s announcement of a leadership reshuffle at Daihatsu in response to its own data scandal. GMO, holding a stake of less than 1% in TIC, advocates for the immediate establishment of an independent leadership and board of directors at TIC to foster a culture of transparency and accountability.

The discussion extends to the strategic management of cross-shareholdings within the Toyota Group, with calls for unwinding these to prevent undue protection of management from critique and to align with regulatory demands for improved corporate governance and valuation. The intricate ownership structure between TIC and Toyota Motor, alongside other subsidiaries, remains a point of speculation and debate among analysts and investors.

While Toyota has made efforts to adjust its cross-shareholding strategy to support investment in electric vehicles and technology, critics like GMO argue that these measures fall short of the necessary governance reforms. However, some investors maintain confidence in Toyota’s historical performance and management strategy, suggesting a cautious approach to structural changes.

Representatives from GMO, TIC, and Toyota Motor have not provided comments on the matter.


  • Sam

    Sam focuses mainly on researching and writing the growing database of Car Facts articles on Garage Dreams, as well as creating interesting list content. He is particularly enthusiastic about JDM cars, although has also owned numerous European vehicles in the past. Currently drives a 3rd generation Suzuki Swift Sport, and a Volkswagen Touareg (mainly kept for taking his border collie out to the hills to go walking)

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