Toyota clan needs to shore up its influence

Kobe Steel

15/05/2025 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, May 15 (Reuters Breakingviews) - Toyota Motor’s 7203.T founding family no longer has a tight grip on the wheel. Akio Toyoda, whose grandfather established the world’s largest carmaker, owns less than 1% of the $250 billion marque he chairs. Now a corporate overhaul in Japan is weakening the web of cross-shareholdings he relies on to wield influence. A buyout of a related company, Toyota Industries 6201.T, would help the clan to shore up its position.

        So-called "cross-shareholdings" are rife in Japan. These are held by companies to maintain and strengthen relationships with other businesses, and offer a support base for Toyoda. Toyota group companies plus partners like Suzuki Motor 7269.T and Mazda Motor 7261.T account for around 17% of Toyota Motor’s outstanding shares, excluding treasury stock, LSEG data shows. Suppliers and others such as Kobe Steel 5406.T and KDDI 9433.T, in which Toyota has invested, also hold stakes.

But these setups are falling out of favour: Japan’s Financial Services Agency is demanding more disclosure on these holdings; insurers and companies are under pressure to trim such positions too. Toyota Motor has reduced the number of these holdings to 126 as of September, from 228 in 2020. It complements a shareholder value push championed by bourse operator Japan Exchange Group.

As these arrangements unravel, Toyoda’s influence is diminishing. He's feeling shareholder heat, too. Votes in favour of his re-election fell to 72% at last year’s annual general meeting: without friendly backers, his rating could have slid closer to the 50% threshold required to keep the role. Only 34% of overseas institutional investors voted in his favour, as Toyoda himself noted at the time.

While some powerful Asian industrialists do own small stakes in the crown jewels of their empires, Toyoda's miniscule direct stake in the carmaker is even lower than the 1.63% stake Jay Y. Lee leverages to hold sway over South Korea's $266 billion Samsung Electronics 005930.KS.

Enter the 6 trillion yen ($42 billion) plan, first reported by Bloomberg, for Toyoda to buy out Toyota Industries. Toyota Motors may also back a deal: it's exploring a partial investment in Toyota Industries, which owns 9% of the carmaker.

That shareholding, worth 3.4 trillion yen, about $24 billion, offers a key to resolving Toyoda's problems. It equates to about 65% of Toyota Industries’ market capitalisation. Add in stakes it owns in 27 other companies, and there’s precious little value ascribed to its own operations.

If Toyoda wants to reinforce his influence with greater ownership, the buyout for Toyota Industries could turn into a real battle.

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CONTEXT NEWS

Toyota Industries is considering “all possibilities” to enhance shareholder value and has received “various proposals” such as going private through a special purpose company, the company said in a filing on April 26.

Toyota Motor is considering investing in a privatisation of Toyota Industries, the carmaker said in a separate filing on April 26.

A day earlier, Bloomberg reported that Toyota Motor Chair Akio Toyoda had proposed a buyout of Toyota Industries that would value the company at 6 trillion yen ($42 billion), citing unnamed sources.

Graphic: Toyota companies and partners hold nearly a fifth of Toyota Motor stock https://reut.rs/4k5W51t

 (Editing by Una Galani and Ujjaini Dutta)

 ((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))