Toyota reports $15 billion in lost market value

Toyota, the popular Japanese car manufacturer, has been hit by a major scandal, resulting in a staggering loss of $15 billion in market value.

Last week, Toyota and Mazda were forced to halt logistics distribution and model manufacturing due to an ongoing investigation by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT).

The company lost 2.45 trillion Japanese yen ($15.62 billion) to the investigation. That sent shockwaves through the industry, sending Toyota shares lower and marking a tumultuous week for the carmaker.

Toyota was not the only company to suffer; Other Japanese automobile rivals Honda, Mazda, Suzuki and Yamaha also lost.

Toyota shares are down sharply, reflecting market volatility

Japan’s Ministry of Transport found irregularities in the registered model certification applications of certain vehicles. The companion report from MLIT involves two companies, Toyota Motor Corporation and Toyota Motor East Japan.

Chairman Akio Toyoda, the company’s leading figure, has proactively addressed concerns raised by MLIT and consumers. He stated, “The investigation is still ongoing, but it has identified that seven models, including those that have already finished production since 2014, were tested using methods that differ from the standards set by national authorities, and we reported this in Minister on May 31.”

Toyota’s annual general meeting will be held later this month, so the company is on edge and eager to put out the fires. Glass Lewis, the influential representation firm, has been vocal that both Vice Chairman Shigeru Hayakawa and Chairman Toyoda should not seek re-election to the board because of this issue and others during their tenure.

Chairman Toyoda is proactive

The chairman has taken full responsibility for the issues and has assured the investors that he will go to “genba”. Genba is a Japanese saying that refers to the location or scene of an issue or event. In manufacturing in Japan, this literally means “shop” or “factory shop”.

He said, “I intend to expand our efforts across the Group and restore authority at Genba to create a solid corporate culture that makes better and better cars. These efforts will have to be sustained and they take time, but I will go to the genba myself and take responsibility for their progress. We appreciate your kind attention.”

Toyota will believe the practical effort will help drive the value down slightly higher. Chairman Toyoda also hopes his proactive handling of the situation will win him favor with the board and investors going forward ahead of the reporting period later this month.

Image: Ideogram.

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