Toyota shareholders worry about distracted chairman

Posted on June 20, 2024Comments Off on Toyota shareholders worry about distracted chairman

Akio Toyoda may have retained his role as Toyota chairman, but the executive’s support continues to fall amid recent scandals and perception among some shareholders that he’s too focused on the brand’s motorsport ventures.

As reported earlier this week, Toyoda-san was re-elected as Toyota chairman, having been appointed to the role in April 2023 following an almost 14-year stint as president of the company his grandfather founded.

However, his re-election wasn’t a smooth process, with his leadership questioned in the lead-up following multiple scandals within the past two years, which have been extensively reported.

Reuters reports Toyoda-san’s approval rating has now dropped to 72 per cent, well down on the 96 per cent figure in 2022 and 85 per cent last year.

By comparison, Koji Sato – who succeeded Toyoda-san in the role of Toyota CEO in April 2023 – has an approval rating of 95 per cent, according to Japanese publication NHK.

Though reports have largely centred around Toyota’s recent scandals as reasons why Toyoda-san’s approval rating has slipped, one particular concern raised by shareholders prior to the vote shows there’s concern about the executive’s commitment to the brand.

Japanese automotive outlet Best Car reports one shareholder said they believe Toyota’s ‘Master Driver’ is too distracted by the brand’s motorsport ventures through the Gazoo Racing brand championed by Toyoda-san.

“I was shocked by the news of the certification fraud. I think there is ineffective internal control and a lack of governance,” the unnamed shareholder reportedly said during a question and answer session. 

“I think the underlying reason is that they are spending too much time on various initiatives, including motorsports. I think the motorsports initiatives have become the chairman’s hobby.”

Toyoda-san’s love for motorsport is no secret, having been behind the push to establish Toyota’s Gazoo Racing (GR) performance division which not only develops road cars such as the GR86, GR Supra, GR Yaris and GR Corolla, but goes racing across multiple championships.

Under the Gazoo Racing banner, Tyota has won five drivers’ and four manufacturers’ titles in the World Rally Championship since 2018, and five World Endurance Championships and five 24 Hours of Le Mans endurance races.

The performance arm is also used as a testbed for its road-going vehicles, which the previously conservative Toyota has been celebrated for embracing in recent years.

Despite his love for motorsport being open and celebrated, Toyoda-san still races under the ‘Morizo’ moniker he used when trying to hide his identity before Toyota threw its support behind his racing ventures.

While some shareholders appear to be worried about the effect of Toyota’s motorsport focus, Toyoda-san’s re-election with majority support shows how the global performance of the brand is still important to those who invest in it.

Last year, Toyota set an automotive industry record by selling 11,233,039 vehicles, becoming the first carmaker to surpass the 11-million sales mark in a calendar year.

Though it also reported record profits in the 2024 Japanese fiscal year (April 1, 2023 to March 31, 2024) – having been 5.35 trillion yen ($52.3 billion) in the black – Toyota warned its profits fall by as much as 20 per cent this financial year, largely due to investments in electrification and artificial intelligence (AI).

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