Toyota, the renowned Japanese car manufacturer, has been hit by a severe scandal, resulting in a staggering $15 billion loss in Market Value.
Last week, Toyota and Mazda were forced to halt the logistical delivery and fabrication of models 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. This has sent shockwaves through the industry, plummeting Toyota’s shares and marking a tumultuous week for the car manufacturer.
Toyota wasn’t the only company to suffer; fellow Japanese automotive rivals Honda, Mazda, Suzuki, and Yamaha also recorded losses.
Toyota’s shares have sharply dipped, reflecting market volatility
The Transport Ministry of Japan found irregularities in certain vehicles’ recorded Model Certification Applications. The shock report by the MLIT involves two companies, Toyota Motor Corporation and Toyota Motor East Japan.
Chairman Akio Toyoda, the company’s key figure, has proactively addressed the concerns raised by the MLIT and consumers. He stated, “The investigation is still ongoing, but it identified that seven models, including those that have already ended production since 2014, were tested using methods that differ from the standards defined by the national authorities, and we reported this to the Ministry on May 31.”
Toyota’s annual general meeting is coming up later this month, so the company is on edge and keen to quell fires. Glass Lewis, the influential proxy firm, has been vocal that both Vice Chairman Shigeru Hayakawa and Chairman Toyoda not be re-elected to the board due to this issue and others across their tenure.
Chairman Toyoda acts proactively
The Chairman has taken full responsibility for the issues and reassured investors that he will go to the “genba.” A 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 floor.”
He said, “I intend to extend our efforts throughout the entire Group and restore authority to the genba to create a solid corporate culture that makes ever-better cars. These efforts will need to be done steadily and will take time, but I will go to the genba myself and take responsibility for their progress. We appreciate your kind attention.”
Toyota will be banking that the hands-on effort will help usher the falling value slightly higher. Chairman Toyoda also hopes his proactive handling of the situation will earn him the favor of the onlooking board and investors ahead of the reporting period later this month.
Image: Ideogram.
