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Toyota adds another automaker to its ‘friends’ list

The Yomiuri Shimbun

Yomiuri Shimbun file photo / Toyota Motor Corp. has formed partnerships with companies in other industries, including SoftBank Corp. in October 2018.

The Yomiuri Shimbun Toyota Motor Corp. has added another carmaker to its list of “friends,” expanding a strategy designed to help the company prepare for an era of profound transformation.

Toyota and Suzuki Motor Corp. announced Wednesday they will form a capital tie-up, a move that sent both automakers’ share prices upward Thursday on the Tokyo Stock Exchange, as investors responded positively to their planned cooperation on autonomous driving technologies.

Toyota also plans to push ahead with its strategy of “creating friends” by working closely with companies that share its vision and objectives, regardless of their size or the industry in which they operate.

Suzuki’s share price touched ¥4,245 at one point Thursday, up ¥160 from Wednesday’s closing price. Toyota shares also were up by as much as ¥43.

Chief Cabinet Secretary Yoshihide Suga indicated the government welcomed the automakers’ decision to form a tie-up. While acknowledging “this was a management decision made by each of these companies,” Suga said at a press conference Thursday it was “extremely important” to craft strategies from the perspective of maintaining and improving competitiveness.

The favorable reaction to Wednesday’s announcement reflects the fact that at a time when massive amounts of money are needed to develop electric vehicles and autonomous driving vehicle technologies, a strategy to pursue the benefits of scale appears essential.

Toyota’s global new vehicle sales, including those of Daihatsu Motor Co. and Hino Motors Ltd., which are both under Toyota’s umbrella, stood at about 10.59 million units in 2018, slightly below the about 10.83 million vehicles sold by German rival Volkswagen AG. However, Toyota’s tally climbs to about 16.60 million units if vehicles sold by Subaru Corp. and Mazda Motor Corp. — with which Toyota has capital tie-ups — and new tie-up partner Suzuki are included. This would be about 1.5 times the number that VW sells.

A Toyota executive on Thursday emphasized the importance of an expansion of scale. “The production of batteries [needed for electric vehicles] is not sufficient to supply every automaker. To survive, it’s necessary to become a selected company,” the executive said.

Willing to share

The strategy Toyota has followed in recent years has consisted of not simply using “capital logic” to take a stake of more than 50 percent to bring a company under its umbrella, but rather opting for flexible tie-ups through business partnerships and smaller investments.

At a press conference in May, Toyota President Akio Toyoda indicated he planned to have the automaker cooperate with more companies. “Going forward, ‘creating friends’ will become a key concept,” Toyoda said. “Without clinging to go-it-alone development, [Toyota will] develop together with those who share the same aspirations.”

Toyota has certainly heeded these words in recent years. As well as working with other automakers, Toyota established joint ventures with SoftBank Corp. and Panasonic Corp. Toyota also has invested in companies including Uber Technologies Inc., a U.S. ridesharing service company, and Singapore-based ride-hailing app operator Grab Holdings Inc.

This has been called an era of major transformation that happens once in a century. In a wide range of competitive fields, independent development devours massive sums of money. Linking up with additional companies and sharing these costs makes it possible to tackle many problems.

IT giants, such as U.S. companies Google LLC and Apple Inc., also are joining the development of next-generation technologies. Toyota likely will ramp up its “creating friends” strategy as it scraps for survival in the rapidly changing auto industry.

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