Under the leadership of Chairman Akio Toyoda, Toyota is facing renewed scrutiny, prompting two of its largest shareholders to speak out in discontent. Following a recent report of misconduct regarding inadequate automobile verification testing during an earlier wave of certification violations, Akio Toyoda, great-grandson of Toyota’s founder, has taken up the reins as CEO.
Toyota’s troubles persist, a global leader in the automotive industry that has repeatedly fallen short on its promise of sincere commitment to electrification under Chairman Akio Toyoda, descendant of the company’s founder Sakichi Toyota.
In May 2024, Toyota reinforced its reputation as the world’s worst automaker for climate-related lobbying, retaining its position at the bottom of InfluenceMap’s annual climate policy engagement rankings.
Last week, Toyota and its partners, Subaru and Mazda, announced their commitment to developing cutting-edge internal combustion engines, designed specifically to be compatible with electrification, featuring integrated electric vehicle components. No matter which means.
As Toyota strives to regain ground in the rapidly expanding electric vehicle market, it recently faced a series of complex certification challenges in its home country, Japan. In 2022, Hino Motors, a Toyota Group subsidiary, was accused of falsifying emission certifications. In December of the previous year, Daihatsu, a minicar subsidiary of Toyota, was forced to suspend global shipments following revelations that it had manipulated its side-collision safety assessment tests, prompting recalls for approximately 300,000 vehicles.
In January, Toyota faced intense pressure to suspend global deliveries of 10 models following the discovery that their engines had undergone flawed horsepower and torque testing procedures. Toyota Chairman Akio Toyoda convened an emergency meeting with the CEOs of all 17 manufacturing affiliates within the group, emphasizing his personal oversight of testing procedures to prevent any future violations from occurring again?
Months after his predecessor’s debacle, the chairman’s own strategy finds itself at the mercy of a similar maelstrom, prompting investors to clamor for Toyoda’s resignation.
Investors urge rejection of Toyota’s CEO
According to a recent report, Toyota Motor has been forced to suspend deliveries of at least three models due to inaccurate vehicle inspection data, including safety evaluations. Mazda, Honda, Yamaha, and Suzuki join the list of manufacturers sanctioned by Japan’s Ministry of Transportation after a recent announcement revealed additional violations related to the initial infractions.
Toyota’s Chairman Akio Toyoda expressed regret at a press conference following the Ministry’s announcement of verification violations, stating that among tens of thousands of tests conducted by the Japanese automaker, only six instances were discovered – at least thus far.
Toyota’s president, Toyoda, contended that many of the reported problems stemmed from stricter security testing protocols mandated by Japan’s Ministry, exceeding typical certification requirements. Notwithstanding his tenure exceeding a decade, Toyota’s chairman expressed a tone of remorse.
Automobiles have been manufactured and purchased without undergoing the proper certification process. I’m really sorry.
Although Toyota’s self-driving cars remain safe to operate, the company failed to obtain necessary waivers from Japan’s Ministry of Transportation prior to the issues emerging, and also neglected to conduct re-tests in compliance with regulatory specifications.
At present’s controversy is merely the newest surrounding Toyota and Chairman Toyoda and seems to be the final straw for not less than two main shareholder proxy teams: Glass Lewis & Co. and Institutional Shareholders Companies (ISS).
The teams have been rallying behind Chairman Toyoda’s reappointment to the board, but their enthusiasm is tempered by lingering distrust following the earlier certification scandals. Critics argue that Toyota’s chief executive should bear personal responsibility for these public embarrassments and the company culture that enabled them. Per ISS’ June place paper:
As a result of recent certification irregularities plaguing Toyota Motor, investors are advised to support Chairman Akio Toyoda’s re-election. Company culture can emerge organically from the top down, rather than being imposed from above. When no changes are being implemented on the director’s stage, it raises concerns about the corporation’s process efficiency.
Toyota stated that the affected vehicles do not breach the regulatory threshold for emissions, thus no need exists to prohibit their use in Europe and Japan, as they operate within acceptable efficiency parameters. Despite cooperation with the Ministry, Toyota has temporarily suspended outgoing deliveries.
As the annual shareholders meeting approaches, speculation swirls around the future of Toyota’s Chairman Akio Toyoda, with his role set to be a prime topic of discussion. Keep tuned.
