Section 2. Toyota Motor Co., Ltd., Toyota Motor Sales Co., Ltd. to Form Toyota Motor Corporation
Item 2. A New Toyota is Born
Merger of Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd.
The signing of the memorandum of understanding on the merger of Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd.1took place on January 25, 1982. Among the main points of the memorandum were that the two companies were to merge on an equal footing and that the target date for the merger was to be July 1, 1982.
At a press conference after the signing, President Eiji Toyoda of Toyota Motor Co., Ltd. and President Shoichiro Toyoda of Toyota Motor Sales Co., Ltd. issued the following statement on the significance of the merger:
To adapt to the dramatic changes of the 1980s and to further consolidate the position that Toyota has built up over the years, now more than ever we need to take a more holistic and flexible approach to exploiting the functions of production and sales, which are two sides of a coin. To do so, we need to further enhance the management of our two companies, which are already effectively in the process of integrating, unite the systems of the two companies to speed up decision-making, make more effective use of human resources, and invest funds and other economic resources efficiently in the sectors where they are needed. It is essential that we put in place a system to achieve these ends, and our two companies have reached a shared conclusion that merging our two companies is the best method to achieve such.
Only two days later, on January 27, a committee to prepare for the merger chaired by Toyota Motor Co., Ltd. Senior Managing Officer Gentaro Tsuji was set up. The committee had a total of five members including one managing officer and one director from each company. July 1 was set as the date of the merger on the basis that, once the decision was made, the sooner it was implemented the better. There was no time for delay and the committee immediately set about concrete assessment of issues essential to the merger, such as the merger ratio, the amount of capital, the number of directors, organizational structures, and which banks to select as the main banks , and began making arrangements.
For 32 years, since the separation of the sales division to establish Toyota Motor Sales Co., Ltd. in April 1950, the two companies had assumed separate responsibilities for production and sales. In the initial period of their separation, the two companies had agreed to coordinate their operations and in 1962 a framework for meetings by representative directors of both sides was set up to discuss important matters. These efforts allowed concentrated investment of economic resources in their respective areas of activity and enabled Toyota to reach a leading position in the industry. Then, from 1978, Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. began personnel exchanges to encourage an even greater sense of unity and also introduced joint training for newly appointed managerial staff and new employees. However, in order to respond to issues such as the intensifying trade friction and the establishment of production plants overseas, and to make possible speedy decision-making, Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. needed to integrate and rebuild all functions.
Preparations for the merger proceeded at a vigorous pace, and on March 15, 1982, Chairman Masaya Hanai and President Eiji Toyoda from Toyota Motor Co., Ltd. and Chairman Seishi Kato and President Shoichiro Toyoda from Toyota Motor Sales Co., Ltd. attended a ceremony to sign the merger agreement, the main points of which were as follows:
- 1.Toyota Motor Co., Ltd. was to change its trading name on the date of the merger to TOYOTA MOTOR CORPORATION.
- 2.Toyota Motor Co., Ltd. was to increase the number of authorized shares by 2 billion shares (with a value of 100 billion yen) to a total of 6 billion shares (with a value of 300 billion yen).
- 3.The shares of the new company were to be allocated at a ratio of 0.75 of a share of Toyota Motor Co., Ltd. in exchange for one share of Toyota Motor Sales Co., Ltd. However, no new shares were to be allocated for the 210 million shares of Toyota Motor Sales Co., Ltd. held by Toyota Motor Co., Ltd.
On May 13, the two companies held extraordinary general shareholders meetings to approve the merger agreement, which was accepted without amendment. With approval having been granted by the Japan Fair Trade Commission on May 8, all required legal procedures were completed by the merger date of July 1.2
And so, on July 1, 1982, the new Toyota came into being, and Toyota became a single company once again for the first time in 32 years. That morning at 9:30, immediately before the first Board of Directors meeting, all 53 executives, including the corporate auditors gathered at the Head Office to attend the unveiling of the new corporate nameplate. A firm tug on a cord by Eiji Toyoda, president of Toyota Motor Co., Ltd. and Shoichiro Toyoda, president of Toyota Motor Sales Co., Ltd., revealed a mahogany-red plate made of U.S. granite bearing the engraving "Toyota Motor Corporation".
At a Board of Directors meeting that day, Eiji Toyoda was appointed chairman; Shigenobu Yamamoto, executive vice president of the former Toyota Motor Co., Ltd., was appointed vice chairman; and Shoichiro Toyoda was appointed president. At the same time, a system of divisional control by executives of senior managing officer rank and above was introduced and responsibility for the various divisions was decided. The capital of the new company was 120.904 billion yen and the number of employees 56,700.
At a press conference that afternoon, Chairman Eiji Toyoda and President Shoichiro Toyoda announced the following management policy:
- 1.Adopting the motto "Customer First", Toyota Motor Corporation, its dealers and suppliers will unite to deliver attractive products.
- 2.In addition to building a system for annual domestic sales of 2 million units, the new Toyota will also actively implement an overseas strategy from a long-term perspective.
- 3.The benefits derived from the merger will be returned to consumers by providing low-price, quality vehicles.
President Toyoda also stated his commitment to always remembering the "3 C's3" as they worked to create the history of the new Toyota.