Section 7. The Functions that Supported Globalization

Item 1. A Wave of Restructuring and a Push for Change in Awareness

Promotion of collaboration with Japanese automakers

A wave of restructuring swept across the global automotive industry in the late 1990s, triggered by increasingly fierce global competition and the burden of the massive investments required for development of the environmental technology that would become essential in the 21st century.

Firstly, Germany's Daimler-Benz AG (now Daimler AG) merged with Chrysler of the United States in 1998, forming DaimlerChrysler AG. Following this, in 1999 the French automaker Renault S.A. and Japan's Nissan Motor Co., Ltd. formed a capital alliance, and in 2000 Japan's Fuji Heavy Industries Ltd. and Mitsubishi Motors Corporation received capital injections from General Motors of the United States and Daimler Chrysler, respectively.

At the time, the tone of commentary in the media was that automakers would struggle to survive in the 21st century without an annual production scale of 4 million vehicles or greater, and the general industry trend was toward consolidation, with a focus on size. This brought about an era of large-scale competition in the automotive industry, pitting automotive groups against one another on a worldwide scale. Toyota Motor Corporation (TMC) set "enhancing all-round group strength, aiming for a world-leading standard" as its highest company-wide implementation priority for fiscal 2000 (ended March 2001), and launched a policy of further strengthening collaboration between group companies.

As part of these efforts, in April 2001 the company consolidated the sales divisions of its logistics and forklifts business to Toyota Industries Corporation. Toyota held the world's top share in the market for industrial vehicles used in the logistics and forklift business, such as forklifts, and the move aimed to create a dynamic operation at Toyota Industries Corporation, spanning development and manufacturing through to sales.

Having already increased its holdings in Japan's Daihatsu Motor Co., Ltd. to 51.2 percent in 1998 to make it a consolidated subsidiary, to further strengthen tie-ups with completed-vehicle manufacturers, TMC increased its stake in Japan's Hino Motor Co., Ltd. to 50.1 percent in August 2001, making Hino Motor a TMC consolidated subsidiary as well. Hino Motor was in charge of trucks and buses, and, in 1996, TMC and Hino Motor had agreed that development and production of Toyota 2-ton trucks would be consolidated at Hino Motor. The move to make Hino Motor into a TMC subsidiary was in response to a request from Hino Motor for increased funding,

Meanwhile, TMC also formed tie-ups with automakers outside the Toyota Group. The company formed operational and capital ties with Fuji Heavy Industries and Isuzu Motors Ltd., which had dissolved its strategic alliance with GM. In the tie-up with Fuji Heavy Industries, TMC took an 8.7 percent stake in 2005 and began commissioning production of the Camry model to Fuji Heavy Industries' U.S. plant, as well as embarking on joint development of sports car models. TMC subsequently raised its holdings in Fuji Heavy Industries to 16.5 percent in 2008. With Isuzu Motors, TMC collaborated on joint development of diesel engines and took a 5.9 percent stake in the company in 2006.

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