Key facts
- Toyota Motor and its affiliates are accelerating the sale of cross-held shares.
- The group's holdings decreased by 16% to nearly 3 trillion yen as of March 2025.
- The divestments are intended to improve capital efficiency and fund electrification initiatives.
- The move aligns with Japanese corporate governance reforms promoting the unwinding of cross-shareholdings.
- Toyota is considering buybacks and secondary sales as methods for divestment, with a potential timeline of 2026.
Toyota Motor and its major affiliates are accelerating the unwinding of cross-held shares, a move that could total around 3 trillion yen (S$24.3 billion). As of March 2025, the group held nearly 3 trillion yen in such shares, marking a 16% decrease from the previous year. This strategic divestment is driven by increasing market demands for efficient capital allocation and Toyota's need for funding its electrification initiatives.
The practice of cross-shareholding, where companies hold stakes in each other to solidify business ties, has long been criticized by governance experts and international investors for insulating management from shareholders. Japanese regulators and the Tokyo Stock Exchange have been encouraging companies to divest these holdings as part of broader corporate governance reforms.
Toyota aims to complete the sale as early as 2026, with potential methods including share buybacks and secondary sales to other investors. The scale and timing may adjust based on shareholder willingness. The automaker is also facing scrutiny over governance, with activist investor Elliott opposing its tender offer for forklift maker Toyota Industries due to concerns about pricing and transparency.
Major shareholders in Toyota include banks like Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group, as well as insurers such as MS&AD Insurance Group, which have themselves been outlining policies to reduce their cross-shareholdings in recent years.