Toyota Motor Corporation

• Date Founded: 1937
• Industry:Automotive
• Corporate Headquarters: Toyota City, Aichi, Japan
• Type: Public

The Toyota Motor Corporation (TMC), headquartered in Toyota City, Aichi, Japan, is a major global manufacturer of automobiles. It became the largest automaker in the world in 2008, a position it maintained through most of the 2010s. The company's total production surpassed 200 million vehicles in 2012. Founded in 1937 by Kiichiro Toyoda, TMC is the largest division of the Toyota Group, which is one of the world’s largest conglomerates, comprising over five hundred consolidated subsidiaries and over two hundred affiliated companies.

The Toyota Motor Corporation produces cars and trucks under multiple brand names, has over 370,000 employees, and in 2024 was ranked eleventh on the Forbes list of the world's biggest public companies. Toyota manufactures a wide range of vehicles—from small entry-level cars to SUVs, pick-up trucks, high-end luxury cars, and race vehicles. A particularly notable model is the Prius, which was the world’s first mass-produced hybrid vehicle.

Toyota has developed a unique and complex guiding philosophy, whose elements all derive from the company’s founding principles: respect, thrift, and perseverance. In 1989 Toyota introduced its familiar logo, composed of two overlapping ovals forming a T within a third, larger oval. The two contained ovals are representative of the mutual trust and beneficial relationship between the customer and the manufacturer, while the larger surrounding oval signifies the global reach of Toyota technology.

History

The Toyota Motor Corporation has its roots, surprisingly, in the textile industry. Sakichi Toyoda, father of TMC founder Kiichiro Toyoda, was born in 1867 in a small village outside of Tokyo. His mother and the other women of the village made their living operating physically taxing handlooms. Sakichi Toyoda made it his life’s mission to improve the efficiency and ease of use of wooden looms. He eventually formed the Toyoda Automatic Loom Works, acquiring nearly one hundred patents over time.

The sale in 1929 of his automatic loom patent to a United Kingdom textile manufacturer for one million yen would finance Toyoda’s expansion into the automotive industry. That year, his son Kiichiro traveled to the United States and Europe to observe automotive production methods. He returned home to launch the Toyoda Automotive Company as a division of his father’s company in 1933. Kiichiro also formed a close working relationship with his cousin Eiji Toyoda, who would go on to become an important figure in the company. By 1937 the Toyoda's automotive division was established as an independent company, and the name was changed to the Toyota Motor Company, Ltd. The name Toyota was thought to be easier to pronounce and a luckier name due to its number of characters (eight) in the Katakana alphabet.

Toyota produced only 1,500 automobiles in its first seven years of operation but found greater success early on in truck manufacturing. The years after World War II were difficult ones for Toyota, but passenger car production resumed in 1947 with the compact, rugged, low-priced Toyopet. As managing director of the company, Eiji Toyoda further studied US automakers' production processes and sought to improve on them, collaborating with machinist Taiichi Ohno. Together, they helped develop systems that became known as kanban and kaizen, integral to what would evolve into the signature efficiency of Toyota's manufacturing. In 1957 Toyota shipped its first cars to the United States, selling only three hundred that year. In 1959 Toyota opened the Motomachi plant in Japan; the next year, Toyota broke ground on a manufacturing plant in Australia, its first outside of Japan.

In 1963, in part to protect the domestic automotive industry, President Lyndon B. Johnson imposed a 25 percent tariff on imported light trucks and other items. This was known colloquially as the chicken tax. It severely restricted the importing of Toyota trucks into the United States. As a work-around, Toyota began planning the construction of its first plants within the United States. Even before these factories were operational, however, the company was attempting to break into the US car market with imported compact cars. Eiji Toyoda became company president in 1967 and led the push into the American market, with the Corolla model becoming the first notable success beginning in 1968. More US consumers began to appreciate the quality and fuel efficiency of Toyotas and other Japanese automobiles through the 1970s, particularly as gasoline prices spiked with the 1973–74 oil embargo.

In 1984 Toyota and General Motors (GM) entered into a pioneering partnership by resurrecting a closed GM plant in Fremont, California. This was to manufacture vehicles to be sold under both brand names. This partnership, called New United Motor Manufacturing Inc. (NUMMI), would last fifteen years and firmly established Toyota in the US market. By 1990 Toyota had captured a 10 percent share of the US market, although many of its vehicles were still imported. Less than two decades later, Toyota was manufacturing over two million vehicles annually in the United States.

In the early 1990s, Toyota invested over $1 billion on patented hybrid (gasoline and electric) technology, and it was the first automotive manufacturer to bring a mass-produced hybrid automobile, the Prius, to market. The Prius was first sold in Japan in 1997 and subsequently worldwide starting in 2000.

By the year 2000, Toyota was selling more cars in the United States than in Japan. Toyota sales in the United States, now its largest global market, surged during the early 2000s as US production continued to increase. By this time, Toyota had greatly expanded its offerings to range from inexpensive compact cars to large luxury SUVs and pickup trucks. Toyota manufacturing plants were designed to permit fast production shifts to meet model demand. While automotive manufacturers had traditionally pushed products on to the marketplace based on what they hoped to sell, Toyota relied on a system in which vehicles are only pulled into production based on actual orders from dealers. While Toyota executives had once studied US manufacturer's methods, in the late twentieth and early twenty-first centuries American firms increasingly adopted Japanese manufacturing strategies pioneered by Toyota.

Toyota continued to innovate and succeed in the twenty-first century. In 2003 it established the car brand Scion in an effort to attract younger drivers. After years of being the world's third-largest automaker behind GM and Ford, Toyota took over the top spot for the first time in 2008. The company also drew attention for non-automotive ventures, including programs or investments in robotics, biotechnology, and philanthropy.

A series of events beginning in approximately 2008 stalled Toyota’s decades-long growth cycle. These included the global financial crisis and recession, safety crises, and the 2011 earthquake and tsunami in Japan. Economic challenges combined with interruptions due to the earthquake and tsunami damage temporarily dropped Toyota's production back to third place globally. A succession of safety recalls between 2009 and 2014, meanwhile, tarnished Toyota’s long-standing reputation for building safe, reliable vehicles. In 2014 Toyota agreed to pay a fine of $1.2 billion to settle a criminal investigation by the US Justice Department for failure to report known safety defects in over 12 million vehicles worldwide.

In 2017 Toyota announced it would acquire a 5 percent stake in fellow Japanese automaker Mazda. The deal furthered an existing cooperative relationship that allowed for the sharing of technologies between industry giant Toyota and the much smaller Mazda. The two companies also announced they would build a joint assembly plant in the United States, with Alabama chosen as the location for the $1.6 billion facility in 2018. Toyota also continued to explore other business deals and technologies, including the controversial development of autonomous vehicles (self-driving cars). However, in March 2018 the company announced it would temporarily stop public road tests of its autonomous vehicles after a fatal crash involving a similar car operated by the ride-sharing company Uber, in which Toyota also had an ownership stake.

Toyota, like many other automobile manufacturers, was negatively affected by complications resulting from the global COVID-19 pandemic that began in 2020. Despite global supply chain issues and a decrease in demand, in 2020, Toyota still managed to surpass competitor Volkswagen to become the number one car manufacturer. This was even after the company sustained a decline of over 10 percent in sales. Nonetheless, ongoing issues such as a worldwide shortage of vehicle computer components led to a situation beginning in 2021 where car manufacturers were unable to supply enough vehicles to meet the rising demand from consumers. Toyota, one of the many manufacturers facing inventory issues, reported that sales for the second quarter of 2022 were down by nearly 25 percent.

Impact

Toyota Motor Corporation is known around the world for its vehicles sold under several different brand names, including Toyota, Lexus (luxury automobiles), and Hino (commercial vehicles). Together, they represent a broad range of options for consumers—from luxury sedans and SUVs to entry-level vehicles aimed at young buyers, as well as more specialized vehicles such as trucks and hybrids. As one of the largest companies in the world, Toyota has a major economic and social impact at many levels, including in Japan, the United States, and around the globe.

Toyota is as renowned for its management practices as it is for its vehicles. The Toyota Production System (TPS) is embedded in the company’s corporate and manufacturing plant culture and relies on employee contributions to improve productivity at all levels, reduce waste, and drive down inefficiencies. Deeply rooted in Toyota Group founder Sakichi Toyoda’s driving principle of kaizen, his belief in ongoing and rigorous improvement through observation and innovation, TPS is one of the most studied and emulated corporate philosophies in modern business history. Just-in-time manufacturing and inventory management, pioneered by Kiichiro Toyoda, is another key component of TPS.

Toyota’s largest manufacturing plant outside Japan, located in Georgetown, Kentucky, operates at near zero waste production levels. In keeping with Sakichi Toyoda’s belief in creating value, not waste, the plant sets specific goals—specifically, that 90 percent of assembly parts will come in returnable and reusable packaging, and plant recycling will exceed one hundred thousand tons per year.

A criticism of all Japanese automakers, but one that was particularly aimed at Toyota, is that they lag in their development of electronic vehicles (EV). This occurred as other automobile makers announced major investments in the perceived future of the auto industry. Toyota remained committed to hybrid vehicles, which rely on both combustible engines and batteries, but made strides in EV technology in the 2020s. In 2021 the company announced its "beyond zero" vision, which encompassed its initiative to reach carbon neutrality through its products, services, and operations. At that time, the company claimed to offer more low- and zero-emission vehicles than any other automaker, including hybrid, battery, and fuel cell electric vehicles. In 2022 Toyota sold more than 2.7 million electric vehicles globally.

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