Following a changing business scenario, Toyota Motor Corp, with a 5.89% stake in Isuzu Motors, have ended their capital partnership though the two automakers will continue to collaborate wherever they can and maintain good ties.
The tie-up between Toyota Motor Corp and Isuzu Motor Ltd goes back to November 2006, when the two automakers entered into an agreement for the use of each other’s operational resources in terms of development and production of diesel engines. The two companies also shared technical assistance for joint projects. This partnership now comes to an end with Toyota planning to sell its entire stake in Isuzu.
This partnership is being dissolved following changes in market environment. The shift to more eco friendly vehicles with the use of electric and hydrogen technologies has seen less emphasis on diesel powered vehicles causing Toyota and Isuzu to abandon joint development of diesel engines.
Decision to withdraw from the partnership came at a time when Toyota announced earnings for the period April to June 2018. Strong sales were recorded in North American markets and in China leading to increased net profits in the first quarter. However, the recent US sanctions on the auto sector could have an impact on future earnings. Trade concerns between US and China along with tariffs on metal imports are also a major cause of concern with profits expected to decline.
Toyota posted profits of 7.2% to ¥657.3 billion ($5.9 billion) in April-June making it their best ever first quarter. Operating profits also increased 18.9% to ¥682.7 billion while sales increased 4.5 % at ¥7.4 trillion. The company however expects net profits to dip 15% in the fiscal to March 2019 over these various issues.
Apart from Toyota, Nissan Motors also announced that rising material costs and a higher Yen has caused net profits of the company to dip 14% during the April to July 2018 period. Sales in China were up during this period while sales in North America and Europe fell sharply.