BookTitleToyota Tsusho 70-Year History

Summary

Toyota Tsusho 70-Year History

First Toyo motor (motorized bicycle) completed(1949)Launch of Toyo Motor FES125cc (1956)2 Toyo Motors’Management CrisisToyo Motors was a manufacturer and distributor of motorized bicyclesestablished in Kariya-shi, Aichi Prefecture, in 1949 by Kazuo Kawamada, a star inthe world of auto racing. Nisshin Tsusho’s president, Tojiro Okamoto, decided tosupport Toyo Motors because he was focused on the future of motorized bicyclesthat could be equipped with auxiliary engines. Borrowing Kariya Machine Works’south factory to establish a production system, Nisshin Tsusho became the soleagent for Toyo Motors, signed a distributor agreement with a local dealer ofToyota Motor Sales, and established a sales channel with a major bicycle store asa sub-agent.The completed auxiliary engines were fitted to bicycles and sold by distributorsand sub-agents. Bicycles with an auxiliary engine and a relatively large luggagecarrier became popular to transport luggage on Awaji Island, Hyogo Prefecture,where transportation was inconvenient. In 1951, 300 units were sold per month,and by 1953 the annual revenue was 180 million yen.However, as motorcycles began to spread quickly, sales gradually declinedand countermeasures were required. In 1956, the heavy-duty utility vehicle ToyoMotor FES125cc was launched, and production was converted to motorcycles,but Toyo Motors was unable to recover. Due to multiple issues, such as the riseof light tricycle trucks, engine defects, and shortages in capital investment andinternal reserves, Toyo Motors fell into a management crisis.3 Escape from Management CrisisToyo Motors was unable to recover after a bank-led reconstruction in responseto this management crisis, and went bankrupt in July 1959, with debt of about1.1 billion yen (more than 10 billion yen in terms of current value). The majorityof the debt was guaranteed by Toyoda Tsusho, and the unfortunate fact that themanagement of two other companies that Toyoda Tsusho had funded hit a stickingpoint left Toyoda Tsusho with debt seven to eight times its capital. Toyoda Tsushohad to implement significant reforms to get back on track. Those measuresincluded becoming the intermediary for delivering materials for the Toyota Groupand engaging in domestic and overseas sales of vehicles, such as the Land Cruiser,produced by members of the Toyota Group.These rebuilding measures greatly improved management practices. Theproducts handled gradually shifted from the textile-related business to metals andmachinery, and Toyoda Tsusho was able to emerge from its own managementcrisis. As a result, Toyoda Tsusho was recognized as a general trading company ofthe Toyota Group in both name and reality.4 Designated Wholesaler of Yawata Iron & Steel Co., Ltd., andFuji Iron & Steel Co., Ltd.Steel was the basic material supporting the economy, and it generally passedthrough designated wholesalers or special dealers, with the exception of directsales by steelmakers. About 70% of domestic sales went through designatedwholesalers, with the rest going through special dealers. In the case of YawataIron & Steel Co., Ltd., and Fuji Iron & Steel Co., Ltd. (today’s Nippon Steel &Sumitomo Metal Corp.), designated wholesalers were limited to major generaltrading companies or steel wholesalers from before the war, so it was extremely64