Toyota Subsidiary Violated Japan's Law Protecting Subcontractors: Report

The Japan Fair Trade Commission (FTC) reportedly found that Toyota Motor Corp’s TM subsidiary, Toyota Customizing & Development Co. (TCD), based in Yokohama, failed to compensate suppliers for storage fees of metal die casts and other items.

TCD violated the law by not paying storage fees to dozens of suppliers and forcing 65 suppliers to accept returns on products deemed defective without proper inspection, reported Bloomberg.

The total cost for these actions was around ¥54 million ($336,100). TCD reimbursed the suppliers last month and agreed to cover storage costs.

The Japanese government aims to ensure fair treatment of suppliers by large manufacturers to help boost wages and consumer spending.

Small companies face challenges from rising import costs and pressure to keep prices low, hindering economic growth. Authorities are addressing governance issues at Toyota following previous safety certification scandals.

Also Read: Insurers To Sell $3.1B In Honda Shares In Wake Of Governance Push: Report

The FTC also cautioned Nissan Motor Co. NSANY for illegally lowering payments to suppliers, prompting scrutiny on the automobile industry to adopt preventative measures.

Metal die casts, commonly used in vehicle production, should have their storage costs covered by clients, as per a 2019 trade ministry report.

Founded in 2018, TCD manufactures and sells ambulances and specialized vehicles both domestically and internationally. Toyota holds a 90.5% stake in TCD, with the remaining shares owned by Toyota Tsusho Corp. TYHOF.

Toyota stock has gained more than 27% in the last 12 months. Investors can gain exposure to the stock via ActivePassive International Equity ETF APIE and Avantis International Large Cap Value ETF AVIV.

Price Action: TM shares are trading lower by 0.08% at $206.08 at last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo by josefkubes on Shutterstock

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