Company history

Toyota began as a secret project inside a loom company. Kiichiro Toyoda, of Toyoda Automatic Loom Works, put the proceeds from selling a loom patent to a British firm toward car research and worked quietly in a corner of the factory for some three years. In September 1933 he set up an automobile department, tearing down an imported Chevrolet to study it, and pushed the venture through as a fait accompli — the board’s formal approval came only afterwards, at an extraordinary meeting in January 1934. There was resistance inside the company to pouring profits earned in the established loom trade into an automobile business whose prospects were unclear; president Risaburo Toyoda backed it without stint, spending group money freely, and by 1935 the G1 truck and A1 prototype car were done.

A 1936 government policy to promote domestic vehicle production designated the auto department an approved company, and in August 1937 it was spun off as Toyota Motor Co., with Risaburo as president and Kiichiro as vice-president. The Koromo plant (in today’s Toyota City), completed in November 1938, ran to about two million square metres — roughly fifty times the old Kariya works — and was Japan’s first integrated plant built for mass-market cars; its opening day became the company’s founding anniversary. Through the war Toyota turned out military trucks, and the thoroughgoing cost-cutting forced by postwar dissolution pressure would later become the soil of the Toyota Production System.

Then came the crisis that shaped everything after. Under the 1949 Dodge Line’s severe austerity, demand collapsed and stalled installment collections choked the manufacturer’s cash. Toyota cut 1,600 people through voluntary retirement and split manufacturing from sales; founder Kiichiro took responsibility and resigned, succeeded by Taizo Ishida from the loom works. When Sumitomo Bank refused to lend during the 1950 emergency, the lesson took root as a lasting preference for financing from its own cash rather than outside borrowing. Sales were hived off as Toyota Motor Sales in April 1950, and the same reconstruction plan spun off three factories as separate firms — among them Nippon Denso (now Denso) and Aichi Kogyo (now Aisin) — seeding the specialized division of labour between finished-car maker and parts supplier that still underpins the group. Then the Korean War’s truck orders proved the rationalization out in the numbers.

The bitter labour cuts of 1950 left a standing constraint: raise a plant’s utilization without adding people. Taiichi Ohno, brought over from the loom works, stripped out the artisan know-how still lingering on the floor and drove a standardization anyone could perform uniformly. A creative-suggestion committee (1951) gathered improvements systematically, and in 1963 the kanban system went company-wide, putting just-in-time — the right things, in the right quantity, at the right time — at the base of production management. Meanwhile the first Crown (1955) took Toyota into the passenger-car market and Toyota Motor Sales, U.S.A. (1957) opened exports to North America, where the early cars struggled on power and durability before quality improvements slowly built trust.

In 1959 Ishida built Motomachi, Japan’s first passenger-car-only plant, for about $6.4M (¥2bn). Passenger cars still belonged to the wealthy and to taxi fleets, at perhaps 5,000 units a month, but the building was framed for 10,000 — a wager that ran ahead of demand, hedged by holding the installed equipment to the smaller figure. At the dedication Ishida spoke of aiming “not for five times the output, but five times the substance,” and full motorization would not arrive until the Corolla years. Readying the vessel before demand was proven became, in the late 1960s, Toyota’s settled posture.

The 1966 Corolla, built at the dedicated Takaoka plant, pushed that idea to a concentration on a single model — cutting unit cost and securing supply at once. The contest with Nissan shifted from a battle of sales power to a battle over the scale and speed of capital investment, and Toyota, readying capacity in advance, took the lead; Miyoshi (1968) and Tsutsumi (1970) followed, Toyota led U.S. import sales by 1975, and the oil-shock years hardened a culture of shop-floor kaizen. In 1982 manufacturing and sales merged back together as Toyota Motor Corporation, unifying development, production and sales under one roof for faster decisions — the platform from which it would go global.

Trade friction — voluntary export restraints and local-content bills in the United States — forced Toyota into local production. After talks with Ford collapsed, it formed the NUMMI joint venture with GM in 1984, using it to verify, in a relatively small and shared-risk bet, whether the Toyota Production System would work in a North American labour environment. With annual sales nearing a million, it then committed to a wholly owned Kentucky plant (decided 1985; Toyota Motor Manufacturing, U.S.A. established January 1986), hiring inexperienced workers from scratch and demanding quality equal to Japan’s. Camry production began in 1988 and a second plant followed in 1994; Toyota had shifted from export-led to local-production-led, easing the friction as it went. In 1989 the Lexus marque entered the luxury segment and a UK plant opened Europe’s local production.

In 1997 Toyota launched the Prius, the world’s first mass-produced hybrid. It grew out of the 1993 G21 project under Takeshi Uchiyamada; when management doubled the fuel-economy target from 1.5× to 2×, a level unreachable by improving the engine alone, hybrid drive became technically unavoidable, and decades of intermittent electrification research converged in the Toyota Hybrid System. The technology spread across models and, by around 2007, had passed a million cumulative sales — moving from an experimental green product to a stable, mass-produced commercial technology.

Behind the products, Toyota built a three-pole structure — North America, Europe and China — localizing production, sales and finance through the 1990s and 2000s. Its habit of deepening long partnerships into control showed again as it took control of Daihatsu (1998) and Hino Motors (2001) after decades of cooperation, set up Toyota Financial Services (2000), and entered China with FAW (2002) and a Guangzhou joint venture (2004). By the year ended March 2007 it recorded consolidated revenue of ¥26.3 trillion and operating profit of ¥2.27 trillion, closing on GM’s scale — but the very complexity of that expansion left a fragility that the Lehman shock would expose.

In the year ended March 2009 the Lehman shock drove Toyota to its first operating loss since founding — about $4.9B (¥461bn) — and a net loss, a plunge that erased the record profits of two years before. It answered with cost improvements, a 36% cut to capital spending and work-sharing to preserve jobs, but deliberately spared research on environmental and safety technology from the axe, a choice that underwrote the later acceleration of its hybrids. In June 2009 Akio Toyoda, of the founding family, became president; a U.S. recall crisis in 2010 forced a rebuild of quality management and disclosure.

To run a ten-million-unit company, Toyota introduced an in-house “company” system in 2016, re-organizing functional silos into product- and technology-based units with clear responsibility while keeping firm-wide functions at head office. Alongside, the 2014 Mirai fuel-cell car anchored a multi-pathway strategy — developing hybrids, plug-in hybrids, electric and fuel-cell vehicles in parallel rather than betting everything on EVs, to fit each region’s energy infrastructure and rules, a deliberately different tack from EV-focused rivals in the West and China. Capital-and-business alliances with Mazda, Suzuki, Subaru and Isuzu followed from 2017, and over Akio’s fourteen years Toyota took the global sales lead and posted a record operating profit of $38.1B (¥5.35tn) in the year ended March 2023.

Yet from 2022 certification-test fraud surfaced across the group — at Hino, then Daihatsu (174 irregularities disclosed in December 2023, halting all its shipments), Toyota Industries, and even Toyota itself in 2024 — which a third-party report tied to a top-down culture and punishing development schedules; the group’s respect for subsidiary autonomy had let quality oversight fail. In April 2023 Koji Sato, an engineer and non-family manager, became president as Akio moved up to chairman, charged with rebuilding oversight while pressing ahead on electrification. In 2025 Toyota decided to take its own root, Toyota Industries, private for about $31.4B (¥4.7tn) — unwinding the cross-shareholdings and parent-child listings the market had long criticized and folding the group’s ownership into one, while targeting a 20% return on equity through buybacks.