Toyota is a Japanese automobile manufacturer founded in 1937 by Kiichiro Toyoda. Toyoda started the company with funding from the sale of his father’s automatic loom technology.
Toyota makes almost 90% of its revenue through the sale of passenger and commercial vehicles. The company also makes money through its Toyota Financial Services arm, funding automotive loans and credit cards while also leasing vehicles.
Toyota earns a small percentage of its total revenue through investments in other car manufacturers and industries such as biotechnology, aerospace, and robotics.
Toyota origin story
Toyota is a Japanese automobile manufacturer founded in 1937 by Kiichiro Toyoda.
The Toyota story begins almost twenty years before the company was incorporated. In 1918, Kiichiro’s father Sakichi invented the world’s first automatic loom. The loom, which reduced manufacturing defects and increased yields, was later sold to British company Platt Brothers for £100,000.
Sakichi then gave the proceeds to his son to develop automotive technology at Toyota, with the first passenger car dubbed the Model AA created in 1936. During the late 1940s, Toyota was able to benefit from Japan’s alliance with the United States. This would give rise to The Toyota Way management philosophy and Toyota Production System lean manufacturing process, with the latter also inspired by Sakichi’s original loom technology.
Toyota was also quick to profit from the emerging Japanese middle class in the 1960s with the release of the Corolla mid-size passenger sedan. The company experienced a period of rapid growth during this time, exporting large numbers of vehicles to foreign markets where they quickly gained a reputation for reliability, affordability, and fuel efficiency.
In 1986, Toyota partnered with General Motors to develop a new manufacturing facility in California. Luxury subsidiary Lexus was launched in 1989, with the company’s first hybrid vehicle, the Toyota Prius, launched in 1997.
Today, Toyota produces vehicles under five different brands: Toyota, Daihatsu, Hino, Lexus, and Ranz. The company also has significant stakes in Mazda, Subaru, Suzuki, Isuzu, and Yamaha, among others.
Toyota generates the bulk of its revenue through the sale of automotive vehicles, with a smaller percentage coming from its financial services division.
Let’s take a look at these streams in more detail.
Automotive sales encompass passenger vehicles, minivans, and commercial vehicles such as trucks, buses, and forklifts. Vehicle sales are segmented into distinct business units based on brand and geographic region. Luxury brand Lexus is considered one of the most profitable.
Toyota also manufactures and sells automotive parts, components, and accessories to other car manufacturers.
Financial services division
Toyota Financial Services is a subsidiary that finances automotive loans, credit cards, and other services such as vehicle leasing.
The remainder of Toyota’s revenue, approximately 4%, comes from other services.
This includes investments the company has made in the housing, telecommunications, biotechnology, aerospace, and robotics industries. It also includes the aforementioned stakes Toyota has taken in competing automotive companies.
Elon Musk, an early investor and CEO of Tesla, is the major shareholder with 21.7% of stocks. Other major shareholders comprise investment firms like Baillie Gifford & Co. (7.7%), FMR LLC (5.3%), Capital Ventures International (5.2%), T. Rowe Price Associates (5.2%), and Capital World Investors (5%). Another major individual shareholder is Larry Ellison (co-founder and CEO of Oracle), with a 1.7% stake.Elon Musk is one of the richest people in the world, with his main ownership in Tesla, making him worth more than a hundred billion dollars. The companies founded by Elon Musk range from electric vehicles and renewable energies, with Tesla, rockets, with SpaceX, infrastructure, with The Boring Company, and neurotechnology with Neuralink. Elon Musk, seen as one of the most visionary tech entrepreneurs from the Silicon Valley scene, started his “career” as an entrepreneur at an early age. After selling his first startup, Zip2, in 1999, he made $22 million, which he used to found X.com, which would later become PayPal, and sell for over a billion to eBay (Musk made $180 million from the deal). He founded other companies like Tesla (he didn’t start it but became a major investor in the early years) and SpaceX. Tesla started as an electric sports car niche player, eventually turned into a mass manufacturing electric car maker.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
