Toyota Motor and Isuzu Motors announced on Friday that they will end their capital tie-up. Isuzu will buy back all of Toyota’s 5.89% stake for 80 billion yen ($720 million).
The two companies formed a capital tie-up in 2006 to develop a 1600 cc diesel engine and build a new factory in Hokkaido, but the project failed to gain traction due to a changing market.
After the tie-up was formed, the companies were hit by the 2008 financial crisis. In addition, Europe and China began strengthening environmental regulations, spelling the end to their usage of diesel-powered vehicles. The emergence of electric vehicles also helped doom the project, forcing the two Japanese automakers to alter their business strategies.
The two automakers said in a statement:
“As the automotive industry faces sweeping, once-in-a-century changes, Isuzu and Toyota intend to accelerate their efforts to improve competitiveness in the commercial and passenger vehicle markets, respectively.”
Meanwhile, Toyota Motor announced on Friday that the company posted gains in both sales and profit. Its group sales for the April-June quarter rose 4.5% from the same period last year to about 66 billion dollars. Operating profit increased 18.9% to 6.1 billion dollars, whereas net profit rose 7.2% to 5.9 billion dollars.