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Capital Calls Japanese automakers go back in time

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HONG KONG, March 24 (Reuters Breakingviews) - Concise insights on global finance in the Covid-19 era.

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REBEL ALLIANCE. Toyota Motor (7203.T), its commercial truck unit Hino Motors (7205.T) and Isuzu Motors (7202.T) have announced a new joint venture to develop connected trucks and fuel cells. That might serve Tokyo’s push to reduce the national carbon footprint, and Toyota’s hope to be a leader in clean-vehicle development. Alas, Isuzu and Toyota are also buying 42.8 billion yen ($394 million) stakes in each other, returning to a cross-shareholding structure they had abandoned in 2018. The arrangement is particularly awkward given Hino, in which Toyota owns 50%, competes with Isuzu.

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That complicates Toyota’s lengthening list of friendly yet pointless holdings in rivals, including significant stakes in Subaru (7270.T) and Mazda Motor (7261.T), plus a series of clean-energy-related strategic partnerships, technology-sharing agreements, and so on. Shares in Toyota, already down sharply since a March 13 peak, shed another 2% on the announcement; Isuzu, in which Toyota will now own a 4.6% stake, popped over 5%. Japan’s government is trying to improve governance and returns for shareholders. On this front Toyota’s new venture looks unclean. (By Pete Sweeney)

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Editing by Antony Currie and Katrina Hamlin

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