Toyota Motor Corp. will increase its stake in Chiyoda Fire & Marine Insurance Co. from the 37.1 percent at present to 47.1 percent by the end of September to strengthen Chiyoda's financial backbone and ties between the two firms, the automaker announced Friday.
Chiyoda will issue 20 million new shares worth a total of 10 billion yen and allocate them to Toyota on Sept. 28, according to Toyota.
The nation's biggest automaker will also purchase existing shares from other shareholders in off-hour trading to raise its stake in Chiyoda to roughly 47.1 percent.
As many financial institutions are forming alliances to survive the upheaval expected from the ongoing "Big Bang" of financial deregulation, Chiyoda decided to expand its sales network by utilizing Toyota's global network and auto credit subsidiaries. "We hope to tie up with 13 Toyota credit subsidiaries overseas, and we would like to support them by offering insurance products," Yoshihiko Arai, senior vice president of Chiyoda, told a news conference.
Chiyoda and Toyota plan to jointly develop automotive insurance products that are especially designed for Toyota vehicles, and Toyota hopes to boost its sales by providing attractive insurance products to its customers, according to the two firms.
Although Arai denied that Toyota currently has plans to raise its stake in Chiyoda to more than 50 percent and turn it into a subsidiary, he did not rule out such action in the future. "If the two companies agree that it would be beneficial to both, it may happen in the future," he said.