Toyota denies rumour of potential Neta purchase

Here’s something rather interesting – Toyota is rumoured to be evaluating the purchase of struggling Chinese electric vehicle maker Neta in an attempt to shore up its electrification efforts in the Middle Kingdom, IT Home reported. The smaller company has been on the ropes for a while now, with production halted, massive layoffs and seriously mounting debt.

The article resulted in a swift and vehement denial from Toyota itself, with its Chinese arm’s brand communications director Xu Yiming saying “I have not heard of this!” Still, such a deal does make a small amount of sense, given the firm’s precarious position in the Chinese market.

Toyota has been scrambling to respond to China’s growing shift towards electric vehicles, rapidly developing models like the bZ3X and bZ5 with BYD motor and battery technology. In February, the company signed an agreement with Shanghai to build a new, wholly-owned factory for a forthcoming Lexus EV, set to enter production in 2027.

Creating a similar factory for the main Toyota brand will give it some extra firepower, and purchasing Neta would enable it to not have to build a whole new facility from scratch – and it would gain some assets and knowhow as part of the deal, too. Even so, such a venture would mean having to take on Neta’s liabilities, which currently stand at around 10 billion yuan (RM6 billion).

Signs of Neta hitting trouble had been made known since November 2024, when it was reported that it had halted production, laid off workers and cut salaries amid declining sales. Even as founder Fang Yuzhou said it was on the brink of a turnaround, the company continued to retrench staff both locally and abroad to stem the tide of red ink, including its entire research and development division.

Last month, Neta struck a debt-to-equity swap deal with 134 core suppliers worth over two billion yuan (RM1.2 billion) to convert 70% of its debt to equity in parent company Hozon Auto, with the other 30% to be repaid over 15 months starting this month. The carmaker currently owes its suppliers six billion yuan (RM3.6 billion).

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