TOKYO -- Shares in Suzuki Motor plunged on Thursday to a nearly one-month low following the announcement that its long-serving chairman will retire later this year.
The decline points to investor concern over the carmaker's future business strategy and growth following the departure of charismatic leader Osamu Suzuki, who oversaw the company's expansion into one of the world's largest compact vehicle makers.
Suzuki's stock price at one point dropped by more than 200 points, or 4%, hitting its lowest level since Feb. 1, despite the Tokyo market's overall rise -- the benchmark Nikkei Stock Average gained nearly 2% following a rally on Wall Street.
The chairman on Wednesday revealed he will step down following the automaker's annual shareholders meeting in June. Having joined the company in 1958, the 91-year-old spent almost half a century at the helm. He helped the automaker expand its footprint in India and strengthen its relationship with Toyota Motor through a capital tie-up.
With Osamu Suzuki's long list of achievements, investors are predictably nervous about what his exit will mean for the automaker's future. Markets had a similar reaction when Jack Ma, founder of Chinese e-commerce giant Alibaba, announced his retirement in 2018.
Suzuki Motor also suffered a share price plunge in India, where a subsidiary is the top automaker. Maruti Suzuki India's stock shed over 9% at one point on Wednesday, before trimming losses and closing down 0.4%.
Along with the chairman's retirement, Suzuki Motor on Wednesday also announced a new midterm business plan that includes increasing its research and development budget to 1 trillion yen ($9.4 billion) over the next five years to accelerate its development of electric and hybrid vehicles.
The plan, however, did little to offset investors' qualms over Chairman Suzuki's impending departure.
Arifumi Yoshida, an analyst at Citigroup Global Markets Japan, said in a report that the profit margin goal included in Suzuki's midterm business plan "gives off a pretty modest impression." The company said it will aim to increase its operating profit margin to 5.5% for the year ending March 2026, a slight improvement compared to the 5.3% the company estimates for the current fiscal year ending March.
Yoshida added that "the retirement of Chairman Suzuki, who has led the company for a long time, will possibly impact the company's share price negatively in the short term."