ToyotaToyota BusinessBusiness StrategyStrategy MeetingMeeting 20072007
ToyotaToyota MotorMotor CorporationCorporation AugustAugust 31,31, 20072007 Cautionary Statement with Respect to Forward-Looking Statements 2
This presentation contains forward-looking statements that reflect Toyota’s plans and expectations. These forward- looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause Toyota’s actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. These factors include: (i) changes in economic conditions and market demand affecting, and the competitive environment in, the automotive markets in Japan, North America, Europe and other markets in which Toyota operates; (ii) fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar, the euro, the Australian dollar and the British pound; (iii) Toyota’s ability to realize production efficiencies and to implement capital expenditures at the levels and times planned by management; (iv) changes in the laws, regulations and government policies in the markets in which Toyota operates that affect Toyota’s automotive operations, particularly laws, regulations and policies relating to trade, environmental protection, vehicle emissions, vehicle fuel economy and vehicle safety, as well as changes in laws, regulations and government policies that affect Toyota’s other operations, including the outcome of future litigation and other legal proceedings; (v) political instability in the markets in which Toyota operates; (vi) Toyota’s ability to timely develop and achieve market acceptance of new products; and (vii) fuel shortages or interruptions in transportation systems, labor strikes, work stoppages or other interruptions to, or difficulties in, the employment of labor in the major markets where Toyota purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold. A discussion of these and other factors which may affect Toyota’s actual results, performance, achievements or financial position is contained in Toyota’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission. Caution concerning Insider Trading 3
Under Japanese securities laws and regulations (the "Regulations"), subject to certain exceptions, any person who receives certain material information relating to the business, etc., of Toyota which may be contained in this document is prohibited from trading in Toyota's shares or certain other transactions related to such shares (as set forth in the Regulations) until such material information is deemed to be made public. Under the Regulations, material information is deemed to be made public when (i) such material information is disclosed by ways of electromagnetic means as prescribed by the ordinance of the Cabinet Office (posting on the TDnet (Timely Disclosure Network) information service and ED-NET (Electronic Disclosure Network) information service ) or (ii) twelve (12) hours have elapsed since a listed company, such as Toyota, disclosed such material information to at least two (2) media sources as prescribed by the Regulations. Katsuaki Watanabe PresidentPresident Agenda 5
Ⅰ．Ⅰ． GrowthGrowth PhilosophyPhilosophy
Ⅱ．Ⅱ． BuildingBuilding aa SolidSolid FoundationFoundation
Ⅲ．Ⅲ． GrowthGrowth DriversDrivers
Ⅳ．Ⅳ． SalesSales PlanPlan
Ⅴ．Ⅴ． ShareholderShareholder ReturnReturn
Ⅰ．Growth Philosophy 6
Quality Improvement Long-term and Stable Growth
Growth Drivers Take-in Technology Products Opportunities Production Sales Full-line & All Regions & Supply & Marketing Product Quality / Cost Risks Human Resources Avoid Ⅱ．Solid Foundation 7
Technology
Production Sales & Supply & Marketing ProductProduct QualityQuality // CostCost HumanHuman ResourcesResources Ⅱ－1．Product Quality 8
Product Quality Cost Human Resources CF Activity CF=Customer First CF Activity Promotion Committee
Design Manufacturing Suppliers After Sales Group-wide Activity Reinforce “Built-in Quality with Ownership”
Trend of Quality Issue Significant improvement in Quality after Initial Period of Use initial quality
Initial Quality
2003 2004 2005 2006 2007 (prospect) Ⅱ－2．Cost 9
Product Quality Cost Human Resources Value Innovation (VI) Activity ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 Model based ’08 Model Idea Design Focus on : System based - Overseas ’09 Model Idea Design Production ’10 Model - Compact Vehicles -Raw Material ’11 Model Design ’12 Model Idea
Promote VI activities to increase net profits Ⅱ－3．Human Resources 10
Product Quality Cost Human Resources Global Promotion of Self-Reliance # of supporting staff from Japan Japan: Changeover of Corolla New Plant Preparation
Explicit Knowledge of 100 100 business conduct (=Toyota Way) Improve capacity -50% -70% expand of overseas 50 50 Overseas: operations Human resources development 0 0 by putting knowledge into practice Previous Model Current Model Indiana Texas < Develop Certified Trainers >
Japan North America
Europe Asia : Certified Trainers (Approx. 700) Ⅲ．Growth Drivers 11
TechnologyTechnology
ProductionProduction SalesSales && SupplySupply && MarketingMarketing ProductProduct QualityQuality // CostCost HumanHuman ResourcesResources Ⅲ－1．Technology 12
Challenges for Sustainable Mobility
CO2 Reduction Fuel Efficiency Alternative Energy Sources
Technology Engine Redesign all to improve Transmission environmental performance ( -2010)
Strengthen line-up (Joint development of 1.6L with Isuzu) & Supply Production Diesel Further reduce emissions (Expansion of clean diesel) Reduce cost through more compact, lighter system Expand model line-up => 1 million unit HV sales in the early 2010s Sales Hybrid Evolve HV technology (Test of PHV on public road) & Marketing PHV=Plug-in Hybrid Vehicle Ⅲ－1．Technology 13
Challenges for Sustainable Mobility Stronger need for next generation environmental technology ( Hybrid System / Engine / Transmission ) Technology
Early commercialization with state of the art environmental technologies & Supply Production
Manufacturing Design Technology Sales
& Marketing Development of Technology through Closer Coordination Ⅲ－2．Production & Supply 14
-Introduction of Sustainable Plant Activity Innovative Manufacturing Technology [Takaoka Plant] New production line at Takaoka Plant began operation (8/’07 -) InnovativeInnovative
Technology ManufacturingManufacturing TechnologyTechnology Transfer Effects technology - Reduction in CAPEX to other - Improvement of product plants
quality and productivity Paint Stamping Assembly -CO2 reduction Body Weld & Supply Production [e.g. Welding Line] Reduce processes & space Previous GBL Innovative Line Shorten production lead time GBL=Global Body Line
Sales Small Robot New Slim Robot & Marketing Large Robot Ⅲ－2．Production & Supply 15
Sustainable Plant Activity -Harmony with the Natural Environment Tsutsumi Plant Initiatives Photovoltaic
Technology Supply of electricity from photovoltaic Power power generation Generation Use of photocatalytic paint Active planting of vegetation in and around the plant & Supply Production
Significant improvement of ＜Image＞
Sales environmental performance & Marketing Ⅲ－2．Production & Supply 16
-Innovation and Kaizen Sustainable Plant Activity of manufacturing Technology Motomachi Plant represents a center to develop all manufacturing technologies related to vehicle bodies Technology [Motomachi Plant] Global Assembly Plants ’09- Development of Next Generation Technology Efficiently support pre-production Production System & Supply Production Global Production and facility installation based on Global Link Preparation
GPC (Skill Training)
Sales Realize high level of & Marketing GPC=Global Production Center productivity & quality Ⅲ－3．Sales & Marketing 17
Regionally Balanced Growth
Change in Geographical Composition (Retail sales, including Hino & Daihatsu) 14.2% Technology 26.9% 13.4%
12.1% 13.2% 10.3% 34.0% 32.3%
10.6% & Supply &
Production Production 6.8% 13.0% 40.2% 12.2% 30.6% 30.2% 2006 2003 8.81 million vehicles Sales 2000 6.79 million vehicles
& Marketing & 5.85 million vehicles Japan North America Europe Asia Others Ⅲ－3．Sales & Marketing 18
Strategy by Region -Japan Introduce attractive products to create new markets Technology
Blade Voxy
MARK X Zio & Supply Production
ist Vanguard Introduce new models Build social infrastructure Aim to revitalize
Sales to support use of automobiles Effectively communicate the Japanese Market & Marketing attractiveness of automobiles Ⅲ－3．Sales & Marketing 19
Strategy by Region -North America Introduce attractive products to create new markets
Technology Launch of New Tundra in ’07 Successful entry into full-size pick-up truck market & Supply Production Enhance Lineup Tundra Aim to grow in all product categories Sales & Marketing Prius Scion xD Highlander Ⅲ－3．Sales & Marketing 20
Strategy by Region -Europe Introduce attractive products to create new markets
Technology Promote sales of core models
Aygo Yaris Auris Avensis & Supply Production Reinforce response to the CO2 reduction - Innovative compact model - Expand diesel line-up - Promote sales of HVs
A new concept vehicle to be displayed at Motor Sales Show in Frankfurt & Marketing RAV4 LS600h Ⅲ－3．Sales & Marketing 21
Strategy by Region -China Aim to further increase profits by expanding
sales networks and local manufacturing Technology Change of Sales Volume / Operating Income (billion yen) Guangzhou
40.0 Tianjin #3
& Supply & Tianjin #2 Production Production (thousands 430 Approx. 20.0 of vehicles) 308 1 Million 116 183 Vehicles
2004 2005 2006 2007 Early 2010‟s Sales
Vehicle Sales (Local Production) Vehicle Sales (CBU) Operating Income in China & Marketing & Operating Income in China=Operating Income of Consolidated Subsidiaries+Operating Income of Affiliated Companies * Equity Ratio of Affiliated Companies Ⅲ－3．Sales & Marketing 22
Strategy by Region -Emerging Markets
Thoroughly respond to local needs Technology Russia Brazil India Market Change Segment where (K vehicles) Toyota is (K vehicles) (K vehicles) Segment where Toyota is represented Segment where 1500 represented 1500 1500 Toyota is represented Small 1000 Small Small 1000 1000 Low Price
Low Price & Supply &
Production Production 500 500 Domestic Brands 500 Commercial Commercial Vehicles, etc. Vehicles, etc. 0 0 0 2000 2006 2000 2006 2000 2006 Toyota Toyota Toyota Sales 2K 106K Sales 25K 70K Sales 21K 49K
Respond to rapid market Introduce global models (Corolla, IMV)
Sales expansion Consider response to the rapid expansion of low price segment -New Plant (12/„07 -)
& Marketing & -Development of Low Cost Technology (Securing quality & profitability) -Expansion of Sales Network Ⅲ－3．Sales & Marketing 23
Strategy by Brand -Lexus Increase Sales by Improving Lineup
Technology 5/‟07 Flagship Model Change in Vehicle Sales (K vehicles) 510 500 480 Improve line-up 390 steadily 400
& Supply & 300
Production Production 2005 2006 2007 2008 2009 LS600hL The Number of Countries/Areas Where Lexus is Sold
Build foundation for the brand 76 80 68 - Expand countries/areas to sell 58 60 Sales - Increase Lexus exclusive dealers
& Marketing & 40 ～2000 ～2006 ～2010 (plan) Ⅲ－3．Sales & Marketing 24
Financial Services Cooperate with dealers and support vehicle sales
Technology Promote various marketing Operating Income programs & strengthen from Financial Service Sector customer-retention (billion yen) 200 Further profit increase
150
& Supply & Production Production
Cover 32 100 Countries/areas
50 Thorough Low Cost Funding Risk Management Sales Highest Rating 0
Low Default Ratio 3/'04 3/'05 3/'06 3/'07 & Marketing & *Excluding Swap Evaluation Loss/Profit Ⅳ．Sales Plan 25
Sales Plan by Region (Retail sales, including Hino and Daihatsu) Europe Japan North America Approx. Approx. Approx. 3.100 1.5 1.450 2.5 2.400 3
1 2 2.5
0.5 1.5 2 2006 2007 2008 2009 2006 2007 2008 2009 2006 2007 2008 2009
Asia (including China) Others Approx. Approx. 2 1.900 1.550 1.5
1.5
1 1
0.5 0.5 2006 2007 2008 2009 2006 2007 2008 2009 (millions of vehicles) Ⅳ．Sales Plan 26
Total Vehicle Sales (Retail sales, including Hino and Daihatsu)
(millions of Approx. vehicles) 9.80 10.40 10 8.81 9.34
5
0 2006 2007 2008 2009 2010 2011 Profit Target of Operating Income Ratio Sustainable Growth in Medium & Long-term 10% in Profit Ⅴ．Shareholders Return 27
Dividend per Share Share Buyback and Consolidated Payout Ratio
Aim for 30% (billion yen)499.2 500 Continue share buyback to (yen) consolidated payout ratio improve capital efficiency 150 in the short term 392.8 23.4 400 21.3 18.3 100 16.8 300 246.5 250.0 13.0 234.3 199.9 200 120 50 90 65 100 36 45
0 0 3/'03 3/'04 3/'05 3/'06 3/'07 3/'03 3/'04 3/'05 3/'06 3/'07 3/'08 Dividend per Share (yen) Share buyback (billion yen) Consolidated Payout Ratio (%) *as authorized by AGM Building a Platform for Growth 28
ContributionContribution toto thethe SustainableSustainable DeveDevelopmentlopment ofof thethe EarthEarth andand SocietySociety Three Sustainability Concepts
Research & Development
Manufacturing
Contribution to the Society
Long-term Sustainable Growth