ToyotaToyotaToyota’s’’ss GlobalGlobal StrategyStrategy ———MovingMovingMoving towardtoward GlobalGlobal MotorizationMotorizationMotorization———
AprilApril 16,16, 20032003
ToyotaToyota MotorMotor CorporationCorporation 1 Cautionary Statement with Respect to Forward-Looking Statements
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 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 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 affecting Toyota’s automotive operations, particularly laws, regulations and policies relating to environmental protection, vehicle emissions, vehicle fuel economy and vehicle safety, as well as changes in laws, regulations and government policies affecting 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 the “Operating and Financial Review and Prospects” and “Information on the Company” sections and elsewhere in Toyota’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission.
2 FujioFujio ChoCho PresidentPresident ToyotaToyota MotorMotor CorporationCorporation
3 I.I. GlobalGlobal ManufacturingManufacturing && MarketingMarketing inin 20022002 Growth in Production Volume Global output Overseas output (Millions(Millions ofof units)units) (Millions(Millions ofof units)units) 333 yearsyearsyears 6.0 20022002 GlobalGlobal (million(million units)units) OutputOutput :: 6.316.31** SalesSales ::6.176.17** 13 years 5.0 * includes Toyota/Lexus, Daihatsu and Hino brands. 2.17 2.0
1.62 Annual sales surpass 4.0 1 million units 1.0
0.45 3.0 0 1986 1999 2002 Corolla
Overseas output Global output 4 II.II. 20102010 GlobalGlobal VisionVision Major change in the global economic environment economic environment
TakingTaking onon thethe challengeschallenges forfor changechange Global motorization
Achieve global Market & population growth production & in the US * Regional strategies – in the US sales of * Regional strategies – 6 million units North America, Europe, Rise of markets in Eastern & Central Asia, China and Japan Europe and in Russia
* Technological innovation Strong growth of Asian markets
2002 2010s
5 III.III. RegionalRegional StrategyStrategy North American Market (1): Creating market through new product launches 2002 sales: (Millions(Millions of units) 1.91 million units Luxury SUVs Full-sized trucks
15
Lexus GX470 Lexus RX330 Tundra Double Commercial vehicle Cab 10 (light truck) market Entry-level vehicle for young drivers Passenger vehicle market No. 1 Scion 5 inin 20022002 passenger vehicle sales Corolla Camry xA xB 0 1990 1995 2000 2002
#4 Indiana #1 NUMMI #2 Kentucky
#5 Mexico #6 Texas 1.65 ⇒⇒“Made-in-Texas” trucks Texas plant
Present Fall 2003 2005 2006 7 III.III. RegionalRegional StrategyStrategy European Market: Integrated manufacturing & marketing
2002 sales: 760,000 MarketingMarketing units organizationorganization restructuringrestructuring startingstarting AprilApril 20032003 Action in United the wider Kingdom EU market
France Czech Republic
New “Avensis” launched inin MarchMarch 20032003 as upper core model ⇒⇒First Japan market Turkey launchlaunch ofof UK-madeUK-made vehicle in fall 2003
Toyota Motor Europe (TME) Leading marketing companies Manufacturing plants 8 III.III. RegionalRegional StrategyStrategy Asian Market: Manufacturing & export base for pickups/multipurpose vehicles ⇒⇒Development of global manufacturing base and mutual distribution network (IMV Project starts in 2004)
Thailand: Global manufacturing base Other Asian nations: Manufacturing To more than 80 nations/regions bases for engines & main components
Japan
South Africa & Argentina: Intra-regionalIntra-regional IndiaIndia manufacturing bases To Europe & Africa Thailand Others To South America Philippines
IndonesiaIndonesia South Africa
Argentina : Pickups & multipurpose vehicles : Engines & main components 9 III.III. RegionalRegional StrategyStrategy Chinese Market: Manufacturing & marketing to be strengthened in response to market growth
Luxury Large & SUV Luxury sedan Crown Land Cruiser/Prado Establish full product lineup Compact Compact Vios Establish Daihatsu Toyota brand image Product lineup (Compact) Corolla Aggressive product launches
50,000 units/year Several hundred 30,000 units/year thousand units/year
capacity 25,000 units →115,000 units/year Production 50,000 units/year 2002 2003 2004 2005 2006 2007 2008 2009 2010
10 III.III. RegionalRegional StrategyStrategy Japanese Market: Introduction of Lexus & Reorganization of Sales Channel ⇒⇒Preparations for future changes (in market structure & customer values)
After reorganization
Lexus Development of new Lexus dealership (new) network in 2005 (150 dealers)
Toyota brand
11 III.III. RegionalRegional StrategyStrategy Japanese Market: Introduction of Lexus & Reorganization of Sales Channel ⇒⇒Preparations for future changes (in market structure & customer values)
Present After reorganization
Toyota brand Lexus Development of new Lexus dealership network in 2005 (150 dealers) (5 channels) (new) Vista Consolidation of Netz & Vista Toyota brand Netz networks in spring 2004 →Foothold in new market segment Netz (4 channels) Luxury vehicle channel for Toyota Toyota the Toyota brand Leading channel for the medium- Toyopet Toyopet size car market
Corolla Largest volume-sales channel, Corolla centering on compact vehicles
12 IV.IV. TechnologyTechnology StrategyStrategy (1)(1) Development of a wide range of technologies and products with focus on market creation
Assessing Energy customer needs technologies technologies Leading-edge Leading-edge Leading-edge Leading-edge Biotechnology technology
Engine Body Electronics Proposal of Existing Existing Transmission Chassis Existing business vision technologies technologies technologies technologies Environment Safety Next-generation IT Next-generation
Products focused on market creation “Comfort ” “Kindness” “Excitement” 13 IV.IV. TechnologyTechnology StrategyStrategy (2)(2)
HarmonizingHarmonizing “Ecology”“Ecology” with with “Emotion”“Emotion”
EcologyEcology EmotionEmotion
14 V.V. ConclusionConclusion
Global-scale motorization
Rise of markets Market & in Eastern & Strong growth of population Central Europe Asian markets growth in the US and in Russia
Addressing challenges for change — toward further growth
15 ToyotaToyotaToyota’s’’ss GlobalGlobal StrategyStrategy ———MovingMovingMoving towardtoward GlobalGlobal MotorizationMotorizationMotorization———
AprilApril 16,16, 20032003
ToyotaToyota MotorMotor CorporationCorporation 16 ToyotaToyota’sToyota’’ss FinancialFinancial StrategyStrategy
AprilApril 16,16, 20032003
ToyotaToyota MotorMotor CorporationCorporation 1 RyujiRyuji ArakiAraki ExecutiveExecutive ViceVice PresidentPresident ToyotaToyota MotorMotor CorporationCorporation
2 I.I. BusinessBusiness PerformancePerformance Operating income by market segment (Billions of yen) FY1998 FY2002 FY2003/9mos. (April,1997-March,1998) (April,2001-March,2002) (April-Dec.,2002) Japan 649 870 813
North America 175 265 268
Europe -2 -12 5
Asia & other regions 8 19 41 Consolidated -12 -19 -17 elimination Consolidated total 818 1,123 1,110
(Japan GAAP) 3 II.II. ProfitProfit EarningsEarnings Growth and targets in operating income ratio & ROE
9 (%) 7.4% 9.1% 9% 6.5% 6.1% 6% (Billions 6 of yen) ～
Operating Operating income ratio ～ 11.3% ● 1,000 (%) 10 8.5% ●10% 6.8% ● 6.3% 500 5.8% ROE ● ● ● 5 0 FY1999 FY2000 FY2001 FY2002 April-Dec.,2002 Target (Japan GAAP) Operating income Operating income ratio ROE 4 III.III. DividendDividend PaymentsPayments && ShareShare BuybackBuyback Cash flow allocated to dividend payments (Billions of yen) 1,000 and share buyback
Capital expenditures R&D
500 ～ 400 ～
0 FY1999 FY2000 FY2001 FY2002 Cash flow Dividend & share buyback (Japan GAAP)
* Cash flow = Current net income + Depreciation costs - Capital expenditures 5 IV.IV. ChangeChange inin ShareShare OwnershipOwnership
IncreaseIncrease inin foreignforeign shareholdersshareholders (listed(listed onon NYNY andand LondonLondon exchangesexchanges Shareholding inin SeptemberSeptember 1999)1999) by banks VS IncreaseIncrease inin individualindividual shareholdersshareholders (reduction(reduction inin stockstock unitunit inin AugustAugust 2000)2000)
[Sept. 30, 1999] [March 31, 2003 (estimate)]
Banks Dra 34% matic drop Approx. 15%
6 V.V. Toyota’sToyota’s ActionsActions onon CorporateCorporate GovernanceGovernance andand InformationInformation DisclosureDisclosure Internal Mechanisms ⇒⇒Reinforcement of internal controls
GeneralGeneral shareholders’shareholders’ meeting
InternationalInternational AdvisoryAdvisory Accounting audits Accounting audits BoardBoard ofof directorsdirectors BoardBoard basedbased onon USUS && JapanJapan auditingauditing Monitoring
Monitoring Monitoring standardsstandards Monitoring Labor-ManagementLabor-Management Council & Forum President Council & Forum BoardBoard ofof statutorystatutory auditorsauditors SocialSocial ContributionContribution Monitoring Monitoring Monitoring ProgramProgram CommitteeCommittee HalfHalf areare externalexternal Managing Officers Monitoring auditorsauditors Monitoring
MonitoringMonitoring CorporateCorporate EthicsEthics CommitteeCommittee
AprilApril 16,16, 20032003
ToyotaToyota MotorMotor CorporationCorporation 8 ToyotaToyotaToyota’s’’ss TechnologyTechnology StrategyStrategy
AprilApril 16,16, 20032003 ToyotaToyota MotorMotor CorporationCorporation 1 AkihikoAkihiko SaitoSaito ExecutiveExecutive ViceVice PresidentPresident ToyotaToyota MotorMotor CorporationCorporation
2 3 Prius:Prius: TheThe World’sWorld’s FirstFirst ProductionProduction HybridHybrid VehicleVehicle
Power train
Design Packaging
4 DevelopmentDevelopment GoalsGoals ofof First-GenerationFirst-Generation PriusPrius
Fuel economy ◆◆ Innovative advances in fuel economy, surpassing 1.5 times conventional gasoline-fuel 2.0 times engine
◆◆ Drastically cleaner 1/10 of regulation emissions levels
5 ToyotaToyota HybridHybrid SystemSystem (THS)(THS)
Generator Battery Gasoline engine
Power control unit (Inverter etc.) Electric motor
Power split device
Start-up Normal driving Acceleration Deceleration Stopping
Engine Engine Electric operating Motor and Battery charging shuts off motor only with maximum engine Energy recovery No energy efficiency consumption
6 HVHV TechnologyTechnology MatrixMatrix
Strong THSII SU-HV
THSII NG-Prius *EV Drive European THS Prius Toyota Coaster Concept Vehicle Plug-in/Switching Estima HV
Japanese Mild Vehicle A non Japanese EV Vehicle B Drive
Crown Mild HV Motor Power Ratio / Vehicle Power
Series/Parallel HV Series HV Parallel HV ( HV of Hybrids)
* : propelled by electric motor only 7 OverallOverall EfficiencyEfficiency << Well-to-Well-to- Wheel Wheel >> 10-15 mode
Overall efficiency (%) Well to Tank Tank to wheel Overall efficiency (%) (%) (%) 0 10 20 30 Gasoline- engine 88 16 vehicle
Diesel- engine 91 20 vehicle
Prius (THS) 88 30
Estimated by Toyota
8 LowLow EnvironmentalEnvironmental ImpactsImpacts (Emissions)(Emissions) ppmc 50 Gasoline Engine approaching Ambient Air level Hybrids help catalyst warm up hence Conventional reach very low emission level level Cold start emission Hot start emission
5 City Air City Air Gas Concentration Gas Gas Concentration Gas Prius
0
96 98 00 02 04 Year
9 Internal Development of Toyota Hybrid System
Engine Generator Secondary battery Power control unit Hybrid Motor ECU
Engine & Motor & Generator Power control unit
Internally developed components 10 IncreasedIncreased SalesSales ofof HybridHybrid VehiclesVehicles
UnitsUnits 100,000100,000 TotalTotal vehicles vehicles
Crown Mild Hybrid
50,00050,000 Estima Hybrid (4WD)
GasGas turbineturbine HVHV (1969)(1969) Prius YearYear 20012001
11 HybridHybrid SynergySynergy DriveDrive
Fuel Economy Hybrid Synergy Drive
Existing hybrid vehicle
ImprovementImprovement ofof conventionalconventional enginesengines Fun to Drive
12 Next-GenerationNext-Generation HybridHybrid SystemSystem (THS(THS II)II)
Secondary battery
Power control unit Voltage boost converter
Generator Inverter Engine Motor (150% increase in output) Power split device
Driving wheel
Hybrid Synergy Drive 13 BroaderBroader ApplicationApplication ofof thethe Next-GenerationNext-Generation HybridHybrid SystemSystem
((SU-HV)(SUSU--HV)HV)
14 FuelFuel CellCell VehicleVehicle
15 DevelopmentDevelopment ofof ToyotaToyota FCHVFCHV FCHV:FCHV: FuelFuel CellCell HybridHybrid VehiclesVehicles 19921992 Start of FCHV development 19961996 Announcement of the hydrogen FCHV at the EVS-13 (Osaka) 19971997 19961996 The world’s first FCHV with Methanol Reformer 20012001 Announcement of the FCHV-3, FCHV-4, FCHV-BUS1, and FCHV-5 20022002 Announcement of FCHV-BUS2 & limited marketing with 19971997 the delivery of Toyota FCHV
2002 2001 20022002 2002 2001 16 InternalInternal DevelopmentDevelopment ofof CoreCore TechnologiesTechnologies
Independent In-house Development of Total System Including Fuel Cell Stacks
Secondary Air battery compressor High-pressure Motor Motor Power control hydrogen Power control unit unit storage tank TOYOTA Air compressor HV EUC FC Stack
Internally developed components Motor TOYOTA FC Stack
17 ApplicationApplication ofof HybridHybrid TechnologyTechnology
PRIUS TOYOTA FCHV
ICE Hybrid Vehicle (PRIUS) Toyota Fuel Cell Hybrid Vehicle
Engine Fuel Cell
Power Power Control Unit Control Unit
Secondary Secondary Battery Motor Battery Motor
18 OverallOverall EfficiencyEfficiency
Well to Tank to Overall efficiency (%) tank( %) Wheel(%) 010203040
Gasoline- engine 88 16 vehicle
FCV (High-pressure 38 hydrogen) 58 FCHV (High-pressure 50 hydrogen)
10-15 modes Estimated by Toyota * Based on current consumption 19 FutureFuture ImageImage ofof PowertrainPowertrain Development Development 2 (in billions)
Fuel cost + fuel cell cost
1 Internal combustion engine vehicles
Internal combustion engine HV Total world vehicle ownership Internal combustion engine fuel cost + Internal combustion engine cost 0 Fuel cell vehicle 2000 20X0 Year
20 Toyota’sToyota’s EnvironmentalEnvironmental TechnologyTechnology DevelopmentDevelopment The Ultimate ECO-Car
FCHVFCHV THSTHS Hybrid Technology DPNRDPNR D-4D-4 CNGCNG DieselDiesel DIDI LeanLean BurnBurn EVEV VVT-iVVT-i
Alternative Diesel-engine Gasoline-engine fuel vehicle vehicle EV & FCV
21 ToyotaToyotaToyota’s’’ss TechnologyTechnology StrategyStrategy
AprilApril 16,16, 20032003 ToyotaToyota MotorMotor CorporationCorporation 22 ToyotaToyotaToyota’s’’ss GlobalGlobal StrategyStrategy ———MovingMovingMoving towardtoward GlobalGlobal MotorizationMotorizationMotorization———
AprilApril 16,16, 20032003 ToyotaToyota MotorMotor CorporationCorporation