Topics Regional Strategy Japan: Realigning Brand Channels—New Product and Distribution Strategy Aiming to revitalize the Toyota brand and heighten marketing efficiency, we reorganized our five existing brand channels into four in May 2004. The post-realignment strategy focuses Toyota channel on high-end vehicles, Toyopet channel on mid-range products, and Corolla channel on compact cars. Moreover, our new Netz channel—created by merging the Lexus dealer image former Vista and Netz channels—will cultivate untapped markets by concentrating on North America: Leveraging Scion to Cultivate a New progressive, differentiated lineups. We aim to Customer Segment carve out a larger market share by leveraging each channel to raise brand value. Following on from the marketing of the xA and the xB in June 2003 in California, we debuted the tC—designed exclusively for the U.S. market—in July 2004. At the same time, we The new Netz logo stepped up efforts to target young customers Also, plans call for the introduction of the Lexus by launching Scion-marque vehicles at more brand into the Japanese market in August than 700 dealers throughout the United States. 2005. We hope to further entrench competitive Internet sales and a personal specifications dominance in our home market by using this concept that allows customers to freely global, premium brand to meet the increasing combine more than 40 optional parts when demand for cars that offer a “sense of the best” ordering a car have captured the imagination as well as individuality. In the first year, Toyota of younger consumers. As a result, we believe plans to offer four Lexus models through 180 we are dealers. We expect then to steadily open more successfully dealerships and increase the number of cultivating a models carried by the Lexus channel. new customer base of first- time Toyota buyers. Scion tC 5 IsisPASSO Porte HIACE Europe: Expanding Operations by Increasing Local China, Guangzhou Toyota Motor Co., Ltd.. With Production an annual production capacity of 100 thousand In line with efforts to vehicles, it is expected that the new company advance local will begin production, we manufacturing increased annual and selling the production capacity Camry from at Toyota Motor mid-2006. Manufacturing As a result, Toyota Motor Manufacturing France (TMMF) France (TMMF) from Toyota plans 184 thousand to 210 thousand vehicles in May to raise its 2004. Along with an increase in production total annual production capacity at our plant in Turkey (Toyota Motor Signing ceremony with Guangzhou Automobile Group Manufacturing Turkey) in March 2004 and a capacity in slated raising of capacity at Toyota Motor China to 335 thousand vehicles by 2006. We Manufacturing UK (TMUK), we expect annual intend to enhance lineups by continuing to production capacity to reach 645 thousand actively bring new products to the market. vehicles next year. Also, Toyota and PSA Also in September 2004, we concluded an Peugeot Citroën plan to start manufacturing agreement with China FAW Group Corporation small passenger cars in the Czech Republic to jointly promote the widespread use of high- starting in 2005. Our market share is quality, high-performance hybrid vehicles built approaching 5% thanks to seven straight years in China. Plans call for beginning assembly of of vehicle sales growth in Europe’s fiercely the Prius by the end of 2005. Moreover, both competitive market. Toyota intends to continue sides agreed to consider future possibility of an curbing the average CO2 emissions of its FAW-branded vehicle featuring a hybrid vehicles while enhancing profitability by system based increasing sales of locally produced vehicles on Toyota and expanding lineups of diesel vehicles— technology. which account for roughly half of the European market. China: Expanding Operations Dramatically In September 2004, Toyota and Guangzhou Automobile Group Co., Ltd. established a joint Signing ceremony with China FAW Group Corporation vehicle production and sales company in 6 Production Strategy IMV Project—Building an Optimal Production System In August 2004, we unveiled the Hilux VIGO resources and potential of outside-Japan new-model pickup in Thailand as the first global production and supply bases for both installment of the IMV (Innovative International vehicles and components. It is also remarkable Multi-Purpose Vehicle) series. Also, in for fact that production will start almost at the Indonesia, we began rolling out a new minivan, same time at its four main production bases of the Kijang Innova, as an addition to the IMV Thailand, Indonesia, Argentina, and South range in September 2004. Africa, which will supply vehicles to markets in Initially, the globalization of Toyota’s business more than 140 countries. Moreover, the project activities was centered on production in Japan includes the production of components in and exporting abroad. This was gradually Thailand, Indonesia, and India for supply to the followed by efforts to build where sold. Today, vehicle-producing countries. Toyota hopes to as free trade agreements become increasingly benefit the automobile industries and common, Toyota aims to offer more-attractive economies of each country involved in the IMV products worldwide and at the same time by project building production and supply structures that improve efficiency through global scale. We call that initiative the IMV Project—an unprecedented approach under the “Made by Toyota” banner that draws fully on the Europe Hilux VIGO (manufactured in Thailand) Middle East Asia Central and South Africa Thailand America TMT 280,000 units*2 (140,000 for export) Indonesia TMMIN 80,000 units*2 (10,000 for export) Kijang Innova (manufactured in Indonesia) Argentina [2005]*1 South Africa [2005]*1 TASA 60,000 units *2 TSAM 60,000 units*2 (30,000 for export) (45,000 for export) Oceania *1 Year production is scheduled to begin *2 Annual production capacity 7 Technological Strategy Development of VDIM – Revolutionizing Active Safety Technology Toyota’s technological development vision is TRC (Traction Control System) and ABS (Anti- founded on “Zero-nizing”, or ultimately striving lock Brake System) begin activating control for zero negative aspects of car society, such when the vehicle’s limit has been reached, as environmental damage and traffic VDIM seamlessly integrates the engine, brakes accidents, while “Maxi-mizing” our customers’ and steering control before the vehicle reaches sense of well-being by offering highly its limits, closing the gap between how a driver enjoyable, comfortable products. intends the vehicle to perform and the vehicle’s VDIM (Vehicle Dynamics Integrated actual performance, based on data gleaned Management) is one example of a new from various sensors. It ensures a high level of technology born as a result of our tireless quest active safety and creates new driving pleasure. to “Zero-nize” and “Maxi-mize.” VDIM integrates management of the engine, brakes, steering and other control systems that hitherto functioned independently, thereby achieving ideal vehicle kinetics. Whereas conventional VSC (Vehicle Stability Control), VDIM System Structure Steering angle sensor Brake pedal stroke sensor Braking pressure sensor Brake actuator Brake ECU Speed sensor (all wheels) Electronically controlled power steering ECU Steering torque sensor Yaw rate and acceleration sensor Engine ECU Electronically controlled power steering actuator Vehicle path presumed by the driver VDIM VSC The Crown Majesta (front engine rear drive) with VDIM fitted as standard 8.