Annual Report 2007 Year ended March 31, 2007 Building a Platform for Growth Established in1937, Toyota Motor Corporation—which celebrates its 70th anniversary this year— has developed into one of the world’s best known automobile manufacturers. The Toyota Group sold over 8.5 million vehicles under the Toyota, Lexus, Daihatsu, and Hino brands in more than 170 countries and regions in fiscal 2007. Further, the Company’s production is firmly rooted in local communities, with 52 companies manufacturing vehicles and parts in 26 countries and regions. Toyota had approximately 300,000 employees on a consolidated basis at the end of fiscal 2007. Cautionary Statement with Respect to Forward-Looking Statements This annual report contains forward-looking statements that reflect Toyota’s plans and expectations. These forward-looking statements are not guarantees of future perfor- mance 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 stop- pages 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. Contents 3 Financial Highlights P6 4 At a Glance 6 Chairman’s Message Fujio Cho, Chairman “By focusing on its core manufacturing principles, Toyota is committed to building cars that customers love the world over.” 8 President’s Message & Interview Katsuaki Watanabe, President “I am committed to steadily improving Toyota’s corporate value by continuing to pursue farsighted innovations and building a solid management platform.” 16 Message from the Executive Vice President Responsible for Accounting Mitsuo Kinoshita, Executive Vice President “Earnings increased significantly due to higher vehicle sales fueled by brisk overseas sales and to cost reductions.” P8 P16 20 Special Feature The Challenge: Strengthen Production Competitiveness —Building a solid foundation for sustainable growth— Because manufacturing capabilities are the core of its competitiveness, Toyota has to further strengthen the competitiveness of its production for future growth. This special feature focuses on the steps we are taking to strengthen the international competitiveness of our production. P20 32 Business Overview Toyota’s fiscal 2007 performance by business segment 33 Automotive Operations 44 Financial Services Operations 46 Other Business Operations P33 47 Management & Corporate Information A variety of information relating to the Company and its management, including corporate philosophy, corporate governance, environmental and social initiatives, Toyota milestones, and an overview of operating bases 69 Financial Section (Environmental and (Toyota 136 Investor Information P56 Social Initiatives) P64 Milestones) ANNUAL REPORT 2007 1 Building a Platform for Growth The platform of a car largely determines basic performance and driving feel. Without solid bases, vehicles lack stability and comfort. Companies are the same. They need strong platforms to perform well and keep growing. In Toyota’s management platform, technological, supply, and sales capabilities drive growth, supported by quality, cost, and human resources. At Toyota, we are building a rock-solid management platform that will launch us toward new levels of achievement. In this year’s annual report, Toyota’s chairman discusses how, since its founding, Toyota has upheld its unique manufacturing mind-set and focused on fostering human resources. Also, in an interview, the president explains measures for consolidating foundations and Toyota’s forward-looking management strategies. In a special feature section, we hear from one of Toyota’s executive vice presidents and other personnel about Toyota’s focus on strengthening the international competitiveness of production and a range of initiatives to consolidate foundations and realize future growth. We hope this report furthers readers’ understanding of Toyota. 2 ANNUAL REPORT 2007 Financial Highlights Toyota Motor Corporation Fiscal years ended March 31 Consolidated Performance (U.S. GAAP) U.S. dollars* Yen in millions in millions % change 2005 2006 2007 2007 2006 vs 2007 For the Year: Net Revenues....................................... ¥18,551,526 ¥21,036,909 ¥23,948,091 $202,864 +13.8 Operating Income ............................... 1,672,187 1,878,342 2,238,683 18,964 +19.2 Net Income........................................... 1,171,260 1,372,180 1,644,032 13,927 +19.8 ROE....................................................... 13.6% 14.0% 14.7% — — At Year-End: Total Assets .......................................... ¥24,335,011 ¥28,731,595 ¥32,574,779 $275,941 +13.4 Shareholders’ Equity............................ 9,044,950 10,560,449 11,836,092 100,263 +12.1 Yen U.S. dollars* % change 2005 2006 2007 2007 2006 vs 2007 Per Share Data: Net Income........................................... ¥ 355.35 ¥ 421.76 ¥ 512.09 $ 4.34 +21.4 Annual Cash Dividends ....................... 65.00 90.00 120.00 1.02 +33.3 Shareholders’ Equity............................ 2,767.67 3,257.63 3,701.17 31.35 +13.6 Stock Information (March 31): Stock Price............................................ ¥3,990 ¥6,430 ¥7,550 $63.96 +17.4 Market Capitalization (Yen in millions, U.S. dollars in millions) ............................ ¥14,403,890 ¥23,212,284 ¥27,255,481 $230,881 +17.4 * U.S. dollar amounts have been translated at the rate of ¥118.05=US$1, the approximate current exchange rate at March 30, 2007. Net Revenues Operating Income Net Income Cash Dividends per Share +¥30.00 +13.8% +19.2% +19.8% Annual Cash Dividends per Share ¥23.95 trillion ¥ 2.24 trillion ¥ 1.64 trillion ¥120.00 8 consecutive years of A new record A new record A new record increased dividends (¥ Billion) (¥ Billion) (¥ Billion) (¥) 25,000 2,500 2,000 150 20,000 2,000 1,600 120 15,000 1,500 1,200 90 10,000 1,000 800 60 5,000 500 400 30 0 0 0 0 FY ’03 ’04 ’05 ’06 ’07 FY ’03 ’04 ’05 ’06 ’07 FY ’03 ’04 ’05 ’06 ’07 FY ’03 ’04 ’05 ’06 ’07 Note: Fiscal years ended March 31 ANNUAL REPORT 2007 3 At a Glance Toyota Motor Corporation Fiscal years ended March 31 Consolidated Segment Information Business Segment Net Revenues Operating Income Other Business Other Business Financial % Financial % Services 5.4 Automotive Services 1.8 Automotive 5.3% 89.3% 7.1% 91.1% FY 2007 FY 2007 Geographic Segment Net Revenues Operating Income Other Regions Other Regions Asia Asia % % 6.1 Japan 3.7 Japan 7.1% 5.3% 47.0% Europe 64.9% Europe 6.1% 11.2% North North America America 28.6% 20.0% FY 2007 FY 2007 Net Revenues Japan North America Europe Asia Other Regions (¥ Billion) (%) (¥ Billion) (%) (¥ Billion) (%) (¥ Billion) (%) (¥ Billion) (%) 16,000 16 16,000 16 16,000 16 16,000 16 16,000 16 12,000 12 12,000 12 12,000 12 12,000 12 12,000 12 8,000 8 8,000 8 8,000 8 8,000 8 8,000 8 4,000 4 4,000 4 4,000 4 4,000 4 4,000 4 0000000000 FY ’04 ’05 ’06 ’07 FY ’04 ’05 ’06 ’07 FY ’04 ’05 ’06 ’07 FY ’04 ’05 ’06 ’07 FY ’04 ’05 ’06 ’07 Operating income margin Operating income margin Operating income margin Operating income margin Operating income margin (Right scale) (Right scale) (Right scale) (Right scale) (Right scale) Note: Fiscal years ended March 31 4 ANNUAL REPORT 2007 Consolidated Vehicle Production and Sales Thousands of units % change 2005 2006 2007 2006 vs 2007 Vehicle Production by Region: Japan................................................................................ 4,534 4,684 5,100 +8.9 Overseas Total ................................................................ 2,697 3,027 3,080 +1.8 North America ............................................................. 1,156 1,201 1,205 +0.3 Europe.......................................................................... 596 623 709 +13.9 Asia ..............................................................................