Annual Report 2009 The Right Way Forward Year ended March 31, 2009 Contents 1 Top Messages 1 Chairman’s Message Fujio Cho, Chairman 2 President’s Message Akio Toyoda, President 4 Message from the Executive Vice President Yoichiro Ichimaru, Executive Vice President 7 Toyota Management Team 8 Performance Overview 10 The Right Way Forward Toyota is dedicated to excellence in manufacturing in order to provide high-quality at affordable prices based on our commitment to the Customer First and genchi genbutsu (on-site, hands-on experience) philosophies. We will continue to focus on the challenge of making even better cars that are appealing to customers around the world. 17 Business Overview The Year in Review / Automotive Operations / Financial Services Operations / Other Business Operations / Motorsports Activities 25 Management & Corporate Information Corporate Philosophy / Corporate Governance / Risk Factors / R&D and Intellectual Property / R&D Organization / Production Sites / Overseas Manufacturing Companies / Toyota Milestones 41 Financial Section 108 Investor Information 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 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, Asia 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, the Canadian 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 government 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. Redesigned Prius (May 2009) Top Messages Chairman’s Chairman’s MessageMessage “ Returning to the roots of the monozukuri philosophy that have nurtured Toyota since its founding, we are striving to create a new automotive paradigm —one that contributes to a bountiful society as it helps preserve the Earth’s environment. ”Fujio Cho, Chairman The unprecedented global economic crisis significantly impacted our bottom line in fiscal 2009, ended March 31, 2009, resulting in an operating loss for only the second time in the Company’s history. I sincerely regret the concern this has caused stakeholders—our shareholders and investors, customers, business partners, and members of the local communities in which we operate. I assure you that the speedy restoration of Toyota’s business vitality—and the laying of strong foundations for future growth—are our top management priorities. Today, the automobile industry is facing its toughest challenges ever. But as an industry that affects society on a global scale, we have an exceptionally important role to play. Our first responsibility, of course, is to provide customers around the world with the attractive and appealing cars they truly want. To help us fulfill that responsibility while protecting the global environment, we have greatly accelerated our development of hybrid vehicles and other environmentally friendly technologies. Toyota is rooted in local communities worldwide, and we will continue to do our utmost to contribute to society, economic growth, and environmental protection in the countries in which we operate. To that end, we are trying to provide jobs and develop human resources through education and training programs, and have returned to the genchi genbutsu (on-site, hands-on experience) roots of Toyota’s monozukuri philosophy—an all-encompassing approach to manufacturing that results in added value for all stakeholders. In June 2009, we introduced a new management team with a strong focus on on-site operational management. As we continue to dedicate ourselves to the creation of better automobiles, we are also strengthening our Groupwide efficiency and human resources development efforts. In closing, I would like to ask for the continued support of our shareholders and investors in the days ahead. With your help—and the bold, resolute action of our committed management team—I am confident that we can restore Toyota to stable growth and continue to increase our corporate value for decades to come. July 2009 Fujio Cho, Chairman Annual Report 2009 1 Top Messages President’s President’s Message “ Close to the customer, and with a strong commitment to the genba*, we will continue our quest to make better cars. Akio Toyoda”, President Having been appointed president of Toyota Motor Corporation at the Ordinary General Shareholders’ Meeting held on June 23, 2009, I would like to begin by expressing heartfelt thanks for the warm, ongoing support of our stakeholders worldwide. Today, the state of the global economy continues to have a devastating effect, not just on automobile manufacturers, but also on parts suppliers and other smaller companies across the entire automobile industry. At Toyota, both vehicle sales and production have fallen sharply, severely impacting business results in fiscal 2009, ended March 31, 2009. As our new management team sets sail under these stormy economic conditions, we feel a deep sense of responsibility to our shareholders and investors. Since Toyota’s founding, we have always made it our pledge to “make better cars and contribute to society.” To fulfill this pledge, we have put the customer first, practiced genchi genbutsu (on-site, hands-on experience), and dedicated ourselves to providing high-quality vehicles at an affordable price. I believe it is these fundamental elements of Toyota’s DNA, passed down over seven decades since our founding, that will enable us to overcome the challenges we currently face. To help us achieve our goals, we are implementing a stronger product-oriented management model focused on making better cars. We have also taken a fresh look at what it means to be an automobile manufacturer, and are redoubling our commitment to the Customer First and genchi genbutsu philosophies that are an integral part of Toyota’s corporate heritage. More specifically, we are reviewing every aspect of our business from the customer’s point of view—including technological development, manufacturing, sales, and service—so that we can develop new products, reduce costs and continue to offer customers the cars they truly want at a price they can realistically afford. In addition, our renewed emphasis on the genba enables us to better anticipate, as well as respond to, the needs of customers and society. * The place of engagement; on the front lines 2 TOYOTA MOTOR CORPORATION Management & Investor Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information Chairman’s Message President’s Message Message from Toyota the Executive Vice President Management Team In order to fully realize product-oriented management, we are also placing greater emphasis on market needs. Based on our Customer First philosophy, we are developing a clear regional vision that defines the best way to serve customers and society in each area of the globe. Our new management structure reflects this emphasis with five regional executive vice presidents that are rich with on-site experience who will provide the hands-on stewardship needed to respond promptly to changing circumstances around the world. I personally believe that cars should not just be a means of transportation, but also a vital part of society, today and in the future. I also believe that they should bring excitement and joy to the lives of the people who drive them. To help realize this dream, we are putting even greater emphasis on the development of environmentally friendly technologies, and are working on breakthrough technologies that will make driving even more fun and exciting in the future. No matter what the business environment, Toyota will never