Annual Report
Year ended March 31, 2014
Aiming to Achieve
Sustainable Growth
and to Bring Smiles
ANNUAL REPORT 2014
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3 President’s Message
Aiming to Achieve
Sustainable Growth
and to Bring Smiles
5 Overview of Four Business Units
5 Lexus International
Lexus International: Becoming a Truly Global Luxury Brand
6 Toyota No. 1
Improving Our Earnings Structure and Offering Advanced Technologies in Developed Markets
7 Toyota No. 2
Supporting Toyota in Future Growth Markets
8 Unit Center
9 Special Feature
Toyota’s DNA Will Endure for the Next 100 Years
10 Toyota in 10 Years and 100 Years
16 Our DNA is Creating Ever-Better Cars
19 Enriching Lives and Building Tomorrow’s Toyota through Innovation
24 Message from the Executive Vice
Developing and Commercializing Major Components with Best-in-World Competitiveness
President Responsible for Accounting
26
29
Consolidated Performance Highlights
34
Management and Corporate Information
44
Financial Section
Review of Operations
29 Automotive Operations
30 Financial Services Operations
31 Non-Automotive Business Operations
34 R&D and Intellectual Property
36 Corporate Philosophy
37 Corporate Governance
39 Management Team
41 Risk Factors
44 Selected Financial Summary (U.S. GAAP)
46 Consolidated Segment Information
47 Consolidated Quarterly Financial Summary
48 Management’s Discussion and Analysis of
Financial Condition and Results of Operations
62 Consolidated Balance Sheets
63 Consolidated Statements of Income
64 Consolidated Statements of
Comprehensive Income
65 Consolidated Statements of Shareholders’ Equity
66 Consolidated Statements of Cash Flows
67 Report of Independent Registered Public
Accounting Firm
68
Investor Information
Cautionary Statement with Respect to Forward-Looking Statements
This document 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 finan-
cial position expressed or implied by these forward-looking statements. These
factors include, but are not limited to:
(i) changes in economic conditions, market demand, and the competitive environ-
ment affecting 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 Russian ruble,
the Canadian dollar and the British pound, and interest rates fluctuations;
(iii) changes in funding environment in financial markets and increased competition in
the financial services industry;
(iv) Toyota’s ability to market and distribute effectively;
(v) Toyota’s ability to realize production efficiencies and to implement capital expendi-
tures at the levels and times planned by management;
(vi) 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 vehicle safety including remedial measures such
as recalls, trade, environmental protection, vehicle emissions and vehicle fuel econ-
omy, as well as changes in laws, regulations and government policies that affect
Toyota’s other operations, including the outcome of current and future litigation and
other legal proceedings, government proceedings and investigations;
(vii) political and economic instability in the markets in which Toyota operates;
(viii) Toyota’s ability to timely develop and achieve market acceptance of new prod-
ucts that meet customer demand;
(ix) any damage to Toyota’s brand image;
(x) Toyota’s reliance on various suppliers for the provision of supplies;
(xi) increases in prices of raw materials;
(xii) Toyota’s reliance on various digital and information technologies;
(xiii) fuel shortages or interruptions in electricity, 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; and
(xiv) the impact of natural calamities including the negative effect on Toyota’s vehicle
production and sales.
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Aiming to Achieve Sustainable Growth
and to Bring Smiles
First, I would like to extend my sincere gratitude for your continued
management structure enables each unit leader to adopt a self-
support and understanding.
sustaining approach that makes the most of on-site, hands-on
Since 2009, Toyota has encountered a multitude of challenges.
experience, thereby facilitating quick decision making. This ability
Thanks to the tireless efforts of all concerned, today we can take
to address individual requirements on a more detailed basis is all
pride in the strengths of our management practices and culture. I
the more important when considering the varying scales and stages
am convinced that we are now in a position to take a definitive
of motorization in each market. In 2014, we are taking this concept
step forward toward sustainable growth.
of self-sustaining operations one step further by making better cars
Just as a tree’s growth rings testify to its survival and growth,
on an individual platform basis. For example, “Team K” will assume
I believe that Toyota’s ongoing growth rests entirely on its ability
comprehensive responsibility for the development, procurement, and
to grow in the face of any adversity. Having recently achieved the
production for models that employ the K platform, including the
unprecedented milestone of 10 million vehicles in global Group sales,
Camry and Avalon. This greatly broadens the scope of the develop-
we are now advancing into uncharted territory. If we are to achieve
ment process, which had tended to focus on individual models, and
sustainable growth, it is vital that we nurture our human resources
allows whole platform teams to channel their energies toward making
while building on each growth ring. It is equally important, however,
better cars.
that we maintain self-restraint and avoid overextension. Balancing
In North America, the decision has been made to unify and relo-
these concerns and directing management resources to areas that
cate the manufacturing, sales and marketing, corporate, and finan-
offer the potential for growth, we will pursue bold innovation and
cial services headquarters at a new shared campus in Plano, Texas,
make aggressive forward-looking investments.
from the latter half of 2016. This will allow our North American opera-
For example, Toyota reorganized its automotive operations into
tions to address the needs of customers in a timelier manner, and to
four business units in April 2013. This more agile and autonomous
produce ever-better cars that exceed expectations. With a history
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spanning more than five decades, Toyota believes that its operations
Toyota marked its 75th anniversary in 2012. It is important to
however, tasks that were once routine may become increasingly diffi-
in North America will benefit through this “One Toyota” concept. By
remember that the many fruits that we are able to harvest today
cult to perform. We also have to remember that actions taken during
undertaking a thorough review of its business structure and working
were sown and cultivated by our hard working predecessors. It is
a crisis may not be practicable at other times.
beyond the boundaries of established manufacturing, sales and
imperative that we, too, place similar importance on our responsibili-
As I see it, Toyota’s current situation is particularly critical as we
marketing, and corporate and financial services, we are better placed
ties to plow, plant, and cultivate the seeds of the future. In this
are now entering another expansion phase. This is why I believe it is
to pursue sustainable growth.
manner, future generations can benefit from the work we do today.
important to put in place independent business units to carry out all
Toyota is equally committed to innovation, the wellspring for new
Early in April 2014, we articulated a new internal slogan: “Work
appropriate activities on the front line.
technologies and future growth. Moving forward, we will maintain our
Today, Smile Tomorrow: in Pursuit of True Competitiveness and
All 330,000 Toyota employees around the world are doing their
commitment to the environment by strengthening and developing our
Innovation.” This new slogan encapsulates my strong belief that our
best to bring happiness, safety, and peace of mind to customers and
hybrid technologies. In addition to efficient gasoline engines and fuel
continued growth must be informed by a strong sense of history. At
communities. As we work to achieve these goals, I would very much
cell vehicles, we will endeavor to develop and commercialize safety
the same time, it is a forward-looking statement that paints a picture
appreciate your continued support.
technologies that offer safe and responsible ways of moving people.
of how Toyota should look both a decade and century from now.
Taking each of these factors into consideration, Toyota will actively
What is the engine for sustainable growth? We have learned from
July 2014
direct resources toward next-generation mobility and IT infrastructure
experience that we can achieve sustainable growth only if we create
innovation.
attractive and appealing cars that bring smiles and if we foster the
As I have already mentioned, my goal is to ensure that Toyota
human resources needed to make this a reality. At the same time,
evolves into a company that is capable of sustainable growth. Even in
ever-better cars can be produced only through efforts made by
the face of a situation like the recent global financial crisis, Toyota
employees on the front line. Individuals must take ownership of their
must not only be resilient, but also be well-equipped to succeed
work and place the utmost emphasis on local manufacturing, swift
against adversity.
decision making, and immediate action. As we continue to grow,
Akio Toyoda
President
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Overview of Four Business Units: Lexus International Toyota No. 1 Toyota No. 2 Unit Center
Lexus: Becoming a Truly Global Luxury Brand
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Lexus NX
Lexus RC
“Strobe,” the third installment of the global Amazing in Motion advertising
campaign, featured a storyline in which a single person cloaked in light ran
and flew freely through the city night.
Our aim is for Lexus—a Japanese original—to
become a truly global luxury brand. Worldwide,
we are pushing forward to offer value that is
different from other luxury brands. The Lexus
International business unit is under the direct
supervision of the president and acts as the
global head office for Lexus brand develop-
ment, sales, marketing and advertising.
Successful overhauls lead from a decline to
record sales
In 2013, 523,000 Lexus vehicles were sold,
exceeding the 518,000 vehicles sold in 2007 just
prior to the start of the global financial crisis. This
increase was largely attributable to the successes
of the redesigned GS launched in 2012 and the
redesigned IS launched in 2013. In 2014, Lexus
plans to continue introducing new vehicles and is
predicting yet another year-on-year sales
increase.
Looking to deliver an exhilarating driving experi-
ence that exceeds expectations, Lexus is focusing
on enhancing the product lineup in the current fiscal
year. For example, we are striking out with innovative
designs, including a distinctive spindle grille that will
make Lexus cars instantly identifiable. We will also
work to differentiate the Lexus brand by taking the
lead in adopting environmental and advanced tech-
nologies centered on hybrid vehicles.
In July 2014, Lexus introduced the NX
compact crossover SUV in Japan as the spring-
board for its launch in other parts of the globe.
Powered by a newly developed 2.0-liter turbo
engine—a first for Lexus—the NX 200t offers both
excellent driving and environmental performance,
while the NX 300h features a 2.5-liter hybrid
system for best-in-class environmental
performance. These additions have rounded out
our lineup of SUVs that are well suited for urban
use in an era of environmental awareness.
Slated for release in late 2014, the new RC
sports coupe is an expression of the pure exhila-
ration felt while driving a Lexus. In addition, the
RC F version will act as the core model of Lexus’
F series of sports cars, which embody the relent-
less pursuit of exhilaration.
Lexus branding activities
Beyond improvements to the vehicle lineup,
Lexus is aiming to link the brand with a new
luxury concept through a variety of lifestyle-
focused branding activities.
With the aim of enhancing the Lexus brand image
while reaching out to a broader range of customers,
we have launched a coordinated series of TV
commercials worldwide featuring our new global
brand campaign slogan “Amazing in Motion.”
We are taking these branding activities one
step further through the Lexus Design Awards
and Lexus Short Films contests that encourage
young, talented creators; the Lexus Amazing
Experience test drive event held at Fuji Speedway,
which provides opportunities to experience the
thrill of driving, and the establishment of the
Intersect by Lexus event and lifestyle space.
Furthermore, this year Lexus has signed
professional golfer Hideki Matsuyama as Lexus
brand ambassador to emphasize the Japanese
origins of Lexus as it takes on the best from
around the world. Lexus will also participate more
actively in motorsports with race cars based on
the RC F in a bid to enhance the exhilarating
image of Lexus.
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Overview of Four Business Units: Lexus International Toyota No. 1 Toyota No. 2 Unit Center
Improving Our Earnings Structure and
Offering Advanced Technologies in Developed Markets
Toyota Vehicle Production in Japan by Year (1935-2013)
Dec. 2013:
150 Million
Milestone
Jan. 1986:
50 Million
Milestone
Oct. 1999:
100 Million
Milestone
Jan. 1972:
10 Million
Milestone
Yaris Hybrid
Tundra
(Million)
5
4
3
2
1
0
1935
’40
’45
’50
’55
’60
’65
’70
’75
’80
’85
’90
’95
2000
’05
’10
’13
Voxy
Noah
The Toyota No. 1 business unit (in charge of
North America, Europe, and Japan) has three
goals: continue creating ever-better cars
through local development, procurement, and
production; establish an earnings structure
able to sustain growth; and maintain annual
production in Japan at three million vehicles.
In line with its aim for sustainable growth in
the North American market, Toyota is prepar-
ing to consolidate all headquarters functions
for the region in Plano, Texas, from 2016,
ahead of the 60th anniversary of Toyota
exports to the U.S. in 2017 (see page 13
for more details).
Over 150 million vehicles produced in Japan
In Japan, cumulative production of Toyota vehi-
cles crossed the 150 million mark on December
5, 2013. This feat took over 78 years to achieve,
starting in August 1935 with the first Model G1
Truck manufactured by the Automotive
Production Division of Toyoda Automatic Loom
Works, Ltd. (now Toyota Industries Corporation).
Production in Japan has accounted for roughly
70% of the 210 million vehicles manufactured
globally to date. The highest-volume model is the
Corolla, with a total of about 25,450,000 vehicles
built in Japan as of the end of December 2013. In
Japan, Toyota boasts a robust manufacturing
foundation replete with advanced technologies,
manufacturing expertise, talented human
resources, and a multilayered supply network.
This foundation has allowed Toyota to pursue its
global ambitions, and remains the source of many
innovative technologies and high-value-added
cars. We believe our manufacturing facilities in
Japan are a base from which we can strengthen
our global competitiveness. We have always
believed in contributing to society through manu-
facturing, and we will keep doing our utmost to
make ever-better cars.
Vehicle sales remain strong in Japan,
the United States, and Europe in 2014
Our efforts to make ever-better cars are paying
off; in 2014, Toyota once again enjoyed strong
sales in Japan, the United States, and Europe.
In Japan, sales have been robust for the Voxy
and Noah compact minivans as well as for the
Harrier luxury crossover SUV. In the United
States, sales increased for our mainstay Camry
and Corolla models, as well as for larger vehicles,
COMS (left), Toyota i-ROAD
On October 1, 2014, “Cité lib by Ha:mo,” a new type of urban mobility
based on ultra-compact electric vehicles connected to public transport,
launches in Grenoble, France.
including the Highlander, Tundra and RAV4. In
Europe, Toyota saw firm sales of the Auris Hybrid
Touring Sports and Yaris Hybrid.
Car sharing trial in France
Starting in October 2014, Toyota will participate in
a three-year car-sharing experiment in Grenoble,
France. The project will be run in partnership with
the City of Grenoble, Grenoble-Alpes Métropole,
Citélib and the EDF Group, and will use 27
recharging stations around the city. We will
provide 70 ultra-compact Toyota i-ROAD and
COMS electric vehicles. The eventual aim of
these projects is to reduce traffic congestion and
improve air quality in city centers by enabling the
smart movement of people from the closest
public transportation station to their final destina-
tion (see pages 22 and 31 for more details).
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Overview of Four Business Units: Lexus International Toyota No. 1 Toyota No. 2 Unit Center
Supporting Toyota in Future Growth Markets
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Ceremony to commemorate the start of Vios exports to the Middle East
Vios
Toyota Motor Engineering & Manufacturing (China) Co., Ltd.
Growth in emerging markets has been quite
volatile recently, but there is still huge poten-
tial for further growth. We need to take advan-
tage of this potential by introducing products
attuned to market needs in a timely way.
Meanwhile, governments in emerging markets
are moving to tighten fuel economy and safety
regulations, bringing them on par with
advanced economies. At Toyota, we must
identify and address the true needs of consum-
ers based on the situation and economic
condition of each country to promote motoriza-
tion and create ever-better cars.
Indonesia: a global production and
supply base
Toyota positions Indonesia as one of its major
global production and supply bases, and has
expanded annual production capacity there from
110,000 vehicles in 2012 to 250,000 vehicles in
2014. Toyota has begun exporting the Vios, its
first Indonesian-made sedan model designed for
export, to Singapore and Brunei followed by nine
countries in the Middle East. Last year, Toyota
exported 118,000 Indonesian-made vehicles to
more than 70 countries in Asia, Africa, Latin
America, and the Middle East. Toyota accounted
for more than 70% of the vehicles made in and
exported from Indonesia.
Indonesia is also an important engine produc-
tion and supply base for Toyota. Our bases in
Indonesia produce engines for the IMV* series of
vehicles: the Hilux pickup truck, Innova minivan,
and Fortuner. About 40% are exported to vehicle
factories in Asia, Latin America, and Africa. Toyota
recently began construction on a new engine
plant for standard passenger cars with the capac-
ity to manufacture 216,000 engines annually, and
plans to begin operations in 2016.
At the end of February 2014, Toyota also began
exporting Toyota-brand compact cars manufac-
tured at an Indonesian subsidiary of Daihatsu
Motor Co., Ltd., to the Philippines. This was the
first export model to receive certification under the
Indonesian government’s LCGC** program.
To address worsening traffic congestion in
Indonesia, 23 Toyota Group companies in
Indonesia worked with the Jakarta government,
the Embassy of Japan, and the Japan International
Cooperation Agency (JICA) on a project in
November 2013 to alleviate the traffic jams plagu-
ing Jakarta’s busy Mampang intersection. Road
work and construction was undertaken that
resulted in the length of the worst traffic jams being
cut about 77% (Source: Toyota Astra Foundation).
* IMV: Innovative International Multi-purpose Vehicle.
** LCGC: Low Cost Green Car, a government program to
promote the use of low-cost, high-fuel efficiency vehicles.
Vehicles certified under the program receive preferential tax
treatment.
Starting to produce hybrid powertrain units
in China
To deliver hybrid vehicles to more customers in
China, Toyota has been working to produce
hybrid units overseas—a first for Toyota—mainly
at Toyota Motor Engineering & Manufacturing
(China) Co., Ltd., which was completed in
November 2013. As a part of this initiative, Toyota
established a company to produce batteries and
another company to manufacture hybrid vehicle
transaxles, with plans to begin operations in
2015. In addition, Toyota is working to create a
production structure for major components, such
as inverters. Starting in 2015, we plan to use
these Chinese-made hybrid units in the Corolla
and Levin models produced and sold through
joint ventures with FAW Group Corporation and
Guangzhou Automobile Group Co., Ltd.
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Overview of Four Business Units: Lexus International Toyota No. 1 Toyota No. 2 Unit Center
Developing and Commercializing Major Components with
Best-in-World Competitiveness
1.3-liter gasoline engine
offers 38% maximum
thermal efficiency
1.0-liter gasoline engine
offers 37% maximum
thermal efficiency
How to Improve Thermal Efficiency
Improved combustion
Fuel
Engine work
(thermal
efficiency)
Pump
Exhaust Cooling Friction
Loss reduction
Improved combustion and loss reduction lead to engines
with high thermal efficiency, low fuel consumption
Powertrain Development and Production Engineering Building
The Unit Center was established in March
2013 to handle Toyota’s unit-related techno-
logical development, manufacturing technol-
ogy development and production. The Center
aims to develop and rapidly commercialize
major powertrain components with best-in-
world competitiveness.
As a part of these efforts, Toyota opened a
new facility, the Powertrain Development and
Production Engineering Building, to facilitate
the development of next-generation
powertrains as the core of ever-better cars.
R&D and manufacturing technology staff at
this facility work on everything from the devel-
opment of basic technologies, such as materi-
als and processes, to entire vehicles and
major components. While maximizing devel-
opment efficiency, we aim to develop new
technologies with unprecedented speed.
Further innovation in
the conventional engine field
Toyota aims to further increase the environmental
performance of its vehicles with a series of newly
developed, highly fuel-efficient conventional gaso-
line engines that offer outstanding thermal effi-
ciency. The new engines leverage Toyota’s
sophisticated conventional engine technologies
as well as combustion and loss-reduction tech-
nologies accumulated through the development
of dedicated hybrid engines.
The key to improving the fuel economy of
engines is finding ways to use the thermal energy
stored in fuel to produce more “work” in an
engine. This is done by maximizing thermal effi-
ciency. Gasoline engines in hybrid vehicles
already boast high thermal efficiencies on par with
those of diesel engines. Toyota has achieved
a series of highly fuel-efficient conventional
engines with the same level of thermal efficiency
without assistance from a hybrid system. The
engines’ maximum thermal efficiency is world-
class, potentially improving fuel efficiency more
than 10%* compared with previous engines. For
example, the 1.3-liter gasoline engine in the series
offers 38% maximum thermal efficiency (Toyota
measurement) putting it on a world-class level for
a mass-produced gasoline engine. The new Vitz
model launched in April 2014 features this
1.3-liter gasoline engine and idling stop as stan-
dard, giving it an excellent fuel economy of 25.0
kilometers per liter*.
By 2015, Toyota plans to launch 14 high ther-
mal efficiency, fuel-efficient engines around the
world. The development of these engines was
made possible by the Unit Center, where an inte-
grated approach is taken to the creation of
product technologies and manufacturing technol-
ogies. Integrated development at the Unit Center
is a major force behind the move toward mass
production of Toyota’s fuel cell vehicle, what we
view as an ideal eco car.
As the eco car pioneer that brought the world
the hybrid vehicle, Toyota is working to improve
the environmental performance of all its cars.
* Under the Japanese Ministry of Land, Infrastructure, Transport
and Tourism’s (MLIT) JC08 test cycle
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Toyota’s DNA Will Endure for the Next 100 Years
As part of our efforts to achieve our Global Vision, we adopted “Work Today, Smile Tomorrow: In Pursuit of True Competitiveness and Innovation” as our internal global corporate policy slogan for the
current fiscal year. This policy paints a picture of how Toyota should look 10 years and 100 years from now, while making it clear that we must not lose our sense of history.
Over its 75-year history, Toyota has faced many hardships, and the beacon that has guided the Company through all difficulties has been its steadfast determination—inspired, as always, by the smiles
of customers around the world—to contribute to society by making cars. With pride and responsibility, Toyota’s many leaders since its foundation have inherited and continued this determination, steer-
ing the Company through each setback with the help of countless others, and passing on the spirit of innovation in our corporate DNA. The number and variety of obstacles that Toyota can expect to
confront over the next century cannot be fathomed. Drawing on our corporate DNA, we will continue to innovate and ensure that tomorrow’s Toyota is even better than today’s.
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Toyota in 10 Years and 100 Years [1 of 6]
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Toyota in 10 Years and 100 Years
With the goal of making ever-better cars, the Toyota Global Vision is an articulation of the kind of company we want to be. It is based on shared values and a spirit of monozukuri (conscientious manufactur-
ing) passed down since our foundation and embodied in the core values of Sakichi Toyoda, the Guiding Principles at Toyota, and the Toyota Way. We use the image of a tree to illustrate our vision: the roots
are our shared values; the ongoing upward growth of its branches represents our efforts to expand business; the fruit represents making ever-better cars and enriching lives and local communities; and the
trunk is our stable base of business. As the trunk of the tree grows bigger and stronger, it is able to support more branches—the creation of ever-better cars. This is the trajectory that puts Toyota on the
path toward sustainable growth.
Of all the components of our vision, building ever-better cars takes priority. We want to deliver products and services that surprise and excite our customers. We want to be a company that puts smiles on
faces—and keeps them there.
A1 prototype passenger car
Toyota’s
DNA
On September 1, 1923, Japan’s rail system was devastated by the Great Kanto Earthquake. Automobiles
ventures to produce vehicles domestically were unable to compete with the U.S. automakers that set up
played a key role in helping save lives and facilitating reconstruction in the aftermath. For many people, this
automobile assembly plants in Japan immediately after the earthquake. However, 10 years later, on
event demonstrated not only the practical public role that automobiles could play but the convenience such
September 1, 1933, Kiichiro Toyoda established the Automotive Production Division (which would later
vehicles, previously regarded only as luxury items, could offer. The surge in demand for automobiles follow-
become the Automotive Department) within Toyoda Automatic Loom Works, Ltd., and began preparing to
ing the earthquake was met by U.S. automakers, whose mass production structure gave them an advan-
build prototypes. While declaring lofty goals, Toyoda, like his father Sakichi, took a hands-on approach to
tage in both supply capability and cost. Efforts were made to produce vehicles in Japan from around 1910
learning and was often heard saying, “an engineer who does not have to wash his hands at least three
The Japanese Auto Industry in
the Early Twentieth Century
onwards. However, as Japanese industry at the time was for the most part technologically underdeveloped,
times a day is not doing a good job.”
business conditions were not conducive to the establishment of a full-blown automotive industry, and
Toyota is a company born from the passions of its founders, who wanted nothing less than to establish a globally competitive automobile industry in Japan.
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Toyota in 10 Years and 100 Years [2 of 6]
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Innovating, Building Tomorrow’s Toyota, and Making Ever-Better Cars
Popularizing environment-friendly cars
Diversification of Automotive Fuels and Powertrains
Worldwide Sales of Toyota Hybrids
6
million
Environmental concerns must be taken into
account when we think about creating a “mobility
society” (that is, a highly mobile society reliant on
automobiles as its major means of transporta-
tion). The Guiding Principles at Toyota, set forth in
January 1992, declared that we will “dedicate our
business to providing clean and safe products
and to enhancing quality of life everywhere through
all of our activities.” In line with this principle, in
December 1997, Toyota launched the world’s first
mass-produced hybrid vehicle, the Prius.
The environment is still a top-priority manage-
ment issue. In addition to hybrid vehicles, Toyota
has been developing next-generation eco cars,
including plug-in hybrid vehicles, electric vehicles,
and fuel cell vehicles. Believing that the spread of
eco cars is in itself good for the environment,
Toyota has focused on hybrid vehicles, selling
more than six million in total as of December
2013. Although it took nine years and nine
months for cumulative sales to reach the one
million mark in May 2007, strengthening demand
has accelerated the popularization of hybrids.
After passing the four million mark in April 2012, it
Primary energy
source
Automotive fuel
Powertrain
Oil
Natural gas
Coal
Plants
Uranium
Hydro, solar,
geothermal electricity
generation
Gasoline
Diesel
Gaseous fuels
Synthetic fuels
Biofuels
Electricity
Hydrogen
Conventional and
hybrid vehicles
PHVs
EVs
FCVs
i
c
s
a
B
n
o
i
t
a
r
e
n
e
g
-
t
x
e
N
While working to reduce energy use, we must also diversify fuels
l
i
s
e
g
o
o
n
h
c
e
t
l
i
s
e
g
o
o
n
h
c
e
t
e
v
r
e
s
n
o
C
y
f
i
s
r
e
v
D
i
(Thousands
of units)
1,800
1,500
1,200
900
600
300
0
117
months
27
months
18
months
14
months
11
months
9
months
(Millions
of units)
HV global sales
• 2012:
Achieved 1 million annual units sales
for the first time
• Mar. 2013: Cumulative sales passed 5 million units
• Dec. 2013: Cumulative sales passed 6 million units
1
million
3
million
2
million
5
million
4
million
6
5
4
3
2
1
0
(CY)
2001
(cid:31) Annual sales (cid:30) Cumulative sales (right scale)
1997
1999
2003
2005
2007
2009
2011
2013
took only 11 months for cumulative sales to break
five million in March 2013, and another nine
months to hit six million in December 2013.
Based on the concept of producing the optimal
vehicle in the optimal location at the optimal time,
Toyota has broadened its hybrid lineup and now
offers at least one in each automobile category.
We believe hybrids have finally entered a full-scale
growth phase and are no longer niche products.
Toyota calculates that as of December 31, 2013,
use of Toyota hybrids* had resulted in approxi-
mately 41 million fewer tons of CO2 emissions**
than would have been emitted by gasoline-powered
vehicles of similar size and driving performance.
Toyota also estimates that the use of its hybrid
vehicles has saved approximately 15 million kiloli-
ters of gasoline compared with the amount that
would have been used by gasoline-powered vehi-
cles of similar size. Hybrid vehicles offer lower CO2
emissions and lower fossil fuel consumption.
As of the end of August 2014, Toyota has 27
hybrid models and one plug-in hybrid model on
the market in about 80 countries and regions.
Furthermore, within the next two years (2014 and
2015), we plan to launch a total of 15 new hybrid
models worldwide. Taking advantage of our
pioneer status, we will continue adding to this
lineup and increasing the number of countries and
regions where we sell hybrids, with the ultimate
aim of popularizing eco cars around the world.
* Excludes the Coaster hybrid electric vehicle and the Quick
Delivery 200 model.
** Number of registered vehicles × distance traveled × fuel
efficiency (actual fuel efficiency in each country) × CO2
conversion factor
Toyota’s
DNA
Kiichiro Toyoda’s passion and commitment to developing an automobile industry in Japan were tested
1935, the year Toyoda began to produce automobiles, was also the year that he laid down his vision for the
repeatedly. When he began, there were no steelmakers in Japan developing the sheet steel needed for
future, which led to today’s Toyota Global Vision. On October 30, 1935, the fifth anniversary of the death of his
automobiles. Toyoda found himself having to establish new business units, such as the Steel Production
father, Sakichi Toyoda (1867-1930), Kiichiro Toyoda set down in writing some of his father’s core values before
Department (which later became Aichi Steel Corporation) alongside the Automotive Department.
announcing the Model G1 Truck. Sakichi Toyoda was the founder of today’s Toyota Group as well as an inven-
After numerous failures, Toyoda finished building the first prototype Model G1 Truck on August 25, 1935,
tor in his own right with numerous patents and new practical designs in his name, both in Japan and abroad.
and the truck launched in December of that year. Over the following year, a total of 14 Model G1 Trucks
On August 28, 1937, the Automotive Department was spun off into Toyota Motor Co., Ltd. In 1940,
were sold. At the behest of the government, truck development took priority, but Toyoda had also
annual automobile output was 46,000 vehicles in Japan, compared with 4,470,000 vehicles in the United
completed a prototype Model A1 passenger car in May 1935, and was able to put it on the market in 1936
States, an enormous difference in scale and capability.
Entering the Automotive
Business
as the improved Model AA—its first mass-produced passenger car. Only two years after establishing the
Automotive Department, Toyoda had launched an automobile business in line with his conviction, “once you
start a new business, moving quickly makes the most economic sense.”
Model AA
The endeavor to make a Japanese automobile from nothing to a finished product was an ordeal, involving identifying defects and solving problems one by one.
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Toyota in 10 Years and 100 Years [3 of 6]
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Further advances in key technologies
for hybrid technology
Hybrid technology can be applied to the develop-
ment of all sorts of environment-friendly vehicles
and can be found in a wide variety of powertrains.
Toyota has positioned hybrid technology as a
core environmental technology for the 21st
century. As a pioneer in the mass production of
hybrid vehicles, we are continuing to improve this
technology.
Power semiconductors have a big impact on
the effectiveness of hybrid technology. Hybrid
systems offer excellent fuel economy through the
efficient use of two power sources: gasoline
engines and electric motors. A large number of
power semiconductors are used in the power
control unit (PCU), a device situated between the
motor, power generator and batteries. The PCU
controls the output of the motor. Some of the
electrical current that flows through the power
semiconductors in the PCU is lost as heat; in fact,
approximately 20% of a hybrid vehicle’s overall
electricity loss is from the power semiconductors.
PCU volume: 1/5
PCU with silicon power
semiconductors
(Production model)
The PCU plays a vital role in controlling electricity usage,
recharging batteries with electricity generated when the
vehicle decelerates and accelerating the vehicle by supply-
ing electricity to motors from the battery bank while driving.
PCU with SiC power
semiconductors
(Future target)
For this reason, making power semiconductors
more efficient will improve fuel economy. Toyota
has been developing its own power semiconduc-
tors as a key technology for improving fuel econ-
omy since the launch of its first-generation Prius
in 1997. In the latest, third-generation Prius, elec-
tricity loss has been reduced to a quarter of that
of the first-generation Prius.
Aiming to make tomorrow’s Toyota better than
today’s, we are developing power semiconductors
that use next-generation silicon technology, namely,
silicon carbide (SiC), a material that is a compound
of silicon and carbon. We have already improved
fuel economy more than 5%* in a prototype
featuring the new SiC power semiconductors. As
early as possible, Toyota aims to commercialize
SiC power semiconductors that offer a 10%*
improvement in fuel economy through greater
efficiency. In addition, we aim to shrink the PCU
to one-fifth the size of current PCUs through
the use of SiC power semiconductors.
* Toyota estimate based on a prototype driven under the
Japanese Ministry of Land, Infrastructure, Transport and
Tourism’s JC08 test cycle parameters.
Toyota’s
DNA
The Crown
On September 25, 1945, soon after the end of World War II, the Allied Power’s General Headquarters in
Crown, which featured cutting-edge technologies, including a front-axle double wishbone suspension.
Japan authorized the production of trucks and in principle allowed any company to produce and sell auto-
Fulfilling Kiichiro Toyoda’s dying wish, the Toyopet Crown was finished in 1955 and launched as Japan’s first
mobiles from October 25, 1949. The industry, however, was still in disarray.
full-fledged passenger car.
In the 1950s, Japanese automakers were forging technological alliances with foreign automakers for the
By October 1956, sales of the Toyopet Crown exceeded 1,000 vehicles per month, becoming a hit
production of passenger cars. Kiichiro Toyoda chose a different path in line with his father Sakichi’s admon-
among drivers enamored with its proprietary design featuring rear-hinged doors and a front-wheel indepen-
ishment, “Before you say you can’t do something, try it.” Aiming to research and innovate on his own,
dent suspension for a smooth ride. With the popularity of the Crown, Toyota completed construction on the
Toyoda embarked on the full-fledged development of a passenger car using home-grown technology. When
Motomachi Plant in Aichi Prefecture in July 1959, only eleven months after the groundbreaking ceremony.
development began, Toyoda decided to name this new passenger car the Crown, feeling that this might be
The plant was to produce 60,000 passenger cars per year.
his crowning achievement. However, he passed away suddenly in March 1952, before the completion of the
Kiichiro Toyoda’s dream of mass producing a home-grown passenger car and sparking the development of Japan’s automotive industry had finally come true.
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Toyota in 10 Years and 100 Years [4 of 6]
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Building the right cars in
the right places
Over half a century has passed since Toyota
exported its first two Crowns to North America in
1957, and it has been almost 30 years since
Toyota started building cars in North America,
beginning with New United Motor Manufacturing,
Inc., in 1986.
Through the 1980s, Toyota was well known as
a maker of mid-sized and compact passenger
cars, such as the Camry and Corolla, as well as
the Hilux small pickup truck. In 1989, Toyota
launched the Lexus brand as its entry into the
luxury passenger car market. From that point
onward, it expanded its lineups of luxury vehicles
and cars for young drivers as well as light-duty
trucks, and introduced hybrid models, changing
its image as a carmaker and increasing its pres-
ence in the U.S. market.
Cumulative production volume in North
America reached 10 million vehicles in 2001, 20
million vehicles at the end of 2008, and 25 million
vehicles in October 2012. In May 2014, Toyota’s
plant in Kentucky, which started production in
May 1988, became the first Toyota plant outside
Japan to have produced 10 million vehicles.
Today, in the United States and Canada, Toyota
has 11* manufacturing companies, three distribu-
tors, and a network of more than 1,750 dealers
that sell more than two million Toyota and Lexus
vehicles annually.
In our quest to innovate and make tomorrow’s
Toyota even better than today’s, we have decided
to establish a new North American headquarters,
moving our regional manufacturing, sales and
marketing, corporate, and financial services head-
quarters to a single location in Plano, Texas. The
move is intended to increase efficiency and
collaboration throughout the organization, with
the ultimate aim of ensuring sustained growth in
North America by creating a business structure
that allows us to deliver ever-better cars to
customers.
Ahead of this strengthening of our business
foundation and in line with our principle of build-
ing the right cars in the right places, we have
assigned an American as the chief engineer over-
seeing the redesign of the flagship Camry model.
Cumulative production volume at Toyota Motor Manufacturing, Kentucky has reached 10 million vehicles.
Under his guidance, and based on intricate market
research, the Camry has evolved into a car with
bold form and solid handling.
* Excluding Subaru of Indiana Automotive, Inc., which produces
vehicles on a commissioned basis
Toyota’s
DNA
The Corolla
In November 1966, the first-generation Corolla was launched in anticipation of the arrival of mass motori-
2013, global cumulative sales of the Corolla crossed the 40 million vehicle mark. One in every five cars sold
zation. The car’s sales gained momentum in 1966, with the start of production at the newly constructed
over the last 76 years has been a Corolla. Always staying ahead of the times and paying attention to the
Takaoka Plant in Aichi Prefecture and exports to Australia. In 1968 exports to North America began to
needs of our customers and society, Toyota has worked relentlessly to improve the technologies and quality
expand. As a result, total automobile output at Toyota, which was around 480,000 vehicles in 1965, more
of the Corolla. Today, the Corolla is marketed in more than 150 countries and regions around the world, and
than doubled to roughly 1,100,000 vehicles by 1968, increasing in line with sales of the first-generation
it is manufactured in 15 locations around the world, including two in Japan.
Corolla. In 1970, four years after the Corolla’s launch, cumulative worldwide sales of the car surpassed one
This is in line with a sentiment Sakichi Toyoda expressed at the construction of an automatic loom plant in
million, and the concept of building the right cars in the right places led to rave reviews around the globe.
1921 in Shanghai, China, namely, “open your door, and look outside,” an apt reminder that we should keep
The Corolla became the world’s best-selling car, reaching in 22.65 million cumulative sales in 1997. In July
our eye on the world and cultivate the courage to take on any challenge.
The Corolla, adored by so many drivers around the world, is one car that laid the cornerstone for making ever-better cars.
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Toyota in 10 Years and 100 Years [5 of 6]
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Comprehensive Development of Next-Generation Eco Cars from a Hybrid Technology Core
Breakdown of Mobility in the Future
HV
Motor
PCU
Battery
Generator
Engine
Fuel
tank
EV
Motor
PCU
Battery
i
e
n
g
n
E
Fuel
tank
PHV
Motor
PCU
Generator
Battery
Engine
Fuel
tank
FCV
Motor
PCU
Battery
FC
stack
Hydrogen
tank
Electric vehicles: short-distance applications Hybrid vehicle and plug-in hybrid vehicles: passenger cars
Fuel cell vehicles: medium and long-distance applications
Hybrid and plug-in hybrid vehicles
Large trucks
Fuel cell vehicles
Electric vehicles
Passenger
Metropolitan buses
Vehicle
size
Compact delivery
vehicles
Short-distance
applications
HV
EV
Delivery trucks
FCV (bus)
FCV
PHV
Motorcycles
Travel distance
HV: Hybrid vehicle EV: Electric vehicle PHV: Plug-in hybrid vehicle FCV: Fuel cell vehicle
Energy source
Electricity
Gasoline, diesel, biofuel, CNG, synthetic fuel, etc.
Hydrogen
Fuel cell vehicles: ideal eco cars
Automobiles can be powered by a wide range of
energy sources, including gasoline, diesel, natural
gas, synthetic liquid fuel, biofuel, electricity, and
hydrogen. Two strategies are being taken to
address environmental problems caused by the
mass consumption of fossil fuels: using less
petroleum and diversifying energy sources.
Combining high thermal efficiency, low fuel
consumption engines and a host of advanced
pollution. In addition to producing zero emissions
when driven, fuel cell vehicles are also highly prac-
tical. Their defining characteristic is their long cruis-
ing range. They can also be refueled very quickly.
As a source of electrical power during emer-
gencies, a fuel cell vehicle is capable of powering
a typical home for roughly a week. Because of
their simultaneous achievement of zero emissions
and high practicality, Toyota positions these vehi-
cles as the ultimate eco-car.
However, one barrier to the proliferation of fuel
cell vehicles is the need to create a refueling
infrastructure in the form of hydrogen stations. To
ensure that our customers are able to operate
fuel cell vehicles reliably, Toyota is cooperating in
the establishment and operation of a hydrogen
supply infrastructure in numerous countries and
regions around the world.
We have more than two decades of experience
with fuel cell vehicles; we started development in
1992 and launched the Toyota FCHV, the world’s
first fuel cell SUV, in December 2002 on a limited
basis in Japan and the United States. Toyota has
developed a proprietary fuel cell stack and
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial Sectiontechnologies, hybrid vehicles are a textbook example of how to use less petroleum. Energy diversification is a broad field, and Toyota is confi-dent that hydrogen represents the next promising energy source of the future. Fuel cell vehicles run on a motor powered by electricity generated by a chemical reaction between hydrogen and oxygen in a fuel cell. The only byproduct of a fuel cell vehicle in operation is water vapor. It does not emit any harmful substances such as CO2, a cause of global warm-ing, or SO2 and NOx, causes of atmospheric ANNUAL REPORT 2014
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Toyota in 10 Years and 100 Years [6 of 6]
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
high-pressure hydrogen tank—critical compo-
nents of a fuel cell vehicle—that perform at world-
leading levels.
Toyota plans to start selling a fuel cell sedan in
Japan before March 2015. At first, the new vehi-
cle will be sold only in major cities that plan to
build hydrogen station networks. We are also
preparing to launch the sedan in the United
States and Europe around summer 2015. From
the 2020s onward, we expect the market for fuel
cell vehicles to increase significantly, with several
tens of thousands of vehicles sold per year.
Over the next 100 years, we believe electrified
powertrains will hold the key to the future of the
automobile. The first-generation Prius opened the
door to this future in 1997, and a new era of
transportation emerged once major challenges
were overcome. Similarly, fuel cell vehicles repre-
sent the next stage in the development of a future
“mobility society.” Toyota has embarked on a long
journey toward making hydrogen an everyday fuel
and fuel cell vehicles the norm.
Toyota’s
DNA
Fuel Cell System Development
Hydrogen tank
Boost converter
Battery
Fuel cell
stack
Motor
Power control unit
Nippon Charge Service Established to Promote the Development of Infrastructure for Electric-Powered Vehicles
Toyota Motor Corporation, Nissan Motor Co., Ltd., Honda Motor Co., Ltd., and Mitsubishi Motors Corporation jointly established a
new company, Nippon Charge Service, LLC (NCS), to promote the installation of chargers and development of a highly convenient
infrastructure network for electric-powered vehicles (PHVs, PHEVs, and EVs) in Japan. Through NCS, the companies will provide
financial support to help cover the cost of charger installation and maintenance to businesses and municipalities that install them,
helping to accelerate the advance of charging infrastructure. The speedy creation of this infrastructure will dramatically improve
customer convenience, helping society maximize the possibilities of electric vehicles.
The development of the first-generation Prius was a major turning point for Toyota. At the time, Chairman
at the Tokyo Motor Show to great fanfare. Encouraged by this reception, Toyota moved up the launch date
Eiji Toyoda stated that Toyota must be in a position to help its customers and society more. The Prius was
for the Prius to December 1997, from the original 1999, to coincide with the Kyoto Conference on Climate
conceived with this goal in mind.
Change (COP3).
What should cars look like in the 21st century? To answer this question, the G21 Project was launched in
The first-generation Prius was the result of a cross-organizational companywide effort to accelerate the
September 1993 with 10 staff assembled from divisions across the Company, including engine, chassis,
development of the hybrid system that included the integration of the development departments for system
and body engineering, as well as production technology. With “G” standing for Globe and “21” for 21st
control and electronic units. The Prius project was exceptional; in the extremely short time frame of two
century, the ambitious goal of the G21 Project was to double the fuel economy of existing engines.
years, completely new technologies were developed and put into mass production. The first-generation
The hybrid system was developed from scratch, and many obstacles were encountered along the way.
Prius debuted with the slogan, “Just in time for the 21st century.” The core hybrid technologies developed
For example, the first prototype, completed in November 1995, simply stopped working after 49 days of
then can be applied to any type of eco car.
operation, and the engineers could not figure out why. That same year, the Prius concept car was displayed
As long as innovation continues in hybrid technology, we can work toward a “mobility society” with more options for customers.
Staying ahead of the Times
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars [1 of 2]
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Our DNA is Creating Ever-Better Cars
Toyota aims to deliver cars that open up new
lifestyles for consumers, cars that change
lives for the better and bring new discoveries.
As we strive to do this, our ideals and pride in
manufacturing are evident at every stage,
from development through production and
sales, and ensuring the performance and
quality of every car we make.
Toyota believes that cars are more than a
means of transportation, being a source of
excitement and exhilaration. At Toyota, we
foster human resources to ensure that our
DNA is passed on to future generations so
that we can continue to sustainably create
truly great cars.
Inherited expertise in manufacturing put
to the test at world-class contests
Toyota’s competitiveness is derived from its
manufacturing expertise and the passing on of
this expertise to the next generation. Toyota
participates in the WorldSkills Competition, which
tests the competence of young employees (the
under 22s), to create opportunities for the voca-
tional workers at the core of our operations to
build on their abilities and learn advanced tech-
niques. Held once every two years since 1950,
this international contest aims to encourage voca-
tional mastery, foster exchange among people of
various nationalities, and nurture appreciation for
technical workmanship. At the 42nd WorldSkills
Competition held in Leipzig, Germany, in July
2013, 1,007 competitors represented 53 coun-
tries and regions in 46 vocational skills. Eight
employees from Toyota competed in seven voca-
tions, with two being awarded gold medals and
all eight contestants receiving prizes. Toyota was
responsible for two of the five gold medals won
by Japan. Over the years, Toyota has won a total
of 25 gold medals, 13 silver medals, and 9 bronze
medals at this international contest.
In addition, four employees of Toyota in
Thailand and Indonesia participated in two voca-
tional fields, taking home one gold medal and two
silver medals. A culture emphasizing vocational
skills has taken hold at our bases overseas. The
Next WorldSkills Competition is slated for São
Paulo, Brazil, in August 2015.
The National Skills Competition has been held
in Japan annually since 1963. Toyota has partici-
pated since 1966, and currently enters the
competition in 10 vocational fields related to auto-
motive manufacturing. The 52nd National Skills
Competition will be held in November 2014 in
Toyota’s home prefecture of Aichi, with more than
1,200 participants from across the country,
including 43 young Toyota technicians, compet-
ing for the distinction of best technique in the
country. The gold medalists will represent Japan
at the next international competition in Brazil.
Creative skill use to make ever-better cars
At Toyota’s Takaoka Plant, production lines are
occasionally referred to as “skill inheritance lines.”
The production floor is a place where younger
workers can learn craftsmanship as well as the
rules and principles of manufacturing. These
production lines were created with a sense of
urgency, because we thought that opportunities
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars [2 of 2]
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
were being lost to pass vocational skills onward
due to automation in plants limiting the ability of
veteran technicians to ply their trade.
The body remembers the experience of build-
ing something. When an issue arises, the experi-
ence can be drawn on to quickly get to the root
of the problem through a cyclical process of
hypothesis and verification. These advanced,
hard-earned skills are reflected in production
technologies, and through a constant evolution
and sharpening of skills and technologies, a spiral
of improvement leads to innovation.
To reinforce its foundation for creating ever-
better cars, Toyota launched an initiative last year
wherein young workers come into direct contact
with how customers around the world use Toyota
vehicles in various transportation environments.
These young engineers, who were mostly
dispatched to our overseas R&D centers,
conducted surveys of market conditions, evalu-
ated local conditions, and participated in develop-
ment. The knowledge they gained through these
experiences will help us create the ever-better
cars of the future.
Knowledge and skills from the grueling
world of motorsport go into making
ever-better cars
For many years, Toyota has tested its vehicles on
the race circuit in Nürburgring, Germany, which is
regarded as the world’s most grueling course.
With the aim of fostering human resources able to
make ever-better cars, Toyota has taken this a
step further and has participated in the 24 Hours
of Nürburgring endurance race since 2007. The
over-25-kilometer course combines the
Nürburgring (North Loop) and the GP Course
used by the F1 Grand Prix. Since 2012, Toyota
has sent its “skill inheritance team” of mechanics
comprising young employees with expertise in a
variety of fields.
Nürburgring features intense elevation changes
of up to 300 meters on a course laid out like
European public roads, complete with rough
patches. During the race, the car design is tested
and seasoned as the team members address
unexpected problems that arise, with the group
becoming closely attuned to the car and group
cohesion strengthening. In an intense and short
period, participants gain a profound appreciation
of automobiles and a level of know-how and skill-
fulness that transcends their daily work. At our
eighth appearance at the competition, 14
mechanics from Toyota participated. Toyota won
in the SP3 class, SP8 class, and the SP-PRO
class, and the Toyota team finished in the best
position with the highest number of laps it has
ever accomplished.
As Toyota manufacturing spreads globally, as
the spirit of innovation is passed along at work-
places around the world, and as technologies
and skills evolve, our DNA will continue to be
passed on for not only the next 10 years but the
next 100 years.
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
What Sets Toyota Apart
> The improvement process is infinite, and
Kaizen (continuous improvement)
Toyota has grown from a single core concept
that is still shared by the entire Group: contrib-
uting to society by making ever-better cars.
Some of the values and ideas that have
defined Toyota over its 75-year history are
listed below.
The Toyota Production System (TPS)
TPS encourages the complete elimination of
waste, irregularities, and overburdening from
the production process. The system, originally
employed in the textile industry, is based on two
fundamental concepts: jidoka, which can be
loosely translated as “automation with a human
touch,” and the Just-in-Time (JIT) principle. Under
these concepts, if a problem occurs, the equip-
ment immediately stops running, preventing the
manufacture of defective products, and at each
stage production is limited to only what is needed,
when it is needed, and in the amount needed.
> Establish the facts through genchi genbutsu
(on-site, hands-on experience)
> Stop production lines when a problem
occurs and implement corrective and
improvement measures
The Nature of the Toyota Production System
after-the-fact improvements are in essence
forward-looking improvements
These directives, which form part of Toyota’s
management philosophy, are by no means limited
to the production front-line. They apply universally
to all endeavors. In effect, TPS represents the
building blocks of Toyota’s human resource
development endeavors.
Genchi Genbutsu
(on-site, hands-on experience)
The genchi genbutsu principle refers to much
more than merely visiting a site to examine some-
thing in situ. It entails understanding and respect-
fully considering the opinions of on-site individuals
as well as of individuals who have extensive rele-
vant knowledge. Genchi genbustu is thus a key
concept in the improvement process. Furthermore,
the notion of “respect for people” is consistent
with Toyota’s founding philosophy, and is under-
pinned by the concept of thoroughgoing and
direct communication.
Kaizen (continuous
improvement)
Take a close look at each site
Consistently uncover issues
The “Five Whys”
Improve each issue
Raise management standards
l
D
e
v
e
o
p
h
u
m
a
n
r
e
s
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Building “true competitiveness”
To consistently deliver a higher level of quality and
competitive products to its customers, Toyota
must continue to nurture a corporate culture that
places the utmost value on quality, productivity,
and cost efficiency. In addition to an unwavering
commitment to JIT that underscores our commit-
ment to the development of a short and efficient
supply chain, we realize that we must also
provide customers with a wide-ranging, compre-
hensive, and well-organized after-sales service
network. From a long-term perspective, we can
only stay competitive if we continue to focus on
developing human resources, fostering relation-
ships of trust between management and labor,
and ensuring that each employee remains
committed to conscientious manufacturing.
For its part, Toyota will continue to hone its true
competitiveness, which provides the underlying
strength for its manufacturing platform over the
medium to long term. By doing so, we hope to
ensure sustainable growth.
Representing a never-ending cycle of progress, the
word kaizen encapsulates a spirit of striving for
continuous improvement and a refusal to accept the
idea that something cannot be made better. Toyota
believes that acknowledging the possibility of contin-
uous improvement can make tasks easier and more
enjoyable. From an organizational standpoint, kaizen
involves the entire workforce while relying on the
extensive knowledge, skills, and experience of the
people working directly on the process. The concept
is based on individuals taking ownership of their
work and focusing on what should be done rather
than on what can be done. At the same time, the
kaizen process is underpinned by thoroughgoing
and direct communication. It is essential to follow
through once a decision has been made upon
thorough deliberation with the participation of all.
We consider this a valuable part of our corporate
culture. Taiichi Ohno (1912-1990), a former Toyota
executive vice president and founder of the Toyota
Production System, once commented that while the
wisdom of humankind was infinite, that wisdom
tended to emerge only during periods of adversity.
When things are not going well and a better method
is discovered, it is critical that suggestions be made
openly, discussed, and put into practice to ensure
continuous improvement.
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation [1 of 4]
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Enriching Lives and Building Tomorrow’s Toyota through Innovation
Toyota aims to enrich lives and communities through innovations that make cars safer, more comfortable and more convenient. This will help create a future “Smart Mobility Society” in which cars are highly
economical and energy efficient.
Safety in a “Smart Mobility Society”
To realize a safe and responsible automobile soci-
ety, Toyota has been developing safety technolo-
gies based on an “Integrated Safety Management
Concept,” that involves a three-pronged, compre-
hensive approach to passengers, cars and trans-
portation systems, in pursuit of a practical safety
strategy with the ultimate aim of zero traffic fatali-
ties and injuries. For Toyota, the “Integrated Safety
Management Concept” is synonymous with vehi-
cle safety. To make cars safer, we concentrate on
integrating safety systems, instead of having them
function independently of each other.
Vehicle-infrastructure cooperative systems use
ITS (Intelligent Transport Systems) technology to
establish car-to-car, car-to-pedestrian, and car-to-
road connections. These systems help prevent
accidents and support safe driving environments
by alerting drivers to pertinent information
provided by roadside sensors and other vehi-
cles—information that is unobtainable using a
single vehicle’s sensors alone. Toyota aims to
make vehicle-infrastructure cooperative systems a
reality as soon as possible, and has been working
with government institutions to create standards
for smart road infrastructure to upgrade the trans-
portation environment. We have been conducting
field tests on public roads since 2006 in collabora-
tion with government agencies and other private-
sector companies. Moreover, by the mid-2010s,
we intend to be the first company in the world to
commercialize systems that use the 700 MHz
band to establish connections between people
and cars to support safe driving environments. We
aim to create advanced driving safety systems by
linking the automated safety systems of vehicles.
“Integrated Safety Management Concept”
Vehicle-Infrastructure Cooperative Systems That Support Driving
Vehicle-to-Infrastructure Communication
Optimal Safety Technology for Each Situation
Safety System Coordination
Avoid Dangerous Incidents
Collision
Mitigate Accident Damage
Parking
Active Safety
Pre-Collision Safety
Providing Information & Support
Accident Warning & Avoidance
Damage Mitigation
Passive Safety
Passenger &
Pedestrian Protection
Emergency
Response
Rescue
Panoramic View
Monitor
Radar Cruise
Control
Blind Spot
Monitor
(BSM)
Pre-Collision
System
(PCS)
GOA
Automatic Collision
Notification (ACN)
4
Display inside vehicle
Notifies the driver by displaying
the information received from
with beeps
1
Vehicle
detection sensor
Detects oncoming vehicles
at intersections with poor
visibility when turning right
2
Pedestrian
detection sensor
Detects pedestrians at the
crosswalk ahead when
turning right
3
700MHz transceiver
Transmits information regarding
and the on-board unit in the
vehicle turning right
(cid:31) Right-turn collision prevention system ((cid:31)(cid:30)(cid:29))
(cid:31) Crossing pedestrian recognition enhancement system ((cid:28)(cid:30)(cid:29))
This service uses roadside infrastructure to detect in real time and notify the drivers of
oncoming vehicles and pedestrians at the crosswalk ahead when turning right.
Vehicle-to-Vehicle Communication
(cid:31) Crossing collision prevention system
This service uses direct communication
between vehicles to exchange information
about position and speed.
Back Guide
Monitor
Lane Keeping
Assist
(LKA)
Lane Departure
Alert
(LDA)
Vehicle Dynamics
Integrated
Management
BA
ABS
TRC
VSC
Basic Functions
Intelligent Parking
Assist (IPA)
Intelligent Adaptive
Front-Lighting
System (AFS)
Adaptive
High-Beam
System (AHS)
Brake Assist
(BA)
Automatic High
Beam (AHB)
Anti-lock Braking
System (ABS)
Intelligent
Clearance
Sonar (ICS)
Drive-Start
Control
Night View
Navigation
Coordination
System
Cooperative ITS
Traction Control
(TRC)
Vehicle Stability
Control System
(VSC)
Alert
Pre-Collision
Brake Assist
Pre-Collision
Braking
Types
Regular Type:
PCS to help
prevent
rear-end collision
Advanced Type:
PCS to help
prevent collision
with pedestrians
Collision-
Resistant
Body Structure
Seatbelts
Airbags
Seats
Pop-Up
Hood
Example of Vehicle-Infrastructure Cooperative ITS (created in December 2013)
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A
i
Autonomous systems
Cooperative ITS
Increased
awareness
of people
20XX
(Present–Future)
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(cid:31) Autonomous systems
(cid:31) Cooperative ITS
Vehicle-to-Pedestrian Communication
Transmitter
(cid:31) Pedestrian existence advisory system
The vehicle communicates with terminals
(transmitters) which are carried by pedestrians
to notify the driver of pedestrians,
including children, elderly persons, and
other road users in support of safe driving.
Frontal
collisions
Rear-end
collisions
Solo
vehicle
accidents
Accidents at
intersections
Accidents
involving
motorcycles/
motorbikes
Accidents
involving
bicycles
Accidents
involving
pedestrians
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial Section
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation [2 of 4]
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
drive. Toyota plans to commercialize the newly
developed AHDA in the mid-2010s.
Toyota aims to develop systems that promote
safer driving, so that drivers can handle their cars
in all kinds of driving conditions like a highly
experienced driver. By pairing these advanced
driving assistance systems with drivers, we hope
to raise the bar for safety and move one step
closer to our vision of a “Smart Mobility Society”
with zero traffic fatalities or injuries.
Automated driving technology
While respecting the intentions of drivers and
preserving the enjoyment of driving, Toyota aims
to create advanced driving assistance systems
that improve the safety of its cars. Since the late
1990s, Toyota has been researching automated
driving technology, and has tested this technol-
ogy on public roads in the United States for
several years with top priority on safety. In Japan,
we have been testing advanced driving assis-
tance systems on public roads since 2011.
The result of this research and testing was the
development of “Automated Highway Driving
Assist” (AHDA), an advanced driving assistance
system for expressways that uses automated
driving technology. AHDA features Cooperative-
Adaptive Cruise Control, which maintains a safe
distance from the car in front while communicat-
ing with it wirelessly, as well as Lane Trace
Control, which helps drivers steer their cars along
optimal paths calculated using data from sensors
that detect white lines on the road at all speeds.
The integration of these two features supports
safer driving conditions and makes cars easier to
Enriching
Lives of
Communities
Toyota has conducted traffic safety education in Japan since the 1960s.
teenagers and their parents in the United States; the White Road Campaign
We continue to educate the public through a wide range of programs,
with the “Milky Way & the Gang” characters teach elementary school children
Teen Drive365 teaches
defensive driving to teenagers.
such as safe driving classes for adults and traffic safety classes for chil-
in Thailand about traffic safety; and other educational programs that teach
dren. We also distribute picture books about traffic safety to children.
traffic safety in India, Argentina, China, and many other places.
Since we began to distribute traffic safety educational materials in 1969,
Toyota’s Collaborative Safety Research Center in the United States
we have issued almost 134 million copies of traffic safety picture books
engages in joint projects with more than 16 universities and research
to preschool and kindergarten children around Japan, as well as almost
institutions in North America. Our research results are open to the public
1.5 million copies of traffic safety picture-card sets. Outside Japan, we
and we are contributing to the U.S. government’s policy planning.
offer similar programs: the TeenDrive365 teaches defensive driving to
Traffic Safety Education
Traffic safety picture books and
picture-card sets
White Road Campaign
in Thailand
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation [3 of 4]
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Comfort in a “Smart Mobility Society”
Technology can connect people, cars, families
and society. Toyota develops and offers telemat-
ics services, including a communications service
that brings a new level of convenience and
comfort to the car ownership experience. Toyota
is developing new system technologies and build-
ing platforms that leverage Big Data, such as a
car’s position, speed, and driving conditions, to
create new value, enhance safety and improve
quality. These systems combine highly accurate
maps and navigation to support advanced driving
with communications interfaces for controlling
vehicles. We plan to create a system open to any
company wishing to offer clients information,
entertainment systems and content.
Our “T-Connect” service features software
agents that control car electronics, search for
information, and display pertinent information for
a safe and comfortable driving experience. These
agents connect with the voice communications
system of the Toyota “Smart Center” to set desti-
nations, search for news and other information,
and transmit data from onboard electronics that
manage driving conditions. Based on this data,
drivers are provided with optimal driving routes
based on the latest traffic and weather informa-
tion. T-Connect can also connect the driver with a
human operator when necessary, including during
emergencies, when help is needed using the
system, or when information is needed from the
car manual.
T-Connect lets drivers download and enjoy
T-Connect apps designed by third parties. For
example, “Brake Master” is an app that plots
braking speed on a graph, making a game out of
improving the braking skills of drivers. In addition,
T-Connect apps can be downloaded to smart-
phones and tablets for managing vehicle data
and accessing maps to guide users in walking the
“last mile” after parking.
Traffic information and statistical data based on
the Big Data sent via telematics services (such as
car position, speed, and driving conditions) is also
Toyota’s Approach to Telematics
How T-Connect Works
used to improve traffic flow, provide map data,
and help in emergency response scenarios.
Toyota has been working with Panasonic
Corporation in the joint development of services
that connect cars with home appliances, with the
aim of creating a “Smart Mobility Society” offering
convenience and comfort. This service enables
T-Connect to send real-time vehicle position infor-
mation to Panasonic’s cloud services to turn on/
off air conditioners at home. This preps homes for
the arrival of their owners and also helps people
who forget to turn off appliances when they leave.
Considering the rate at which many developed
societies are aging, Toyota is developing technol-
ogies that will augment elderly drivers’ awareness
of driving conditions while helping them make
good driving decisions. These technologies will
help create a “Mobility Society” where the elderly
can pursue more fulfilling, mobile lives.
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Services
Interactive voice response
Agent
Additional apps for navigation
Apps
Safety/help service
Online Care
Toyota Smart Center
Connection
methods
Wi-Fi
Smartphone*
(via tethering)
“au”
Wi-Fi spots
DCM
Blue
tooth**
T-Connect-enabled navigation systems
Mobile devices
Devices
*Requires tethering-enabled smartphone; **Requires Bluetooth-enabled device
Panasonic’s Cloud
Toyota Smart Center
• Remotely operate home appliances
• Check status of home appliances
Panasonic
home appliance
control app
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial SectionTelematics serviceToyota’s approach• Interactive interfaces linked to vehicle• High-precision maps and navigation for advanced driving assistance• Services using big dataIndependently develop technologies and establish platforms• Multimedia/information servicesEstablish open systems that third parties can contribute to• Third-party software enabling smartphone use while drivingConsider using after carefully assessing safety and data security
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation [4 of 4]
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
Convenience and the “Smart Mobility
Society” of the future
Urban transportation systems that incorporate
cars into communities will play a key role in creat-
ing a future “Smart Mobility Society” where low-
carbon, efficient transportation is a reality. For
example, the Toyota City Verification Project in
Japan is a prototype of a low-carbon city. In
collaboration with local governments, Toyota also
provides next-generation vehicles, such as plug-
in hybrid vehicles, electric vehicles, and fuel cell
vehicles, installs charging stations with solar
panels, and conducts personal mobility experi-
ments. In addition, to achieve low carbon trans-
portation, we aim to optimize the movement of
people by building transportation systems that
encompass private and public transportation
systems, promoting environment-friendly driving
practices, and alleviating traffic jams using ITS.
Enriching
Lives of
Communities
Toyota Mobility Foundation
business activities, with a high likelihood of enriching lives in communities and building ever-better cars that
expect the foundation to provide grants amounting from ¥3 billion to ¥4.5 billion per year.
In August 2014, Toyota established the Toyota Mobility Foundation to provide global assistance to NPOs
exceed customer expectations. In emerging markets, the foundation will search for solutions to social prob-
and research organizations that are helping to build a better society through mobility. The foundation will
lems by helping to close the mobility gap and promoting the development of the automotive industry on a local
support businesses and activities focused on enhancing mobility and that have a strong correlation to Toyota’s
basis. In advanced countries, the foundation will focus on developing next-generation mobility solutions. We
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial Section Activities towards SMART MOBILITY SOCIETYToyota aims to create a smart mobility society where people feel secure and happy in transport and everyday life.• The vehicle complies with the driver’s verbal and nonverbal commands.• The vehicle predicts the driver’s actions in order to provide services. The vehicle will become a trusted partnerthrough close communication with the driver.• Vehicles exchange their locations and speeds at all times. • Vehicles receive useful information from roadside infrastructure.Toward the realization of Toyota’s ultimate goal:zero casualties from traffic accidents.Connected with vehicles and roads• Actualizing a low-carbon society where homes and vehicles share energy with each other. • Promoting local energy production/consumption. • Creating communities that are strong enough to withstand natural disasters.Optimizing the energy use of the entire community.Achieving eco-friendly lifestyles with a high quality of life.FutureAround 2020• Utilizing big data generated from vehicles to improve traffic control and disaster-related measures.• Implementing an ultra-micro EV sharing service integrated with public transportation. Building a stress-free traffic environment whereeveryone can move around as they wish.PresentPast(cid:31) Vehicle Information and Communication System(cid:31) Japan Mayday Service(cid:31) Electronic Toll Collection(cid:31) G-BOOK ServiceWhat can I do for you?Centralized voice recognition system:AgentPush-style notifications based on behavioral prediction:Agent +Your usual route is congested. Shall we take a detour?Social networking servicelinking people and vehicles:TOYOTA friendIndustrial Energy Management:F-GridHome and VehicleEnergy Management:Smart House & HEMSVegetable greenhouseControlling home electrical appliances from vehicles:H2V eneliV2HRebuilt/Reused batteriesHigh-efficiency powergeneration systemWireless power transmissionEnergy management for the entire community:EDMSMultimodal route guidance:Ha:moHigh-performanceautomatic parking system:Smart parkingNext generation ultra-micro EV:TOYOTA i-ROADBig Data information service EDMSEnergy Data Management SystemSmart Mobility ParkPlease charge my batterybecause I am almost empty.Next-generation dealer management system:e-CRB (Customer Relationship Building)ITS spotAdvanced automaticcollision notificationGreen wave driving assistanceV2P cooperative system:Vehicle to PedestrianV2V cooperative system:Vehicle to VehicleIntelligent Driver-Support SystemV2I cooperative system:Vehicle to InfrastructureUltra-micro EV sharing system:Ha:mo RIDE ANNUAL REPORT 2014
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting
New Values for the Next Hundred Years
The willingness to take on new challenges has been in Toyota’s DNA since its founding.
Toyota has embarked on a path of embracing new values and achieving sustainable growth over the next 10 years and 100 years. In making tomorrow’s
Toyota even better than today’s, we are focusing on the following three areas.
The first is initiatives for the future that focus on pursuing innovation. We aim to embrace new values centered on the future and people.
This is a departure from our previous approach, which centered on cars. Toyota hopes that its products and services will change people’s lives for the better.
The second is to cultivate an adventurous spirit as we enter new fields. Leaving our comfort zone, we aim to create new industries
and businesses by taking in the best ideas and knowledge around the world.
The third is to ensure that Toyota plays an ever more essential role in society through its efforts to find solutions to social problems. We
aim to build a win-win relationship between Toyota and society, and to deepen this relationship as we create shared values together.
We will use innovation to create the future.
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting [1 of 2]
Message from the Executive Vice President Responsible for Accounting
Fiscal 2014 Business Results
On a consolidated basis for the fiscal year ended March 31, 2014, the
Toyota Group reported an increase in both revenue and earnings. Vehicle
sales increased 0.245 million units to 9.116 million units compared with the
previous fiscal year. Net revenues expanded ¥3.6277 trillion to ¥25.6919
trillion, operating income grew ¥971.2 billion to ¥2,292.1 billion, and net
income rose ¥860.9 billion to ¥1,823.1 billion.
Factors that contributed to the increase in operating income included a
¥900.0 billion boost due to exchange-rate fluctuations as well as ¥290.0
billion contributed by cost reduction efforts, ¥180.0 billion by marketing
efforts, and ¥81.2 billion by other factors. Factors that were detrimental to
operating income included a ¥480.0 billion rise in expenses.
The increase in miscellaneous costs and others was largely attributable
to non-recurring expenses incurred as a result of an agreement reached
with the U.S. Attorney’s Office. In contrast, the Company’s earnings for the
fiscal year under review benefitted from movements in foreign currency
exchange rates, most notably the weakening of the yen against both the
U.S. dollar and the euro, the improving profitability of exports, the success
of cost reductions undertaken together with suppliers, and aggressive
marketing efforts.
From a marketing perspective, the active release of fully remodeled cars,
including the Harrier, Voxy, and Noah, together with the efforts of dealers
nationwide helped boost sales in Japan. On a global basis, the Group’s
performance was mixed. Sales stalled in Thailand and India due mainly to
market contraction and increasingly fierce competition. In contrast, the
continued recovery in North America, coupled with the release of remod-
eled cars, including the RAV4, Lexus IS, and Tundra, served to drive sales
forward. We thus saw vehicle sales grow mainly in North America, Europe,
and the Middle East. The sales increase in Japan and across many coun-
tries and regions worldwide reflects the introduction of new car models that
accurately address the needs of domestic and overseas customers as well
as the intense efforts of the Group’s global dealers.
I strongly believe that the revitalization of the Group’s operations and
management is attributable to the hard work of dealers and suppliers along
with the concerted efforts of the entire Toyota Group of companies to
improve profitability.
Consolidated Financial Forecasts for Fiscal 2015
For the fiscal year ending March 31, 2015, we forecast vehicle sales of 9.1
million units, net revenues of ¥25.7 trillion, operating income of ¥2.3 trillion,
and net income of ¥1.78 trillion on a consolidated basis. Our exchange rate
assumptions are ¥100 per US$1 and ¥140 per a1.
In our forecast for consolidate operating income we expect cost reduc-
tion efforts (¥165 billion) to be a contributing factor. We also expect
exchange-rate fluctuations (¥95 billion), marketing efforts (¥45 billion), and
an increase in expenses (¥17.1 billion) to negatively impact operating
income. While the aforementioned cost reduction efforts and the absence
of the one-off expense incurred in the fiscal year ended March 31, 2014,
will help boost earnings, the anticipated deterioration in model composition,
impact of low-priced currencies in emerging markets, and aggressive
forward-looking expenditures aimed at securing sustainable growth on the
back of increased competitiveness are projected to hold operating income
at its current level.
We will be looking to build a foundation that is capable of generating
sustainable growth by implementing a wide range of measures. As we work
to enhance our competitiveness by developing human resources, under-
taking capital investments, and implementing our new management struc-
ture, we will take care not to be overly influenced by short-term financial
results. Meanwhile, in order to absorb the increase in fixed costs associ-
ated with forward-looking investments, we will not let up in our efforts to
reduce costs through Companywide value analysis (VA) activities, or to
improve profitability by efficiently promoting sales.
We have been aiming to establish a cycle of developing ever-better cars
that delight our customers and benefit society while fulfilling our duty to
increase sales and profits that are, of course, reinvested in development.
To support this cycle, we will endeavor to maintain and build on our
strong earnings base and to steadfastly engage in activities that improve
our profit structure. To this end, we will continue to increase the gross profit
margin per unit and place suitable controls on fixed costs.
Financial Strategy
The three key priorities of our financial strategy are growth, efficiency, and
stability.
We believe that the balanced pursuit of these three priorities over the
medium to long term will allow us to achieve steady and sustainable growth
as well as increase corporate value.
1. Growth: Sustainable growth through continuous forward-looking
investments
The structure of the automotive market is undergoing dramatic change.
Along with burgeoning environmental awareness, we are witnessing rising
demand for diverse types of eco cars as well as the rapid development of
information technology and telecommunications. At the same time, global
competition is becoming increasingly fierce. Focusing on environmental and
safety as well as information and telecommunications technology develop-
ment and investing capital in areas aimed at enhancing productivity, Toyota
will actively undertake all necessary expenditure to remain at the forefront.
This will include the development of human resources, which we recognize
is key to maximizing conscientious manufacturing and investment in IT
Our goal is to achieve
sustainable growth by
undertaking strategic and
efficient forward-looking
investments that build on
our robust earnings base.
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial Section
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Toyota in 10 Years and 100 Years
Our DNA is Creating Ever-Better Cars
What Sets Toyota Apart
Enriching Lives and Building Tomorrow’s Toyota through Innovation
New Values for the Next Hundred Years
Message from the Executive Vice President Responsible for Accounting [2 of 2]
Message from the Executive Vice President Responsible for Accounting
FY2015 Forecast: Consolidated Vehicle Sales
(Thousands of units)
10,000
8,000
6,000
4,000
2,000
0
9,116
2,365
2,529
844
1,609
1,769
9,100
2,210
2,620
850
1,630
1,790
–16
–155
+91
+6
+21
+21
FY2014 Results
FY2015 Forecasts
Change
(cid:31) Japan (cid:31) North America (cid:31) Europe (cid:31) Asia (cid:31) Other
FY2015 Forecasts: Consolidated Financial Summary
(Billions of yen)
Net Revenues
Operating Income
Operating Margin
Income before Income Taxes
and Equity in Earnings of
Affiliated Companies
Equity in Earnings of
Affiliated Companies
Net Income Attributable to
Toyota Motor Corporation
Net Margin Attributable to
Toyota Motor Corporation
FOREX Rates
Yen/US$
Yen/Euro
FY2015 Forecasts
(Apr. 1, 2014–
Mar. 31, 2015)
FY2014 Results
(Apr. 1, 2013–
Mar. 31, 2014)
¥25,700.0
¥25,691.9
2,300.0
8.9%
2,292.1
8.9%
2,390.0
2,441.0
300.0
1,780.0
6.9%
¥100
140
318.3
1,823.1
7.1%
¥100
134
Analysis of FY2015 Forecast: Consolidated Operating Income
(Billions of yen)
Effects of
FOREX
Rates
2,292.1
Profit Improvement
Activities +40.0
Cost
Reduction
Effort
Increase
in
Expenses*
Change
+8.1
+7.9
—
–51.0
–18.3
–43.1
—
+– 0
–6
2,300.0
–95.0
Volume/
Model Mix
–120.0
Other
Marketing
Efforts
+75.0
+165.0
–200.0
+182.9
Effects of Marketing Activities –45.0
* Details:
Investment for strengthening competitiveness
R&D Expenses
Depreciation and CAPEX-related Costs
Labor Costs
Expenses, etc.
Non-recurring
Expenses
for FY2014,
etc.
–50.0
–35.0
–65.0
–50.0
FY2014 Results
Operating Income (+7.9)
FY2015 Forecasts
systems that support efficient workplace practices. We will place consider-
able weight on investments that accurately reflect market trends and lead
toward sustainable growth over the long term.
For example, and as a part of the Company’s environmental activities,
Toyota is working diligently to improve the fuel economy of conventional
engines and is actively engaging in the development of a wide range of
technologies, including hybrid technologies for plug-in hybrid, electric, and
fuel cell vehicles (FCVs). The Company is placing particular emphasis on
FCVs, which are being designed as part of efforts to respond to the grow-
ing diversity of automotive fuels. Boasting zero CO2 or environmentally
hazardous substance emissions while running as well as a level of conve-
nience that is comparable to current gasoline vehicles, FCVs are the ulti-
mate in eco cars. In a bid to promote their widespread use, Toyota plans to
launch a sedan-type FCV in Japan before March 2015 and some time in
summer 2015 in the United States and Europe.
From the perspective of safety, Toyota is drawing on the integrated safety
concept, which pursues connectivity between a wide variety of safety
systems while providing optimal driver support across all driving scenarios,
to vigorously develop safety technologies, including the practical applica-
tion of advanced driver assistance systems.
In the area of information and telecommunications technology, Toyota is
active across a broad spectrum of fields. In addition to an interactive inter-
face that links directly to a vehicle’s operations, sophisticated navigation
systems, and big data analysis, the Company has begun developing technol-
ogies that deliver new value both in terms of vehicle safety and performance.
For example, Toyota is rolling out T-Connect, an innovative new telematics
service. T-Connect features an interactive voice response service that
handles queries about locations and news, as well as a predictive information
service that draws on data from user route histories to predict a car’s desti-
nation. Based on the predicated destination, T-Connect provides voice guid-
ance on relevant traffic accidents, congestion, and road surface conditions.
2. Efficiency: Improving profitability and capital efficiency
Toyota will continue its push forward with the Toyota New Global
Architecture (TNGA), an initiative to overhaul the way we work with the goal
of facilitating the timely launch of appealing products globally. Under TNGA,
we are improving development efficiency and making ever-better cars by
standardizing parts and components through grouped development. In
addition to actively investing in the development of new technologies, we
are carrying out “simple and slim” activities that facilitate the effective use of
existing equipment.
Looking ahead, we will strive to further improve our earnings structure
through efficient investment that emphasizes the areas in which we want to
advance, including hybrids, other eco-cars, and emerging markets.
3. Stability: Maintaining a solid financial base
To ensure a solid financial base, we secure sufficient liquidity and stable
shareholders’ equity. This allows us to maintain capital expenditure and
R&D investment at levels conducive to future growth as well as to maintain
working capital at a level sufficient for operations, even when business
conditions are difficult due to such factors as steep increases in raw materi-
als prices or volatility in foreign exchange rates. We plan to refine and
implement measures to improve business continuity planning in the event
of a major disaster. Amid expectations that the global automotive market
will expand over the medium to long term, we believe that, in addition to
putting crisis measures into place, maintaining adequate liquidity is essen-
tial to the implementation of forward-looking investment aimed at improving
product appeal and the development of next-generation technologies as
well as to the establishment of global production and sales structures. We
will continue to pursue improvements in capital efficiency and cash flow.
Dividends and Share Acquisitions
Toyota considers the enhancement of shareholder value a priority manage-
ment policy and to this end is aiming for sustainable growth through corpo-
rate reorganization to increase corporate value. We aim to pay stable,
ongoing dividends, targeting a consolidated payout ratio of 30%, while
giving due consideration to such factors as performance each term, invest-
ment plans, and cash and cash equivalents.
To succeed in this highly competitive industry, we plan to use retained earn-
ings to quickly commercialize environment- and safety-related next-generation
technologies, with emphasis on customer safety and peace of mind.
Within this context, Toyota declared an annual dividend payment of ¥165
per share for the fiscal year ended March 31, 2014.
At the Company’s 110th General Meeting of Shareholders, Toyota
received approval to dispose of 30 million common shares of treasury stock
in order to establish the Toyota Mobility Fund. The Company also plans to
repurchase up to 60,000,000 shares of its common stock at a total
purchase price of up to ¥360 billion during the fiscal year ending March 31,
2015. Taking the aforementioned into consideration, we cancelled 30
million shares of our treasury stock on June 30, 2014.
With an eye to long-term capital efficiency, Toyota will adopt a flexible
approach toward the future acquisition of its own shares.
Moving forward, we will continue striving to further improve profits and
meet the expectations of our shareholders.
July 2014
Nobuyori Kodaira
Executive Vice President
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial Section
ANNUAL REPORT 2014
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Consolidated Performance Highlights
Consolidated Performance (U.S. GAAP)
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Fiscal years ended March 31
Net Revenues:
Automotive
Financial Services
All Other
Inter-Segment Elimination
Operating Income:
Automotive
Financial Services
All Other
Inter-Segment Elimination
Net Income Attributable to Toyota Motor Corporation*2
ROE
ROA
As of March 31
Total Assets
Toyota Motor Corporation Shareholders’ Equity
Short-Term Debt, Including Current Portion of Long-Term Debt
Long-Term Debt, less Current Portion
2010
2011
Millions of yen
2012
2013
2014
% change
2014 vs. 2013
18,950,973
17,197,428
1,245,407
947,615
(439,477)
147,516
(86,370)
246,927
(8,860)
(4,181)
209,456
2.1%
0.7%
30,349,287
10,359,723
5,497,997
7,015,409
18,993,688
17,337,320
1,192,205
972,252
(508,089)
468,279
85,973
358,280
35,242
(11,216)
408,183
3.9%
1.4%
29,818,166
10,332,371
5,951,836
6,449,220
18,583,653
16,994,546
1,100,324
1,048,915
(560,132)
355,627
21,683
306,438
42,062
(14,556)
283,559
2.7%
0.9%
30,650,965
10,550,261
5,963,269
6,042,277
22,064,192
20,419,100
1,170,670
1,066,461
(592,039)
1,320,888
944,704
315,820
53,616
6,748
962,163
8.5%
2.9%
35,483,317
12,148,035
6,793,956
7,337,824
25,691,911
23,781,404
1,421,047
1,151,280
(661,820)
2,292,112
1,938,778
294,891
64,270
(5,827)
1,823,119
13.7%
4.7%
41,437,473
14,469,148
7,780,483
8,546,910
+16.4
+16.5
+21.4
+8.0
—
+73.5
+105.2
–6.6
+19.9
—
+89.5
—
—
+16.8
+19.1
+14.5
+16.5
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial Section
ANNUAL REPORT 2014
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Consolidated Performance Highlights
Consolidated Performance (U.S. GAAP)
[2 of 3]
Net Revenues
(¥ Billion)
30,000
25,000
20,000
15,000
10,000
5,000
0
Operating Income /
Operating Income Ratio
(cid:31)(cid:31) Operating Income
(cid:30)(cid:30) Operating Income Ratio
(¥ Billion)
2,500
2,000
1,500
1,000
500
0
(%)
10
8
6
4
2
0
Net Income Attributable to
Toyota Motor Corporation/ROE
(cid:31)(cid:31) Net Income Attributable
to Toyota Motor Corporation
(cid:30)(cid:30) ROE
(¥ Billion)
2,000
1,500
1,000
500
0
(%)
20
15
10
5
0
FY
’10 ’11 ’12 ’13 ’14
FY
’10 ’11 ’12 ’13 ’14
FY
’10 ’11 ’12 ’13 ’14
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P Net Revenues:
P Operating Income
¥25,691.9 billion ( +16.4%)
2,292.1 billion
(+73.5%)
P Net Income Attributable to Toyota Motor Corporation
1,823.1 billion
(+89.5%)
Analysis of Operating Income
(¥ Billion)
Operating Income +971.2
R&D Expenses/Capital Expenditures
for Property, Plant and Equipment
(excluding vehicles and equipment
on operating leases)
(cid:31)(cid:31) R&D Expenses
(cid:31)(cid:31) Capital Expenditures for Property, Plant and Equipment
(¥ Billion)
1,000
800
600
400
200
0
FY
Total Assets/ROA
(cid:31)(cid:31) Total Assets
(cid:30)(cid:30) ROA
(¥ Billion)
50,000
40,000
30,000
20,000
10,000
0
(%)
5
4
3
2
1
0
Note: “Net Income Attributable to Toyota Motor
Corporation,” equivalent to “Net Income” up to 2009.
Toyota Motor Corporation
Shareholders’ Equity/
Shareholders’ Equity to
Total Assets
(cid:31)(cid:31) Toyota Motor Corporation Shareholders’ Equity
(cid:30)(cid:30) Shareholders’ Equity to Total Assets
(¥ Billion)
15,000
(%)
50
12,000
9,000
6,000
3,000
0
40
30
20
10
0
1,320.8
0
FY2013
Effects of
FOREX
Rates
＋900.0
Cost
Reduction
Efforts
＋290.0
Marketing
Efforts
＋180.0
Increase in
Expenses,
etc.
–480.0
Valuation
Gain/Losses
from Interest
Rate Swaps
–51.6
Other
＋132.8
2,292.1
FY2014
’10 ’11 ’12 ’13 ’14
FY
’10 ’11 ’12 ’13 ’14
FY
’10 ’11 ’12 ’13 ’14
Net Revenues by Region
Operating Income by Region
(¥ Billion)
1,510.1
* Figures for North America exclude valuation gains/losses from interest rate swaps.
(¥ Billion)
15,000
12,000
9,000
6,000
3,000
0
FY
Japan
North America
Europe
Asia
Other Regions
’10 ’11 ’12 ’13 ’14
’10 ’11 ’12 ’13 ’14
’10 ’11 ’12 ’13 ’14
’10 ’11 ’12 ’13 ’14
’10 ’11 ’12 ’13 ’14
Note: Fiscal years ended March 31
+933.8
576.3
’13
’14
Japan
+152.7
+31.7
+19.6
–91.1
341.5*
188.9*
’13
’14
North America
26.4
’13
58.2
’14
Europe
376.0
395.7
’13
’14
Asia
133.7
’13
42.5
’14
Central and South America,
Oceania, Africa and
The Middle East
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial Section ANNUAL REPORT 2014
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Consolidated Performance Highlights
Consolidated Vehicle Production and Sales
Thousands of units
[3 of 3]
Fiscal years ended March 31
Vehicle Production by Region:
Japan
Overseas Total
North America
Europe
Asia
Central and South America
Oceania
Africa
Consolidated Total
Vehicle Sales by Region:
Japan
Overseas Total
North America
Europe
Asia
Central and South America
Oceania
Africa
Middle East
Other
Consolidated Total
2010
3,956
2,853
1,042
433
1,021
146
106
105
6,809
2,163
5,074
2,098
858
979
231
251
184
466
7
7,237
2011
3,721
3,448
1,338
372
1,344
148
113
133
7,169
1,913
5,395
2,031
796
1,255
281
248
209
569
6
7,308
2012
3,940
3,495
1,275
383
1,441
152
93
151
7,435
2,071
5,281
1,872
798
1,327
289
223
214
550
8
7,352
2013
4,276
4,422
1,677
368
1,924
205
100
148
8,698
2,279
6,592
2,469
799
1,684
364
271
259
741
5
8,871
[Reference] Vehicle Sales
> Consolidated vehicle unit sales in Japan and overseas came to 9,116,000
in the fiscal year ended March 31, 2014, up 245,000, or 2.8%, compared
with the previous fiscal year.
> Consolidated vehicle unit sales in Japan were 2,365,000, an increase of
86,000, or 3.8%, year on year. Excluding mini-vehicles, Toyota and Lexus
vehicle unit sales (retail) was 1,648,000, up 36,000, or 2.2%, representing a
record market share of 46.7%.
> Total vehicle unit sales (retail), including the Daihatsu and Hino brands, was
also a historic high, reaching 10,133,000, a year-on-year increase of
441,000, or 4.6%.
> Consolidated Lexus vehicle unit sales came to approximately 540,000, around
44,000, or 8.8%, higher than the previous fiscal year. By geographic region,
Lexus vehicle unit sales in Japan, North America, Europe, Asia, and other were
about 48,000, 300,000, 45,000, 92,000, and 55,000, respectively.
Vehicle Sales
Number of vehicles produced for
wholesale by Toyota Motor Corporation
and its consolidated subsidiaries
Number of vehicles produced for
wholesale by Toyota’s
affiliates outside consolidation
(e.g. JV affiliates in China)
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% change
2014 vs. 2013
Vehicle Production by Region
(cid:31) Japan (cid:31) Overseas Total
(Thousands of units)
10,000
8,000
6,000
4,000
2,000
0
FY
’10 ’11 ’12 ’13 ’14
Breakdown of Vehicle
Production by Region
(cid:31) Japan (cid:31) North America (cid:31) Europe
(cid:31) Asia (cid:31) Other Regions
Consolidated Total:
9,032 thousand units
5.3%
21.5%
5.6%
FY2014
48.1%
19.5%
Vehicle Sales by Region
(cid:31) Japan (cid:31) Overseas Total
(Thousands of units)
10,000
Breakdown of Vehicle Sales
by Region
(cid:31) Japan (cid:31) North America (cid:31) Europe
(cid:31) Asia (cid:31) Other Regions
Consolidated Total:
9,116 thousand units
8,000
6,000
4,000
2,000
0
FY
’10 ’11 ’12 ’13 ’14
19.4%
25.9%
FY2014
17.7%
27.7%
9.3%
C
u
s
t
o
m
e
r
s
2014
4,345
4,687
1,759
506
1,939
242
103
138
9,032
2,365
6,751
2,529
844
1,609
413
259
267
824
6
9,116
C
o
n
s
o
l
i
d
a
t
e
d
V
e
h
c
e
S
a
e
s
l
i
l
i
D
s
t
r
i
b
u
t
o
r
s
o
r
l
D
e
a
e
r
s
o
u
t
s
d
e
i
c
o
n
s
o
l
i
d
a
t
i
o
n
T
o
y
o
t
a
a
n
d
L
e
x
u
s
V
e
h
c
e
S
a
e
s
l
l
i
+1.6
+6.0
+4.9
+37.5
+0.8
+18.0
+3.0
–6.8
+3.8
+3.8
+2.4
+2.4
+5.6
–4.5
+13.5
–4.4
+3.1
+11.2
+20.0
+2.8
T
o
y
o
t
a
R
e
t
a
i
l
i
l
V
e
h
c
e
S
a
e
s
l
* There are a limited number of exceptional cases where sales are made other than
in accordance with the flowchart above.
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial SectionDaihatsu- and Hino-Brand VehiclesToyota- and Lexus-Brand Vehicles
ANNUAL REPORT 2014
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Automotive Operations
The Company works diligently to produce ever-
better cars that exceed expectations in order to
deliver products that bring smiles to the faces of
people who choose Toyota.
In the fiscal year under review, net revenues
from automotive operations totaled ¥23,781.4
billion, an increase of ¥3,362.3 billion, or 16.5%,
compared with the previous fiscal year. On the
earnings front, operating income jumped by
¥994.0 billion, or 105.2%, year on year, to
¥1,938.7 billion.
Net Revenues
(¥ Billion)
25,000
20,000
15,000
10,000
5,000
0
FY
’10
’11
’12
’13
’14
Operating Income (Loss)
(¥ Billion)
2,000
1,500
1,000
500
0
-500
FY
’10
’11
’12
’13
’14
Looking at conditions in the automotive market, trends
mainly in the United States were firm. Certain emerg-
ing markets, on the other hand, showed signs of slow-
ing down. Against this backdrop, Toyota aggressively
introduced new products in Japan and successfully
expanded sales thanks to the efforts of dealers nation-
wide. Outside Japan, the Company boosted vehicle
sales in North America, Europe, and other regions.
Since introducing the world’s first mass-produced
car under the Prius brand name in December 1997,
Toyota has placed considerable emphasis on promot-
ing the widespread use of hybrid vehicles. With sales
having passed the four million mark in April 2012,
demand continued to gather momentum and, within
the relatively short space of approximately nine
months, we saw cumulative hybrid sales of five million
break through the six million mark in January 2014.
Thus, we can confidently say that hybrid vehicles
have now achieved full-fledged market penetration.
Source: Toyota Motor Corp.
Note: Market definitions are as follows:
Europe: Germany, France, the United Kingdom, Italy, Spain, the Netherlands,
Belgium, Portugal, Denmark, Greece, Ireland, Sweden, Austria,
Finland, Switzerland, Norway, Poland, Hungary, and the Czech
Republic
Indonesia, Thailand, the Philippines, Malaysia, Singapore, Vietnam,
Taiwan, South Korea, and Brunei Darussalam
Mini-vehicles excluded
Asia:
Japan:
Consolidated Vehicle Sales
(Thousands of units)
10,000
8,000
6,000
4,000
2,000
0
FY
8,871
2,279
2,469
799
1,684
1,640
’13
9,116
+245
2,365
+86
2,529
+60
844
1,609
+45
–75
1,769
+129
’14
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Automotive Operations
Financial Services Operations
Non-Automotive Business Operations
Vehicle Sales by Principal Markets
Japan
(Thousands of units)
(cid:31)(cid:31) Total market sales (excluding mini-vehicles)
(cid:29)(cid:29) Toyota market share
(%)
60
North America
(Thousands of units)
20,000
(cid:31)(cid:31) Total market sales
(cid:29)(cid:29) Toyota market share
4,000
3,000
2,000
1,000
0
FY
’10
’11
’12
’13
’14
Europe
(Thousands of units)
25,000
(cid:31)(cid:31) Total market sales
(cid:29)(cid:29) Toyota market share
20,000
15,000
10,000
5,000
0
CY
’09
’10
’11
’12
’13
15,000
10,000
5,000
0
CY
’09
’10
’11
’12
’13
Asia
(Thousands of units)
10,000
(cid:31)(cid:31) Total market sales
(cid:29)(cid:29) Toyota market share
45
30
15
0
(%)
10
8
6
4
2
0
8,000
6,000
4,000
2,000
0
CY
Millions of yen
(%)
40
30
20
10
0
(%)
25
20
15
10
5
0
’09
’10
’11
’12
’13
2010
For the years ended
March 31
Net Revenues by Region:
Japan
North America
Europe
Asia
Other*
Intersegment elimination/
unallocated amount
11,220,303
5,670,526
2,147,049
2,655,327
1,673,861
(4,416,093)
2011
2012
2013
2014
10,986,246
5,429,136
1,981,497
3,374,534
1,809,116
11,167,319
4,751,886
1,993,946
3,334,274
1,760,175
12,821,018
6,284,425
2,083,113
4,385,476
2,094,265
14,297,470
8,117,099
2,724,959
4,877,672
2,336,641
(4,586,841)
(4,423,947)
(5,604,105)
(6,661,930)
% change
2014 vs.
2013
+11.5
+29.2
+30.8
+11.2
+11.6
—
Operating income (loss):
Japan
North America
Europe
Asia
Other*
Intersegment elimination/
unallocated amount
(225,242)
85,490
(32,955)
203,527
115,574
(362,396)
339,503
13,148
312,977
160,129
(207,040)
186,409
17,796
256,790
108,814
576,335
221,925
26,462
376,055
133,744
1,510,165
326,052
58,228
395,737
42,568
+162.0
+46.9
+110.0
+5.2
–68.2
1,122
4,918
(7,142)
(13,633)
(40,638)
—
Note: Fiscal years ended March 31
(cid:31) Japan (cid:31) North America (cid:31) Europe (cid:31) Asia
(cid:31) Other*
* Central and South America, Oceania, Africa and the Middle East, etc.
President’s MessageOverview of Four Business Units Special FeatureReview of OperationsConsolidated Performance HighlightsManagement and Corporate InformationInvestor InformationFinancial Section
ANNUAL REPORT 2014
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Financial Services Operations
Toyota offers automotive financing and a variety
of other financial services for total support of
customer lifestyles.
In the fiscal year ended March 31, 2014, net
revenues from financial service operations
amounted to ¥1,421.0 billion, up ¥250.3 billion, or
21.4%, compared with the previous fiscal year. In
contrast, operating income declined ¥20.9 billion,
or 6.6%, year on year, to ¥294.8 billion. The
decrease in operating income was mainly due to
the recording by sales finance subsidiaries of
valuation losses on interest rate swaps stated at
fair value.
Net Revenues
(¥ Billion)
1,500
1,200
900
600
300
0
FY
’10
’11
’12
’13
’14
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Automotive Operations
Financial Services Operations
Non-Automotive Business Operations
Toyota’s financial services operations are primarily
handled by Toyota Financial Services Corporation
(TFS), which has overall control of financial services
subsidiaries worldwide. TFS provides financial services
primarily for vehicle purchases and leases to approxi-
mately 9.6 million customers in 35 countries and
regions worldwide.
During the period under review, we continued with
last year’s efforts to strengthen regional strategies by
enhancing our relationships with distributors through the
provision of financial products and services meeting vari-
ous national and regional customer characteristics.
TFS continued to broaden its connections with
customers in Japan, responding to their needs by
offering ready access to sound financial services such
as credit cards and housing loans in addition to auto-
motive financing.
On the global front, the Toyota Group is aggressively
expanding its business in emerging markets. In
January 2013, the Company established Toyota Motor
Leasing (China) Co., Ltd., which opened its doors for
business in April 2013. In the same month, Toyota
established the financial services company, Toyota
Financial Services Kazakhstan MFO LLP, which
commenced business in January 2014.
In such major markets as Europe and the United
States, TFS aims to ensure stable earnings by working
to secure margins and achieve thorough low-cost
operations with consideration for vehicle sales support
and the balancing of business risks.
To respond to dramatic changes in the business
environment, TFS will strengthen groupwide compli-
ance and risk management structures while focusing
on enhancements to its business platform, such as IT
platform development and human resource cultivation
in management.
Overview of Toyota’s Financial Services Operations
Total assets
Net revenues
Operating income
Operating areas
¥18,943.5 billion
¥1,421.0 billion
¥294.8 billion
34 countries and regions
worldwide
Number of employees
approx. 9,000
(As of March 31, 2014)
Operating Income
(¥ Billion)
400
Financial Services Operations Organization
Toyota Motor Corporation
Total Assets
(cid:31)(cid:31) Toyota (Consolidated) (cid:31)(cid:31) TFS
(¥ Trillion)
50
300
200
100
0
FY
’10
’11
’12
’13
’14
Toyota Financial Services Corporation
Overseas Sales Finance
Companies
Toyota Finance Corporation
40
30
20
10
0
FY
’10
’11
’12
’13
’14
Note: Fiscal years ended March 31
Note: Fiscal years ended March 31
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Automotive Operations
Financial Services Operations
Non-Automotive Business Operations [1 of 3]
Non-Automotive Business Operations
Non-automotive business operations include
Intelligent Transport Systems (ITS), information
technology and telecommunications, e-TOYOTA,
housing, marine, and biotechnology and affores-
tation businesses. In each of these operations we
are fostering a workplace culture that encourages
creativity and entrepreneurship. Also, we are
seeking ideas for new businesses outside the
Toyota group of companies as another key aspect
in the creation of future core businesses.
In the fiscal year under review, net revenues
from non-automotive business operations were
¥1,151.2 billion, ¥84.8 billion, or 8.0%, higher than
the previous fiscal year. Operating income also
improved ¥10.6 billion, or 19.9%, year on year to
¥64.2 billion.
Net Revenues
(¥ Billion)
1,200
1,000
800
600
400
200
0
FY
’10
’11
’12
’13
’14
Operating Income
(¥ Billion)
70
60
50
40
30
20
10
0
-10
FY
’10
’11
’12
’13
’14
Note: Fiscal years ended March 31
Intelligent Transport Systems
e-TOYOTA
Toyota is involved in the planning and development of
products and services for Intelligent Transport Systems
(ITS). We view this technology as a valuable way to link
motor vehicles and transportation infrastructures, thereby
contributing to sustainable economic development.
In 2009, we helped create a practical vehicle-
infrastructure cooperative system for safe driving that
prevents traffic accidents more effectively than current
safety technologies. In conjunction with this, Toyota
developed an onboard communications device, mainly
for expressway use, compatible with the ITS Spot
Service. Also, in 2011 Toyota commercialized the
Driving Safety Support System (DSSS), an onboard
navigation system for public highways. We will
continue to increase the number of models equipped
with this device.
Toyota is also engaging in R&D for vehicle infrastruc-
ture cooperative systems, such as actively participat-
ing in public and private sector field trials, so as to
bring them into use as soon as possible.
Verification testing of the Harmonious Mobility
Network (Ha:mo) began in October 2012. Ha:mo is a
transportation support system aimed at realizing
comfortable mobility for people, cities, and society by
optimally and efficiently combining private car and
public transportation.
Ha:mo offers two core services. The first, Ha:mo
NAVI, is an route guidance system that supports opti-
mal mobility, based on road and traffic conditions as
well as on the availability of public transportation, while
addressing the need to reduce CO2 emissions and
ensure increased transportation comfort. The other
core service, Ha:mo RIDE, is a car-sharing system that
offers ultra-compact electric vehicles for urban short-
distance transport.
The Toyota i-ROAD, a (twin-seater EV) personal
mobility concept car, has been added to the Ha:mo
RIDE service lineup from this year. It provides a fresh
and enjoyable motoring experience together with a
level of convenience that rivals motorcycles.
The Ha:mo RIDE service lineup also includes the
COMS, an ultracompact electric vehicle manufactured
by Toyota Auto Body Co., Ltd., and electric bicycles
featuring Yamaha Motor Co., Ltd.’s Power Assist
System. In this manner, every effort is being made to
address the diverse needs of users.
D Read more
Toyota is developing e-TOYOTA business operations
to facilitate the integration of IT services and automo-
biles. Toyota continues to plan and develop a variety of
Internet services. Chief among these are the TOYOTA
Web Passport, a secure membership system for
accessing Toyota’s online services, and GAZOO, a
web portal for automobile information. Moreover, the
Company is planning and developing telematics
services for in-vehicle terminals and smartphones,
including T-Connect, G-BOOK, and G-Link. Plans are
in place for developing these services overseas in such
countries and regions as China, Thailand, and the
Middle East.
D Read more
TOPICS
New “Big Data Traffic Information Service”
Toyota developed and provided its “Big Data Traffic
Information Service,” a new kind of traffic-information service
utilizing big data—including vehicle location and speed, road
conditions, and other parameters—that is collected and
stored via telematics services. Based on such data, traffic
information, statistics, and other related information can be
provided to local governments and businesses to improve
traffic flow, augment map information services, and support
disaster prevention measures.
Steps are also being taken to provide online “T-Connect
smartphone app” services to private smartphone users. At
the same time Toyota provides the T-Probe traffic information
and navigation service, which users can access while driving
or on foot. Determining the best possible route given traffic
congestion and conditions,
T-Probe is the first technology
that is purely stand-alone and not part of the Toyota onboard
navigation system. The service is accessible around the
clock, providing road map and pertinent disaster counter-
measure information, including details of emergency facilities.
With the increasingly widespread use of the Big Data
Transportation System together with related smartphone
T-Connect smartphone app services, Toyota is working to
provide more convenient and comfortable total life services
while contributing to the development of cities that are resil-
ient to disaster through increased safety.
D Read more
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Hands-free
conversation
What time
will you get here?
Maybe
around 5.
Information Technology and
Telecommunications
Toyota dealers also serve as sales points for mobile
phones and point-to-point telecommunications
services provided by KDDI Corporation at more than
7,000 sales outlets (vehicle dealers, parts dealers,
rental offices, and L&F offices) throughout Japan.
Toyota is has also been engaged in the promotion of
functions and services that link cars and mobile phones,
such as hands-free telephones and G-BOOK services,
and in 2014 newly launched the T-Connect service.
Toyota’s information technology and telecommuni-
cations business will come to play an even more
important role as we develop smart grids that link
people, cars and homes.
D Read more
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Automotive Operations
Financial Services Operations
Non-Automotive Business Operations [2 of 3]
Housing
Marine
Biotechnology and Afforestation
Drawing on the advanced engine, electronic control,
and other technologies developed through its auto-
motive operations, the Toyota Group is engaged in
the development, manufacture, and sale of high-
performance, high-quality pleasure boats. Every
effort is being made to contribute to the development
of an affluent society in the marine field by providing
safe, comfortable, and environment-friendly products.
D Read more
Toyota is working diligently to help create a resource
recycling society through its biotechnology and affor-
estation activities.
In Australia, the Group is actively involved in affor-
estation, while in Japan activities include environmen-
tal greening, horticultural, and agricultural biomass
operations.
Moreover, the Group has launched Housaku Keikaku,
an agricultural IT management tool for commercial rice
growers, as a part of its efforts to support agriculture.
By providing this tool, Toyota strives to enhance the
competitiveness of agriculture in Japan.
D Read more
Toyota entered the housing business in 1975. As a
part of its endeavors in this field, the Toyota Group
provides housing under the brand name Toyota Home.
Toyota Home brings together the strengths of the
Toyota Group’s intellectual capital and its technological
capabilities. Housing products include “Eco Mirai
Homes,” which offer comfortable, economical, and
environmentally friendly living, and smart houses that
focus on safety, security, sound health, and comfort.
The Company’s “SINCE feelas” lineup of smart houses
received the 2013 Good Design Award in recognition
of its outstanding design.
The Toyota Group engages in a wide range of activi-
ties in this field encompassing sales of condominiums,
rental housing, and homes for the elderly as well as
renovation services.
Note: Effective October 1, 2010, all housing operation produc-
tion and technical development functions were transferred
from Toyota Motor Corporation to Toyota Housing
Corporation.
D Read more
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TOPICS
Promoting the Fun of Automobiles
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Automotive Operations
Financial Services Operations
Non-Automotive Business Operations [3 of 3]
Toyota continues to push boundaries in motorsports, driven by the desire to make ever-better cars and satisfy new car enthusiasts
Inspiring customers through motorsports
Activities for car fans and enthusiasts
WEC
NASCAR
Aimed at broadening the appeal of car racing and fostering
more car enthusiasts, Toyota is striving through GAZOO
Racing* to make ever-better cars that satisfy drivers and
promote the joy of cars in ways that transcend the role of a
typical car manufacturer.
As a part of its unwavering commitment to making ever-
better cars, every year Toyota participates in the ADAC 24h
Rennen Nürburgring, a 24-hour endurance race in
Germany. Employees take part both as drivers and
mechanics. In addition to helping develop human resources
well-versed in the making of cars, Toyota places consider-
able emphasis on promoting efforts aimed at commercializ-
ing models that deliver the fun of driving in the GRMN
(GAZOO Racing tuned by MN) and G (G Sports) categories.
Furthermore, in striving to promote the joy of cars, the
Company holds circuit driving programs throughout Japan
to allow individuals with no racing experience to easily
enjoy the thrills of circuit driving in a safe environment. The
TOYOTA GAZOO Racing FESTIVAL is one initiative that
strives to broaden opportunities in which car fans and
enthusiasts can interact.
* GAZOO Racing: A part of activities aimed at increasing car enthusi-
asts. GAZOO gives Toyota test drivers chances to race, and helps in
our goal of making ever-better cars through vehicle development,
while promoting the allure of cars through grassroots motor sports.
D Read more
SUPER GT
SUPER FORMULA
The TS040 HYBRID, equipped with a racing hybrid system, took part in the FIA
World Endurance Championship, including the traditional 24 Hours of Le Mans.
In addition to participating in NASCAR in the U.S. and SUPER GT and SUPER
FORMULA, top-of-category levels of racing in Japan, we support TOYOTA AUTO
BODY CO.,LTD., which participates in the Dakar Rally.
D Read more
24 Hours Nürburgring endurance racing event held
in June 2014
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R&D and Intellectual Property [1 of 2]
Corporate Philosophy
Corporate Governance
Management Team
Risk Factors
R&D and Intellectual Property
Toyota’s R&D is dedicated to the development of
attractive, affordable, high-quality products for
customers worldwide. The intellectual property
that R&D generates is a vital management
resource that Toyota utilizes and protects to
maximize its corporate value.
R&D Guiding Principles
P Providing clean and safe products and
enhancing the quality of life of people every-
where through all our activities.
P Pursuing advanced technological develop-
ment in a wide range of fields, we pledge to
provide attractive products and services that
respond to the needs of customers worldwide.
R&D Activities
The overriding goals of Toyota’s technology and product
development activities are to minimize the negative
aspects of driving, such as traffic accidents and the
burden that automobiles have on the environment, and
maximize the positive aspects, such as driving pleasure,
comfort, and convenience. By achieving these sometimes
conflicting goals to a high degree, we want to open the
door to the automobile society of the future.
To ensure efficient progress in R&D activities, we
coordinate and integrate all phases, from basic research
to forward-looking technology and product develop-
ment. With respect to such basic research issues as
energy, the environment, information technology, tele-
communications, and materials, projects are regularly
reviewed and evaluated in consultation with outside
experts to achieve efficient R&D cost control.
And with respect to forward-looking, leading-edge
technology and product development, we establish
cost-performance benchmarks on a project-by-project
basis to ensure efficient development investment.
expenses. At the same time, we plan to continue
making substantial investments in R&D involving
forward-looking, leading-edge technologies and the
development of products associated with the environ-
ment, energy, and safety. These investments are essen-
tial to preserving our competitive edge in terms of
technologies and products.
In Japan, R&D operations are led by Toyota Central
Research & Development Laboratories, Inc., which works
closely with Daihatsu Motor Co., Ltd., Hino Motors, Ltd.,
Toyota Auto Body Co., Ltd., Toyota Motor East Japan,
Inc., and many other Toyota Group companies. Overseas,
we have a worldwide network of technical centers as well
as design and motorsports R&D centers.
R&D Organization
Toyota operates a global R&D organization with the
primary goal of building automobiles that precisely meet
the needs of customers in every region of the world.
Domestic and Overseas R&D Bases
Facility Name
Japan
Head Office Toyota Technical Center
Higashi-Fuji Technical Center
Tokyo Design Research & Laboratory
Shibetsu Proving Ground
Toyota Central Research & Development
Laboratories, Inc.
Activities
Location
Product Planning, Design, Vehicle
Engineering and Evaluation
Advanced Engineering
Research of Advanced Styling Designs
Vehicle Testing and Evaluation
Toyota City, Aichi Prefecture
Susono City, Shizuoka Prefecture
Hachioji City, Tokyo
Shibetsu City, Hokkaido
Basic Research
Nagakute City, Aichi Prefecture
Basic research
Technological
breakthroughs
related to
components
and systems
Product
development
Development theme discovery
Research on basic vehicle-related technology
Forward-looking and leading-edge
technology development
Development of leading-edge components
and systems ahead of competitors
Head Office
Toyota Technical Center
Higashi-Fuji
Technical Center
Tokyo Design
Research & Laboratory
Shibetsu Proving Ground
Toyota Central
Research & Development
Laboratories, Inc.
Primary responsibility for new model
development
Development of all-new models and
existing-model upgrades
Facility Name
USA
Activities
Location
Toyota Motor Engineering & Manufacturing
North America, Inc.
Product Planning, Vehicle Engineering and
Evaluation, Basic Research
Michigan, California, Arizona, Washington DC
Calty Design Research, Inc.
Design
Newport Beach, California
Ann Arbor, Michigan
’10
’11
’12
’13
’14
R&D Expenditures
In fiscal 2014, R&D expenses totaled ¥910.5 billion, up
12.8% from the previous fiscal year, representing 3.5%
of consolidated net revenues. We worked closely with
suppliers to develop components and products more
efficiently and took steps to reduce our own R&D
Toyota Motor Engineering &
Manufacturing North America, Inc.
Calty Design Research, Inc.
R&D Expenses
(¥ Billion)
1,000
800
600
400
200
0
FY
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R&D and Intellectual Property [2 of 2]
Corporate Philosophy
Corporate Governance
Management Team
Risk Factors
Facility Name
Europe
Toyota Motor Europe NV/SA
Toyota Europe Design Development
Toyota Motorsport GmbH (TMG)
Vehicle Engineering and Evaluation
Design
Development for Motorsport Vehicles,
Advanced Engineering
Brussels, Belgium; Derby, U.K.
Nice, France
Cologne, Germany
Activities
Location
Intellectual Property
Intellectual Property Strategies
Toyota carefully analyzes patents and the need for
patents in each area of research to formulate more
effective R&D strategies. We identify R&D projects in
which Toyota should acquire patents, and file relevant
applications as necessary to help build a strong global
patent portfolio. In addition, we want to contribute to
sustainable mobility by promoting the spread of tech-
nologies with environmental and safety benefits. This is
why we take an open stance to patent licensing and
grant licenses when appropriate terms are met. A good
example of this policy is the licensing to other compa-
nies of patents in the area of hybrid technology, which is
one of our core technologies involving environmental
energy.
Intellectual Property Guiding Principle
P Securing greater corporate flexibility and
maximizing corporate value through the
appropriate acquisition and utilization of intel-
lectual property.
Intellectual Property Activities
Toyota’s competitiveness springs from a forward-
looking R&D stance that is instrumental to core
strengths associated with products and technologies.
Underlying each new product that emerges from R&D,
there are always intellectual properties such as inven-
tions and expertise, that we value as important
management resources.
Intellectual Property Systems
R&D and intellectual property activities are organization-
ally linked to enable us to focus on selected develop-
ment themes and build a strong patent portfolio. We
have established an Intellectual Property Committee
made up of individuals involved with management,
R&D, and intellectual property. This committee acquires
and utilizes important intellectual property that contrib-
utes to business operations and helps determine poli-
cies for management risks associated with intellectual
property.
Toyota Motor Europe NV/SA
Toyota Europe Design Development
Toyota Motorsport GmbH (TMG)
Facility Name
China
Activities
Location
Toyota Motor Engineering and Manufacturing (China)
Co., Ltd.
Tianjin FAN Toyota Motor Co., Ltd. FAW Toyota R&D
Center
GAC Toyota Motor Co., Ltd. R&D Center
Basic Research, Technical Research
and Vehicle Evaluation
Jiangsu
Vehicle Engineering and Evaluation
Tianjin
Vehicle Engineering and Evaluation
Guangdong
Toyota Motor Engineering and
Manufacturing (China) Co., Ltd.
Tianjin FAN Toyota Motor Co., Ltd.
FAW Toyota R&D Center
GAC Toyota Motor Co., Ltd. R&D Center
Facility Name
Asia Pacific
Activities
Location
Toyota Motor Asia Pacific Engineering and
Manufacturing Co., Ltd.
Toyota Technical Center Asia Pacific Australia Pty., Ltd.
Vehicle Engineering and Evaluation
Samutprakarn Province, Thailand
Vehicle Engineering and Evaluation
Melbourne, Australia
Toyota Motor Asia Pacific Engineering
and Manufacturing Co., Ltd.
Toyota Technical Center Asia Pacific
Australia Pty., Ltd.
D See Domestic and Overseas R&D Bases
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Corporate Philosophy
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R&D and Intellectual Property
Corporate Philosophy
Corporate Governance
Management Team
Risk Factors
N Seeking Harmony between People, Society and the Global Environment as well as
the Sustainable Development of Society through Manufacturing
N The Spirit of the Toyoda Precepts, Passed down since Toyota’s Founding
Since its foundation, Toyota has continuously strived
energy. The pillars of our social contribution are
The Toyoda Precepts represent the essential philosophy of the founder of the Toyota group of companies, Sakichi
to contribute to the sustainable development of soci-
“environment,” “traffic safety,” and “human resources
Toyoda, and are a source of spiritual support for Toyota employees.
ety through the manufacturing and provision of innova-
development.” Toyota seeks to be of value to commu-
tive, high-quality products and services that lead the
nities and to society through our main lines of busi-
times. The automobile is a wonderful machine that
ness, and to bring smiles to people’s faces. Toyota’s
provides freedom of movement. Nevertheless, auto-
basic Corporate Social Responsibility (CSR) policy is
The Toyoda Precepts
• Always be faithful to your duties, thereby contributing to the company and to the overall good.
mobiles have an impact on the environment and soci-
to contribute to the sustainable development of soci-
• Always be studious and creative, striving to stay ahead of the times.
ety. This is something we at Toyota always keep in
ety. This phrase embodies the spirit of the Toyota
mind, and we try to create harmony among people,
Guiding Principles, and clarifies our CSR stance for
societies and the environment by listening to what our
our stakeholders, both within and outside the Com -
customers and local communities have to say. Our
pany. Toyota subsidiaries and suppliers share this CSR
operations are aimed at creating a sustainable society
policy, and we expect them to adhere to the spirit of
through monozukuri (conscientious manufacturing).
the policy in their operations.
• Always be practical and avoid frivolousness.
• Always strive to build a homelike atmosphere at work that is warm and friendly.
• Always have respect for spiritual matters, and remember to be grateful at all times.
Toyota develops and produces environment-friendly
Toyota also participated in the formulation of
vehicles such as hybrid vehicles, and we also offer
the Charter of Corporate Behavior of the Nippon
N Toyota Guiding Principles
superior accident prevention and collision safety
Keidanren (Japan Business Federation), which is an
The Toyota Guiding Principles (adopted in 1992 and revised in 1997) reflect the kind of company that Toyota seeks to
features. In addition, Toyota is involved in new busi-
alliance of Japanese leading corporations, and
be in light of the unique management philosophy, values, and methods that it has embraced since its foundation.
nesses, such as biotech, afforestation and renewable
observes the standards outlined therein.
Toyota, along with its consolidated subsidiaries, seeks to contribute to the continuous development of human society
and of the planet through its businesses based on understanding and sharing the Toyota Guiding Principles.
Positioning of the CSR Policy
Overview of Toyota’s CSR Activities
Guiding Principles at Toyota
CSR Policy:
“Contribute to Sustainable Development”
Toyota Global Vision
1
0
0
2
y
a
W
a
t
o
y
o
T
Medium- to long-term management plans
Company policies, annual policies, regional
policies, head office and divisional policies
T
h
e
T
o
y
o
t
a
C
o
d
e
o
f
C
o
n
d
u
c
t
Regular business activities
Safety
Environment
2. Respect the culture and customs of every nation and contribute to economic and social development
Safety
Environment
through corporate activities in their respective communities.
3. Dedicate our business to providing clean and safe products and to enhancing the quality of life every-
1. Honor the language and spirit of the law of every nation and undertake open and fair business activities
to be a good corporate citizen of the world.
Social
Aspect
Environmental
Aspect
where through all of our activities.
Society
and
Cultures
Comfort
and
Convenience
Economic
Aspect
Resources/
Energy
Sources
4. Create and develop advanced technologies and provide outstanding products and services that fulfill
the needs of customers worldwide.
5. Foster a corporate culture that enhances both individual creativity and the value of teamwork, while
honoring mutual trust and respect between labor and management.
6. Pursue growth through harmony with the global community via innovative management.
7. Work with business partners in research and manufacture to achieve stable, long-term growth and
Education
mutual benefits, while keeping ourselves open to new partnerships.
Toyota’s Social Contribution Activities
Societal Issues
D Read more
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Corporate Philosophy
Corporate Governance [1 of 2]
Management Team
Risk Factors
N Toyota’s Basic Policy on Corporate Governance
N Corporate Governance System
Additionally, in order to achieve sustainable growth
Toyota has an “International Advisory Board”
through the continuous development of even-better
consisting of advisors from each region overseas, and,
cars that exceed customer expectations around the
as appropriate, receives advice on a wide range of
Toyota has positioned the stable long-term growth of
In March 2011, Toyota announced the “Toyota Global
world, and realize the Toyota Global Vision, the TNGA
management issues from a global perspective. In
corporate value as a top-priority management issue.
Vision” and commenced “Visionary Management.”
Planning Division, an organization directly under
addition, the Company has a wide variety of confer-
We believe that in carrying this out, it is essential that
This is based on values that have guided Toyota since
Toyota’s top management, was established in order to
ences and committees for deliberations and the moni-
we achieve long-term and stable growth by building
its founding, such as the “Guiding Principles at Toyota”
rapidly promote the implementation of the “Toyota
toring of management and corporate activities that
positive relationships with all stakeholders, including
and the “Toyota Way,” which aim to exceed customer
New Global Architecture (TNGA).”
reflect the views of various stakeholders, including the
shareholders and customers as well as business part-
expectations by the development of ever-better cars
ners, local communities, and employees, and by
and enriching the lives of societies, and to be
supplying products that will satisfy our customers. This
rewarded with a smile that ultimately leads to a stable
N Management Transparency
“Labor-Management Council, the Joint Labor-
Management Round Table Conference,” and the
“CSR Committee.”
position is reflected in the “Guiding Principles at
base of business.
Toyota,” which is a statement of Toyota’s fundamental
Toyota’s current management structure is based on
business policies. Also, Toyota adopted and presented
the structure introduced in April 2011. In order to fulfill
the CSR Policy “Contribution towards Sustainable
the Toyota Global Vision, Toyota reduced the Board of
Development,” an interpretation of the “Guiding
Directors and decision-making layers, and has
With respect to our system regarding directors, we
believe that it is important to elect individuals that
comprehend and engage in our strengths, including
commitment to manufacturing, with an emphasis on
Principles at Toyota” that organizes the relationships
endeavored to swiftly communicate the views of
front-line operations and problem solving based on the
with its stakeholders. We are working to enhance
customers and information from operations on-ground
actual on-site situation (genchi genbutsu). At the
corporate governance through a variety of measures
to management and facilitate rapid management deci-
designed to further increase our competitiveness as a
sion making.
109th Ordinary General Shareholders’ Meeting held in
June 2013, three Outside Directors were appointed in
global company.
In April 2013, Toyota made organizational changes
order to further reflect the opinions of those from
We believe it is important to put in place a system
with the aim of further increasing the speed of decision
outside the Company in management’s decision-
that enables customer opinions and on-site informa-
making by clarifying responsibilities for operations and
making process. While Toyota currently does not have
tion to be swiftly communicated to management in
earnings, specifically by dividing the automotive busi-
its own standard or policy on independence in
order to make a prompt management decision, and
ness into the following four units—Lexus International
enables us to review whether such management deci-
(Lexus business); Toyota No. 1 (North America, Europe
sions are accepted by our customers and society. We
and Japan); Toyota No. 2 (China, Asia & the Middle
appointing Outside Directors, the Company believes
that such appointments are appropriate since various
rules on independence, such as stock exchange regu-
believe that our current system, involving the supervi-
East, East Asia & Oceania; Africa, Latin America & the
lations, are used as references in making such
sion and auditing of the execution of business by our
Caribbean); and Unit Center (engine, transmission,
appointments. We believe our Outside Directors will
Board of Directors (including Outside Directors) and
and other “unit”-related operations)—and an Executive
advise us in our management decision-making
Audit & Supervisory Board Members (including
Vice President was put in charge of the operations of
process based on their broad experience and insight
Outside Audit & Supervisory Board Members), is the
each unit in order to realize organizational change that
in their respective fields of expertise.
most appropriate system for us.
supports operations and earnings responsibility.
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Risk Factors
lations, are used as references in making such
appointments. The state of internal controls and inter-
nal audits are reported to Audit & Supervisory Board
N Accountability
extraordinary committee meetings from time to time
whenever necessary.
The CSR Committee comprises mainly the directors at
Members (including Outside Audit & Supervisory
Toyota has engaged in timely and fair disclosure of
the executive vice president level and above as well as
Board Members) through the Audit & Supervisory
corporate and financial information as stated in the
N Basic Policy Regarding the System to Secure
the Appropriateness of Business
representatives of the Audit & Supervisory Board. To
Board and the “CSR Committee,” and the status of
CSR Policy “Contribution towards Sustainable
manage and promote activities that are important to
accounting audits is reported by independent External
Development.” In order to ensure the accurate, fair,
Toyota, together with its subsidiaries, has created and
fulfilling the Company’s social responsibility, the
Auditors to the Audit & Supervisory Board Members
and timely disclosure of information, Toyota has estab-
maintained a sound corporate climate based on the
committee reviews important issues related to basic
(including Outside Audit & Supervisory Board
lished the Disclosure Committee chaired by an officer
“Guiding Principles at Toyota” and the “Toyota Code of
corporate policy, overall CSR (including environmental
Members) through the Audit & Supervisory Board. To
of the Accounting Division. The Committee holds
Conduct.” Toyota integrates the principles of problem
and social contribution initiatives), overall corporate
enhance the system for internal audits, a specialized
regular meetings for the purpose of preparing, report-
identification and continuous improvement into its
governance (including corporate ethics and compli-
organization made independent of direct control by
ing, and assessing its annual securities report, quar-
business operation process and makes continuous
ance) and risk management, and discusses measures
the management evaluates the effectiveness of the
terly report under the Financial Instruments and
efforts to train employees who will put these principles
to address such issues.
system to secure the appropriateness of documents
Exchange Law of Japan, and Form 20-F under the
into practice.
Toyota has adopted an auditor system. Seven Audit
regarding financial calculation and other information in
U.S. Securities Exchange Act, and also holds
& Supervisory Board Members (including four Outside
accordance with Section 404 of the U.S. Sarbanes-
Audit & Supervisory Board Members) play a role in
Oxley Act and Article 24-4-4 (1) of the Financial
Toyota’s corporate governance efforts by undertaking
Instruments and Exchange Law of Japan. In order to
audits in accordance with the audit policies and plans
enhance the reliability of the financial reporting of
determined by the Audit & Supervisory Board. In
Toyota, the three auditing functions—audit by Audit &
addition, Toyota has secured the personnel and frame-
Supervisory Board Members, internal audit, and
work supporting the audit by Audit & Supervisory
accounting audit by Independent External Auditors—
Board Members. The Outside Audit & Supervisory
aid in conducting an effective and efficient audit
Board Members advise Toyota from a fair and neutral
through meetings held periodically and as necessary
perspective, based on their broad experience and
to share information and come to understanding
insight in their respective fields of expertise. While
through discussion on audit plans and results.
Toyota currently does not have its own standard or
policy on independence in appointing Outside Audit &
Supervisory Board Members, the Company believes
that such appointments are appropriate since various
rules on independence, such as stock exchange regu-
D Read more
Toyota’s Corporate Governance
Emphasizing Front-line Operations +
Multidirectional Monitoring
Shareholders
Audit & Supervisory Board
(More than half of the members
are outside Audit &
Supervisory Board members)
Board of Directors
(including Outside Directors)
External Accounting Auditor
(Audit of consolidated financial
statements and internal
control over financial reporting)
Officers Responsible for Business
Operations (by center, region,
function and process)
International Advisory Board
Labor-Management Council
Joint Labor-Management
Round Table Conference
CSR Committee
• CSR/Environment Council
• Corporate Governance Council
• Risk Management Council
Disclosure Committee
Internal Auditing
Department
(Internal control systems)
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Corporate Philosophy
Corporate Governance
Management Team [1 of 2]
Risk Factors
Management Team (As of June 20, 2014)
Board of Directors
Chairman of the Board
President, Member of the Board
Executive Vice President, Member of the Board
Takeshi Uchiyamada
’69 Joined Toyota Motor Corporation
(“TMC”)
’98 Director
’01 Managing Director
’03
Senior Managing Director
’05 Executive Vice President
’12 Vice Chairman
’13 Chairman of the Board
Executive Vice President, Member of the Board
Mitsuhisa Kato
’75 Joined TMC
’04 Managing Officer
’06 Advisor
’10 Senior Managing Director
’11 Senior Managing Officer
’12 Executive Vice President
Akio Toyoda
’84 Joined TMC
’00 Director
’02 Managing Director
’03 Senior Managing Director
’05 Executive Vice President
’09 President
Satoshi Ozawa
’74 Joined Toyota Motor Sales Co., Ltd.
’03 Managing Officer
’07 Senior Managing Director
’10 Executive Vice President
Masamoto Maekawa
’73 Joined Toyota Motor Sales Co., Ltd.
’03 Managing Officer of TMC
’07 Advisor to TMC
’09 Senior Managing Director
’11 Senior Managing Officer
’12 Executive Vice President
Yasumori Ihara
’75 Joined Toyota Motor Sales Co., Ltd.
’04 Managing Officer
’07 Advisor
’09 Senior Managing Director
’11 Director and Senior Managing Officer
’13 Executive Vice President
Senior Managing Officer, Member of the Board
Member of the Board
Koei Saga
’77 Joined TMC
’08 Managing Officer
’12 Senior Managing Officer
’13 Director
Tokuo Fukuichi
’74 Joined TMC
’11 Managing Officer
’13 Senior Managing Officer
’14 Director
Shigeki Terashi
’80 Joined TMC
’08 Managing Officer
’13 Senior Managing Officer
’13 Director
Member of the Board
Ikuo Uno*
’59 Joined Nippon Life Insurance Company
’97 President and Representative Director
of the same
’05 Chairman and Representative Director
of the same
’11 Advisor to the same
’13 Director
Haruhiko Kato*
’75 Joined Ministry of Finance (Japan)
’09 Director-General of National Tax
Administration Agency
’11 President and CEO of Japan Securities
Depository Center, Inc.
’13 Director
Mark. T. Hogan*
’73 Joined General Motors Corporation
’02 Vice President of General Motors
Group
’04 President of Magna International Inc.
’08 President and CEO of The Vehicle
Production Group LLC
’10 President of Dewey Investments LLC
’13 Director
* Outside Director
Nobuyori Kodaira
’72 Joined Ministry of International Trade
and Industry
’04 Director-General, Agency for Natural
Resources and Energy
’06 Retired from the same
’08 Advisor to TMC
’09 Managing Officer
’10 Senior Managing Director
’11 Director and Senior Managing Officer
’12 Executive Vice President
Seiichi Sudo
’74 Joined TMC
’03 Managing Officer
’08 Advisor
’12 Senior Managing Officer
’13 Executive Vice President
Yoshimasa Ishii
’76 Joined Toyota Motor Sales Co., Ltd.
’05 Managing Officer of TMC
’09 Senior Managing Director
’11 Senior Managing Officer
’13 Director
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Management Team (As of June 20, 2014)
Outside Audit & Supervisory Board Members
Full-Time Audit & Supervisory Board Member
Yoichiro Ichimaru
’71 Joined Toyota Motor Sales Co., Ltd.
’01 Director of TMC
’03 Managing Officer
’05 Senior Managing Director
’09 Executive Vice President
’11 Audit & Supervisory Board Member
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R&D and Intellectual Property
Corporate Philosophy
Corporate Governance
Management Team [2 of 2]
Risk Factors
Masaki Nakatsugawa
’76 Joined Toyota Motor Sales Co., Ltd.
’06 Audit & Supervisory Board Member
of TMC
Masahiro Kato
’75 Joined TMC
’09 Managing Officer
’11 Audit & Supervisory Board Member
Outside Audit & Supervisory Board Member
Kunihiro Matsuo
’68 Prosecutor of Tokyo District Public
Prosecutors Office
’04 Prosecutor General of Supreme Public
Prosecutors Office
’06 Registered as attorney
’07 Outside Audit & Supervisory Board
Member of TMC
Yoko Wake
’70 Joined The Fuji Bank, Limited
’93 Professor of Faculty of Business and
Commerce of Keio University
’11 Outside Audit & Supervisory Board
Member of TMC
Teisuke Kitayama
‘69 Joined Mitsui Bank
‘00 Managing Executive Officer of The
Sakura Bank, Limited
‘05 President and Director of Sumitomo
Mitsui Financial Group, Inc.
‘05 Chairman and Director of Sumitomo
Mitsui Banking Corporation
‘14 ,Outside Audit & Supervisory Board
Member of TMC
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R&D and Intellectual Property
Corporate Philosophy
Corporate Governance
Management Team
Risk Factors [1 of 3]
Operational and other risks faced by Toyota that
required for innovation and development, pricing,
recovery. Meanwhile, growth in emerging markets
customer demand with respect to quality, safety and
could significantly influence the decisions of inves-
customer service and financing terms. Increased
slowed down due to weakening currencies of emerg-
reliability. The timely introduction of new vehicle
tors are set out below. However, the following
competition may lead to lower vehicle unit sales,
ing markets stemming from U.S. monetary easing
models, at competitive prices, meeting rapidly chang-
does not encompass all risks related to the opera-
which may result in a further downward price pressure
beginning to be curtailed, increases in interest rates of
ing customer preferences and demand is more funda-
tions of Toyota. There are risk factors other than
and adversely affect Toyota’s financial condition and
emerging markets to protect the local currency, and
mental to Toyota’s success than ever, as the
those given below. Any such risk factors could
results of operations. Toyota’s ability to adequately
political instability in some nations. The shifts in
automotive market is rapidly transforming in light of the
influence the decisions of investors. The forward-
respond to the recent rapid changes in the automotive
demand for automobiles is continuing, and it is unclear
changing global economy. There is no assurance,
looking statements included below are based on
market and to maintain its competitiveness will be
how this situation will transition in the future. Toyota’s
however, that Toyota will adequately and appropriately
information available as of June 24, 2014, the filing
fundamental to its future success in existing and new
financial condition and results of operations may be
respond to changing customer preferences and
date of Form 20-F.
markets and to maintain its market share. There can
adversely affected if the shifts in demand for automo-
demand with respect to quality, safety, reliability, styling
N Industry and Business Risks
be no assurances that Toyota will be able to compete
biles continues or progresses further. Demand may
and other features in a timely manner. Even if Toyota
successfully in the future.
also be affected by factors directly impacting vehicle
succeeds in perceiving customer preferences and
price or the cost of purchasing and operating vehicles
demand, there is no assurance that Toyota will be
The worldwide automotive industry is highly volatile.
such as sales and financing incentives, prices of raw
capable of developing and manufacturing new, price
The worldwide automotive market is
Each of the markets in which Toyota competes has
materials and parts and components, cost of fuel and
competitive products in a timely manner with its avail-
highly competitive.
been subject to considerable volatility in demand.
governmental regulations (including tariffs, import
able technology, intellectual property, sources of raw
The worldwide automotive market is highly competi-
Demand for vehicles depends to a large extent on
regulation and other taxes). Volatility in demand may
materials and parts and components, and production
tive. Toyota faces intense competition from automotive
social, political and economic conditions in a given
lead to lower vehicle unit sales, which may result in
capacity, including cost reduction capacity. Further,
manufacturers in the markets in which it operates.
market and the introduction of new vehicles and tech-
downward price pressure and adversely affect
there is no assurance that Toyota will be able to imple-
Although the global economy continues to recover
nologies. As Toyota’s revenues are derived from sales
Toyota’s financial condition and results of operations.
ment capital expenditures at the level and times
gradually, competition in the automotive industry has
in markets worldwide, economic conditions in such
planned by management. Toyota’s inability to develop
further intensified amidst difficult overall market condi-
markets are particularly important to Toyota. In Japan,
Toyota’s future success depends on its ability to
and offer products that meet customers’ preferences
tions. In addition, competition is likely to further inten-
the economy gradually recovered due to increasing
offer new innovative competitively priced products
and demand with respect to quality, safety, reliability,
sify in light of further continuing globalization in the
personal consumption and last-minute demand
that meet customer demand on a timely basis.
styling and other features in a timely manner could
worldwide automotive industry, possibly resulting in
spurred by the increase of the consumption tax. In the
Meeting customer demand by introducing attractive
result in a lower market share and reduced sales
further industry reorganization. Factors affecting
United States, the economy has seen ongoing gradual
new vehicles and reducing the amount of time
volumes and margins, and may adversely affect
competition include product quality and features,
recovery mainly due to increasing personal consump-
required for product development are critical to auto-
Toyota’s financial condition and results of operations.
safety, reliability, fuel economy, the amount of time
tion and the European economy has shown signs of
motive manufacturers. In particular, it is critical to meet
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R&D and Intellectual Property
Corporate Philosophy
Corporate Governance
Management Team
Risk Factors [2 of 3]
Toyota’s ability to market and distribute effectively
may decrease, adversely affecting its financial condi-
Toyota’s production and deliveries, which could have
various digital and information technologies, including
is an integral part of Toyota’s successful sales.
tion and results of operations.
an adverse effect on Toyota’s financial condition and
information service and driving assistance functions.
Toyota’s success in the sale of vehicles depends on its
results of operations.
Despite security measures, Toyota’s digital and infor-
ability to market and distribute effectively based on
Toyota relies on suppliers for the provision of
mation technology networks and systems may be
distribution networks and sales techniques tailored to
certain supplies including parts, components and
The worldwide financial services industry is highly
vulnerable to damage, disruptions or shutdowns due
the needs of its customers. There is no assurance that
raw materials.
competitive.
to attacks by hackers, computer viruses, breaches
Toyota will be able to develop sales techniques and
Toyota purchases supplies including parts, compo-
The worldwide financial services industry is highly
due to unauthorized use, errors or malfeasance by
distribution networks that effectively adapt to changing
nents and raw materials from a number of external
competitive. Increased competition in automobile
employees and others who have or gain access to the
customer preferences or changes in the regulatory
suppliers located around the world. For some
financing may lead to decreased margins. A decline in
networks and systems Toyota depends on, service
environment in the major markets in which it operates.
supplies, Toyota relies on a single supplier or a limited
Toyota’s vehicle unit sales, an increase in residual
failures or bankruptcy of third parties such as software
Toyota’s inability to maintain well-developed sales
number of suppliers, whose replacement with another
value risk due to lower used vehicle price, an increase
development or cloud computing vendors, power
techniques and distribution networks may result in
supplier may be difficult. Inability to obtain supplies
in the ratio of credit losses and increased funding
shortages and outages, and utility failures or other
decreased sales and market share and may adversely
from a single or limited source supplier may result in
costs are factors which may impact Toyota’s financial
catastrophic events like natural disasters. Such
affect its financial condition and results of operations.
difficulty obtaining supplies and may restrict Toyota’s
services operations. If Toyota is unable to adequately
incidents could materially disrupt critical operations,
ability to produce vehicles. Furthermore, even if Toyota
respond to the changes and competition in automo-
disclose sensitive data, interfere with information
Toyota’s success is significantly impacted by its
were to rely on a large number of suppliers, first-tier
bile financing, Toyota’s financial services operations
services and driving assistance functions in Toyota’s
ability to maintain and develop its brand image.
suppliers with whom Toyota directly transacts may in
may adversely affect its financial condition and results
vehicles, and/or give rise to legal claims or proceed-
In the highly competitive automotive industry, it is criti-
turn rely on a single second-tier supplier or limited
of operations.
ings, liability or regulatory penalties under applicable
cal to maintain and develop a brand image. In order to
second-tier suppliers. Toyota’s ability to continue to
laws, which could have an adverse effect on Toyota’s
maintain and develop a brand image, it is necessary to
obtain supplies from its suppliers in a timely and cost-
Toyota’s operations and vehicles rely on various
brand image and its financial condition and results of
further increase customers’ confidence by providing
effective manner is subject to a number of factors,
digital and information technologies.
operations.
safe, high-quality products that meet customer prefer-
some of which are not within Toyota’s control. These
Toyota depends on various information technology
ences and demand. If Toyota is unable to effectively
factors include the ability of Toyota’s suppliers to
networks and systems, some of which are managed
N Financial Market and Economic Risks
maintain and develop its brand image as a result of its
provide a continued source of supply, and Toyota’s
by third parties, to process, transmit and store elec-
inability to provide safe, high-quality products or as a
ability to effectively compete and obtain competitive
tronic information, including sensitive data, and to
Toyota’s operations are subject to currency and
result of the failure to promptly implement safety
prices from suppliers. A loss of any single or limited
manage or support a variety of business processes
interest rate fluctuations.
measures such as recalls when necessary, vehicle unit
source supplier or inability to obtain supplies from
and activities, including manufacturing, research and
Toyota is sensitive to fluctuations in foreign currency
sales and/or sale prices may decrease, and as a result
suppliers in a timely and cost-effective manner could
development, supply chain management, sales and
exchange rates and is principally exposed to fluctua-
revenues and profits may not increase as expected or
lead to increased costs or delays or suspensions in
accounting. In addition, Toyota’s vehicles may rely on
tions in the value of the Japanese yen, the U.S. dollar
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R&D and Intellectual Property
Corporate Philosophy
Corporate Governance
Management Team
Risk Factors [3 of 3]
and the euro and, to a lesser extent, the Australian
metals, non-ferrous alloys including aluminum, and
such as Toyota are required to implement safety
legal proceedings brought by its shareholders and
dollar, the Russian ruble, the Canadian dollar and the
plastic parts, may lead to higher production costs for
measures such as recalls for vehicles that do not or
governmental proceedings and investigations. Toyota
British pound. Toyota’s consolidated financial state-
parts and components. This could, in turn, negatively
may not comply with the safety standards of laws and
is in fact currently subject to a number of pending legal
ments, which are presented in Japanese yen, are
impact Toyota’s future profitability because Toyota may
governmental regulations. In addition, Toyota may, in
proceedings and government investigations. A nega-
affected by foreign currency exchange fluctuations
not be able to pass all those costs on to its customers
order to reassure its customers of the safety of
tive outcome in one or more of these pending legal
through translation risk, and changes in foreign
or require its suppliers to absorb such costs.
Toyota’s vehicles, decide to voluntarily implement
proceedings could adversely affect Toyota’s financial
currency exchange rates may also affect the price of
recalls or other safety measures even if the vehicle
condition and results of operations.
products sold and materials purchased by Toyota in
The downturn in the financial markets could
complies with the safety standards of relevant laws
foreign currencies through transaction risk. In particu-
adversely affect Toyota’s ability to raise capital.
and governmental regulations. Many governments
Toyota may be adversely affected by natural
lar, strengthening of the Japanese yen against the U.S.
Should the world economy suddenly deteriorate, a
also impose tariffs and other trade barriers, taxes and
calamities, political and economic instability, fuel
dollar can have an adverse effect on Toyota’s operat-
number of financial institutions and investors will face
levies, or enact price or exchange controls. Toyota has
shortages or interruptions in social infrastructure,
ing results.
difficulties in providing capital to the financial markets at
incurred, and expects to incur in the future, significant
wars, terrorism and labor strikes.
Toyota believes that its use of certain derivative finan-
levels corresponding to their own financial capacity,
costs in complying with these regulations. If Toyota
Toyota is subject to various risks associated with
cial instruments including foreign exchange forward
and, as a result, there is a risk that companies may not
launches products that result in safety measures such
conducting business worldwide. These risks include
contracts and interest rate swaps and increased local-
be able to raise capital under terms that they would
as recalls, Toyota may incur various costs including
natural calamities; political and economic instability;
ized production of its products have reduced, but not
expect to receive with their creditworthiness. If Toyota is
significant costs for free repairs. Furthermore, new
fuel shortages; interruption in social infrastructure
eliminated, the effects of interest rate and foreign
unable to raise the necessary capital under appropriate
legislation or changes in existing legislation may also
including energy supply, transportation systems, gas,
currency exchange rate fluctuations. Nonetheless, a
conditions on a timely basis, Toyota’s financial condition
subject Toyota to additional expenses in the future. If
water, or communication systems resulting from natu-
negative impact resulting from fluctuations in foreign
and results of operations may be adversely affected.
Toyota incurs significant costs related to implementing
ral hazards or technological hazards; wars; terrorism;
currency exchange rates and changes in interest rates
may adversely affect Toyota’s financial condition and
results of operations
N Political, Regulatory, Legal and Other Risks
safety measures or meeting laws and governmental
labor strikes and work stoppages. Should the major
regulations, Toyota’s financial condition and results of
markets in which Toyota purchases materials, parts
operations may be adversely affected.
and components and supplies for the manufacture of
The automotive industry is subject to various
Toyota products or in which Toyota’s products are
High prices of raw materials and strong pressure
governmental regulations.
Toyota may become subject to various legal
produced, distributed or sold be affected by any of
on Toyota’s suppliers could negatively impact
The worldwide automotive industry is subject to vari-
proceedings.
these events, it may result in disruptions and delays in
Toyota’s profitability.
ous laws and governmental regulations including
As an automotive manufacturer, Toyota may become
the operations of Toyota’s business. Should significant
Increases in prices for raw materials that Toyota and
those related to vehicle safety and environmental
subject to legal proceedings in respect of various
or prolonged disruptions or delays related to Toyota’s
Toyota’s suppliers use in manufacturing their products
matters such as emission levels, fuel economy, noise
issues, including product liability and infringement of
business operations occur, it may adversely affect
or parts and components such as steel, precious
and pollution. In particular, automotive manufacturers
intellectual property. Toyota may also be subject to
Toyota’s financial condition and results of operations.
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Selected Financial Summary (U.S. GAAP) [1 of 2]
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements
Selected Financial Summary (U.S. GAAP)
Toyota Motor Corporation
Fiscal years ended March 31
For the Year:
Net Revenues:
Sales of Products
Financing Operations
Total
Costs and Expenses:
Cost of Products Sold
Cost of Financing Operations
Selling, General and Administrative
Total
Operating Income (Loss)
% of Net Revenues
Income (Loss) before Income Taxes and Equity in Earnings of Affiliated Companies
Provision for Income Taxes
Net Income (Loss) Attributable to Toyota Motor Corporation
ROE
Net Cash Provided by Operating Activities
Net Cash Used in Investing Activities
Net Cash Provided by (Used in) Financing Activities
R&D Expenses
Capital Expenditures for Property, Plant and Equipment*
Depreciation
At Year-End:
Toyota Motor Corporation Shareholders’ Equity
Total Assets
Long-Term Debt
Cash and Cash Equivalents
Ratio of Toyota Motor Corporation Shareholders’ Equity
Per Share Data:
Net Income (Loss) Attributable to Toyota Motor Corporation (Basic)
Annual Cash Dividends
Toyota Motor Corporation Shareholders’ Equity
Stock Information (March 31):
Stock Price
Market Capitalization (Yen in millions)
Number of Shares Issued (shares)
* Excluding vehicles and equipment of operating leases
2005
2006
17,790,862
760,664
18,551,526
14,500,282
369,844
2,009,213
16,879,339
1,672,187
9.0%
1,754,637
657,910
1,171,260
13.6%
2,370,940
(3,061,196)
419,384
755,147
1,068,287
997,713
9,044,950
24,335,011
5,014,925
1,483,753
37.2%
20,059,493
977,416
21,036,909
16,335,312
609,632
2,213,623
19,158,567
1,878,342
8.9%
2,087,360
795,153
1,372,180
14.0%
2,515,480
(3,375,500)
876,911
812,648
1,523,459
1,211,178
10,560,449
28,731,595
5,640,490
1,569,387
36.8%
2005
2006
355.35
65
2,767.67
3,990
14,403,890
3,609,997,492
421.76
90
3,257.63
6,430
23,212,284
3,609,997,492
Yen in millions
2007
22,670,097
1,277,994
23,948,091
18,356,255
872,138
2,481,015
21,709,408
2,238,683
9.3%
2,382,516
898,312
1,644,032
14.7%
3,238,173
(3,814,378)
881,768
890,782
1,425,814
1,382,594
11,836,092
32,574,779
6,263,585
1,900,379
36.3%
Yen
2007
512.09
120
3,701.17
7,550
27,255,481
3,609,997,492
2008
2009
24,820,510
1,468,730
26,289,240
20,452,338
1,068,015
2,498,512
24,018,865
2,270,375
8.6%
2,437,222
911,495
1,717,879
14.5%
2,981,624
(3,874,886)
706,189
958,882
1,480,570
1,491,135
11,869,527
32,458,320
5,981,931
1,628,547
36.6%
19,173,720
1,355,850
20,529,570
17,468,416
987,384
2,534,781
20,990,581
(461,011)
-2.2%
(560,381)
(56,442)
(436,937)
-4.0%
1,476,905
(1,230,220)
698,841
904,075
1,364,582
1,495,170
10,061,207
29,062,037
6,301,469
2,444,280
34.6%
2008
2009
540.65
140
3,768.97
4,970
17,136,548
3,447,997,492
(139.13)
100
3,208.41
3,120
10,757,752
3,447,997,492
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Selected Financial Summary (U.S. GAAP) [2 of 2]
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements
Selected Financial Summary (U.S. GAAP)
Toyota Motor Corporation
Fiscal years ended March 31
For the Year:
Net Revenues:
Sales of Products
Financing Operations
Total
Costs and Expenses:
Cost of Products Sold
Cost of Financing Operations
Selling, General and Administrative
Total
Operating Income (Loss)
% of Net Revenues
Income (Loss) before Income Taxes and Equity in Earnings of Affiliated Companies
Provision for Income Taxes
Net Income (Loss) Attributable to Toyota Motor Corporation
ROE
Net Cash Provided by Operating Activities
Net Cash Used in Investing Activities
Net Cash Provided by (Used in) Financing Activities
R&D Expenses
Capital Expenditures for Property, Plant and Equipment*
Depreciation
At Year-End:
Toyota Motor Corporation Shareholders’ Equity
Total Assets
Long-Term Debt
Cash and Cash Equivalents
Ratio of Toyota Motor Corporation Shareholders’ Equity
Per Share Data:
Net Income (Loss) Attributable to Toyota Motor Corporation (Basic)
Annual Cash Dividends
Toyota Motor Corporation Shareholders’ Equity
Stock Information (March 31):
Stock Price
Market Capitalization (Yen in millions)
Number of Shares Issued (shares)
* Excluding vehicles and equipment of operating leases
2010
2011
Yen in millions
2012
2013
2014
% change
2014 vs. 2013
17,724,729
1,226,244
18,950,973
15,971,496
712,301
2,119,660
18,803,457
147,516
0.8%
291,468
92,664
209,456
2.1%
2,558,530
(2,850,184)
(277,982)
725,345
604,536
1,414,569
10,359,723
30,349,287
7,015,409
1,865,746
34.1%
17,820,520
1,173,168
18,993,688
15,985,783
629,543
1,910,083
18,525,409
468,279
2.5%
563,290
312,821
408,183
3.9%
2,024,009
(2,116,344)
434,327
730,340
629,326
1,175,573
10,332,371
29,818,166
6,449,220
2,080,709
34.7%
2010
2011
66.79
45
3,303.49
130.17
50
3,295.08
17,511,916
1,071,737
18,583,653
15,795,918
592,646
1,839,462
18,228,026
355,627
1.9%
432,873
262,272
283,559
2.7%
1,452,435
(1,442,658)
(355,347)
779,806
723,537
1,067,830
10,550,261
30,650,965
6,042,277
1,679,200
34.4%
Yen
2012
90.21
50
3,331.51
20,914,150
1,150,042
22,064,192
18,010,569
630,426
2,102,309
20,743,304
1,320,888
6.0%
1,403,649
551,686
962,163
8.5%
2,451,316
(3,027,312)
477,242
807,454
854,561
1,105,109
12,148,035
35,483,317
7,337,824
1,718,297
34.2%
24,312,644
1,379,267
25,691,911
19,988,245
812,894
2,598,660
23,399,799
2,292,112
8.9%
2,441,080
767,808
1,823,119
13.7%
3,646,035
(4,336,248)
919,480
910,517
970,021
1,250,853
14,469,148
41,437,473
8,546,910
2,041,170
34.9%
+16.2
+19.9
+16.4
+11.0
+28.9
+23.6
+12.8
+73.5
—
+73.9
+39.2
+89.5
—
+48.7
—
+92.7
+12.8
+13.5
+13.2
+19.1
+16.8
+16.5
+18.8
—
2013
2014
% change
2014 vs. 2013
303.82
90
3,835.30
575.30
165
4,564.74
+89.4
+83.3
+19.0
+19.9
+19.9
—
3,745
12,912,751
3,447,997,492
3,350
11,550,792
3,447,997,492
3,570
12,309,351
3,447,997,492
4,860
16,757,268
3,447,997,492
5,826
20,088,033
3,447,997,492
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements
Consolidated Segment Information
Toyota Motor Corporation
Fiscal years ended March 31
Business Segment:
Net Revenues:
Automotive
Financial Services
All Other
Intersegment Elimination
Consolidated
Operating Income (Loss):
Automotive
Financial Services
All Other
Intersegment Elimination
Consolidated
Geographic Information:
Net Revenues:
Japan
North America
Europe
Asia
Other
Intersegment Elimination
Consolidated
Operating Income (Loss):
Japan
North America
Europe
Asia
Other
Intersegment Elimination
Consolidated
2009
2010
2011
2012
2013
2014
Yen in millions
% change
2014 vs. 2013
18,564,723
1,377,548
1,184,947
(597,648)
20,529,570
(394,876)
(71,947)
9,913
(4,101)
(461,011)
12,186,737
6,222,914
3,013,128
2,719,329
1,882,900
(5,495,438)
20,529,570
(237,531)
(390,192)
(143,233)
176,060
87,648
46,237
(461,011)
17,197,428
1,245,407
947,615
(439,477)
18,950,973
(86,370)
246,927
(8,860)
(4,181)
147,516
11,220,303
5,670,526
2,147,049
2,655,327
1,673,861
(4,416,093)
18,950,973
(225,242)
85,490
(32,955)
203,527
115,574
1,122
147,516
17,337,320
1,192,205
972,252
(508,089)
18,993,688
85,973
358,280
35,242
(11,216)
468,279
10,986,246
5,429,136
1,981,497
3,374,534
1,809,116
(4,586,841)
18,993,688
(362,396)
339,503
13,148
312,977
160,129
4,918
468,279
16,994,546
1,100,324
1,048,915
(560,132)
18,583,653
21,683
306,438
42,062
(14,556)
355,627
11,167,319
4,751,886
1,993,946
3,334,274
1,760,175
(4,423,947)
18,583,653
(207,040)
186,409
17,796
256,790
108,814
(7,142)
355,627
20,419,100
1,170,670
1,066,461
(592,039)
22,064,192
944,704
315,820
53,616
6,748
1,320,888
12,821,018
6,284,425
2,083,113
4,385,476
2,094,265
(5,604,105)
22,064,192
576,335
221,925
26,462
376,055
133,744
(13,633)
1,320,888
23,781,404
1,421,047
1,151,280
(661,820)
25,691,911
1,938,778
294,891
64,270
(5,827)
2,292,112
14,297,470
8,117,099
2,724,959
4,877,672
2,336,641
(6,661,930)
25,691,911
1,510,165
326,052
58,228
395,737
42,568
(40,638)
2,292,112
+16.5
+21.4
+8.0
—
+16.4
+105.2
–6.6
+19.9
—
+73.5
+11.5
+29.2
+30.8
+11.2
+11.6
—
+16.4
+162.0
+46.9
+120.0
+5.2
–68.2
—
+73.5
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements
Consolidated Quarterly Financial Summary
Toyota Motor Corporation
Fiscal years ended March 31
Net Revenues
% Change
Operating Income
% Change
Operating Income Margin
Income before Income Taxes and Equity in Earnings of Affiliated Companies
% Change
Net Income Attributable to Toyota Motor Corporation
% Change
Business Segment:
Net Revenues:
Automotive
Financial Services
All Other
Intersegment Elimination
Consolidated
Operating Income:
Automotive
Financial Services
All Other
Intersegment Elimination
Consolidated
Geographic Information:
Net Revenues:
Japan
North America
Europe
Asia
Other
Intersegment Elimination
Consolidated
Operating Income (Loss):
Japan
North America
Europe
Asia
Other
Intersegment Elimination
Consolidated
2013
2014
Yen in billions
First Quarter
5,501.5
59.9%
353.1
—%
6.4%
415.2
—%
290.3
24,929.9%
Second Quarter
5,406.7
18.2%
340.6
351.8%
6.3%
379.3
379.4%
257.9
220.7%
Third Quarter
5,318.7
9.3%
124.7
–16.7%
2.3%
131.2
–33.9%
99.9
23.4%
Fourth Quarter
5,837.0
2.4%
502.3
110.6%
8.6%
477.8
102.8%
313.9
159.4%
First Quarter
6,255.3
13.7%
663.3
87.9%
10.6%
724.1
74.4%
562.1
93.6%
Second Quarter
6,282.1
16.2%
592.0
73.8%
9.4%
619.3
63.3%
438.4
70.0%
Third Quarter
6,585.0
23.8%
600.5
381.6%
9.1%
678.9
417.5%
525.4
425.9%
Fourth Quarter
6,569.3
12.5%
436.1
–13.2%
6.6%
418.5
–12.4%
297.0
–5.4%
5,120.1
274.4
243.2
(136.2)
5,501.5
258.6
86.7
9.3
(1.6)
353.1
3,242.2
1,592.8
512.0
1,073.6
483.4
(1,402.7)
5,501.5
107.1
117.6
3.4
101.5
27.1
(3.7)
353.1
5,008.7
272.0
252.6
(126.6)
5,406.7
239.3
87.7
13.1
0.3
340.6
3,163.9
1,450.9
497.5
1,088.2
500.8
(1,294.8)
5,406.7
143.7
64.9
8.6
92.9
31.5
(1.2)
340.6
4,889.2
301.3
262.0
(133.8)
5,318.7
43.7
69.0
15.4
(3.4)
124.7
2,976.2
1,525.0
508.3
1,112.5
530.3
(1,333.8)
5,318.7
15.6
(17.1)
9.2
91.7
32.3
(7.1)
124.7
5,401.0
322.8
308.4
(195.2)
5,837.0
402.9
72.2
15.7
11.4
502.3
3,438.5
1,715.6
565.1
1,110.9
579.5
(1,572.7)
5,837.0
309.8
56.4
5.1
89.7
42.6
(1.4)
502.3
5,818.0
339.8
234.4
(137.0)
6,255.3
608.4
51.2
7.1
(3.5)
663.3
3,456.2
2,105.1
595.9
1,218.0
609.0
(1,729.1)
6,255.3
456.0
82.6
5.2
104.1
42.5
(27.3)
663.3
5,815.2
347.7
273.5
(154.4)
6,282.1
499.5
82.0
13.1
(2.6)
592.0
3,487.5
1,962.8
707.0
1,181.8
583.1
(1,640.2)
6,282.1
373.9
79.6
20.1
91.4
33.6
(6.7)
592.0
6,096.5
364.9
278.4
(154.8)
6,585.0
515.5
67.3
20.6
(3.0)
600.5
3,544.0
2,136.8
726.2
1,252.6
603.4
(1,678.2)
6,585.0
331.3
112.5
17.7
110.0
32.2
(3.4)
600.5
6,051.5
368.5
364.8
(215.4)
6,569.3
315.1
94.2
23.2
3.3
436.1
3,809.6
1,912.2
695.6
1,225.1
540.9
(1,614.3)
6,569.3
348.7
51.2
15.1
90.0
(65.7)
(3.1)
436.1
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [1 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
All financial information discussed in this section is derived from Toyota’s consolidated
Consolidated Vehicle Sales
financial statements that appear elsewhere in this annual report. The financial statements
have been prepared in conformity with generally accepted accounting principles in the
(Thousands of units)
10,000
United States of America.
M Overview
The business segments of Toyota include automo-
political and general economic conditions; introduc-
tive operations, financial services operations and all
tion of new vehicles and technologies; and costs
8,000
6,000
4,000
2,000
0
Toyota’s vehicles compared with those offered by
other manufacturers. The timely introduction of new
or redesigned vehicles is also an important factor in
satisfying customer needs. Toyota’s ability to satisfy
changing customer preferences can affect its reve-
nues and earnings significantly.
The profitability of Toyota’s automotive operations
is affected by many factors. These factors include:
• vehicle unit sales volumes,
• the mix of vehicle models and options sold,
other operations. Automotive operations are
incurred by customers to purchase or operate vehi-
FY
’10
’11
’12
’13
’14
• the level of parts and service sales,
Toyota’s most significant business segment,
cles. These factors can cause consumer demand to
• the levels of price discounts and other sales
accounting for 90% of Toyota’s total revenues
vary substantially in different geographic markets
During fiscal 2014 and 2013, Toyota’s consolidat-
incentives and marketing costs,
before the elimination of intersegment revenues for
and for different types of automobiles.
ed vehicle unit sales in Japan increased as com-
• the cost of customer warranty claims and other
fiscal 2014. Toyota’s primary markets based on
During fiscal 2014, automotive markets pro-
pared with each prior fiscal year, primarily as a result
customer satisfaction actions,
vehicle unit sales for fiscal 2014 were: Japan (26%),
gressed in a steady manner, especially in the U.S.,
of the active introduction of new products and the
• the cost of research and development and
North America (28%), Europe (9%) and Asia (18 %).
although some markets in emerging countries have
efforts of dealers nationwide. For fiscal 2014, Toyota
other fixed costs,
Automotive Market Environment
slowed down. Efforts toward building a low-carbon
and Lexus brands’ market share excluding mini-
• the prices of raw materials,
society and improvements in safety, such as the
vehicles was 46.7%, and market share (including
• the ability to control costs,
The worldwide automotive market is highly competi-
technical development of eco-cars and automated-
Daihatsu and Hino brands) including mini-vehicles
• the efficient use of production capacity,
tive and volatile. The demand for automobiles is
driving, were promoted worldwide.
was 42.2%, each remaining at a high level continu-
• the adverse effect on production due to the
affected by a number of factors including social,
ing from the prior fiscal year. Overseas consolidated
reliance on various suppliers for the provision of
The following table sets forth Toyota’s consolidated vehicle unit sales by geographic market based on loca-
2014. During fiscal 2013, total overseas vehicle unit
• the adverse effect on market, sales and pro-
tion of customers for the past three fiscal years.
sales increased in every region. During fiscal 2014,
ductions of natural calamities and interruptions
vehicle unit sales increased during fiscal 2013 and
supplies,
Japan
North America
Europe
Asia
Other*
Overseas total
Total
Thousands of units
Years Ended March 31,
2013
2,279
2,469
799
1,684
1,640
6,592
8,871
2014
2,365
2,529
844
1,609
1,769
6,751
9,116
2012
2,071
1,872
798
1,327
1,284
5,281
7,352
* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.
total overseas vehicle unit sales increased as a
of social infrastructure, and
whole, due to increased sales in North America,
• changes in the value of the Japanese yen and
Europe and other regions.
other currencies in which Toyota conducts
Toyota’s share of total vehicle unit sales in each
business.
market is influenced by the quality, safety, reliability,
Changes in laws, regulations, policies and other
price, design, performance, economy and utility of
governmental actions can also materially impact the
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [2 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
profitability of Toyota’s automotive operations.
slow-to-return accelerator pedals. Also in January
and dealers. Toyota believes that its ability to pro-
These laws, regulations and policies include those
2010, Toyota recalled in Europe, China and other
vide financing to its customers is an important value
attributed to environmental matters, vehicle safety,
regions certain models of Toyota vehicles related to
added service. Therefore, Toyota has expanded its
fuel economy and emissions that can add signifi-
sticking accelerator pedals. In February 2010,
network of finance subsidiaries in order to offer
cantly to the cost of vehicles. The European Union
Toyota announced a worldwide recall related to the
financial services in many countries.
has enforced a directive on end-of-life vehicles. See
software program that controls the antilock braking
Toyota’s competitors for retail financing and retail
“Legislation Regarding End-of-Life Vehicles”,
system in certain vehicle models including the Prius.
leasing include commercial banks, credit unions
“Information on the Company — Business Overview
The recalls and other safety measures described
and other finance companies. Meanwhile, commer-
— Governmental Regulation, Environmental and
above have led to a number of claims and lawsuits
cial banks and other captive automobile finance
Safety Standards” and note 23 to the consolidated
against Toyota. For a more detailed description of
companies also compete against Toyota’s whole-
financial statements in Toyota’s annual report on
these claims and lawsuits, see “Information on the
sale financing activities.
Form 20-F for a more detailed discussion of these
Company — Business Overview — Legal Proceedings”
Toyota’s total finance receivables increased dur-
laws, regulations and policies.
and note 23 to the consolidated financial state-
ing fiscal 2014 mainly due to the favorable impact of
Many governments also impose local content
ments in Toyota’s annual report on Form 20-F.
fluctuations in foreign currency translation rates and
requirements, impose tariffs and other trade barri-
The worldwide automotive industry is in a period
an increase in retail receivables.
ers, and enact price or exchange controls that can
of global competition which may continue for the
limit an automaker’s operations and can make the
foreseeable future, and in general the competitive
Total Assets by Financial Services Operations
repatriation of profits unpredictable. Changes in
environment in which Toyota operates is likely to
these laws, regulations, policies and other govern-
intensify. Toyota believes it has the resources, strat-
mental actions may affect the production, licensing,
egies and technologies in place to compete effec-
distribution or sale of Toyota’s products, cost of
tively in the industry as an independent company for
products or applicable tax rates. From time-to-time
the foreseeable future.
when potential safety problems arise, Toyota issues
vehicle recalls and takes other safety measures
Financial Services Operations
including safety campaigns relating to its vehicles. In
The competition in the worldwide automobile finan-
November 2009, Toyota announced a safety cam-
cial services industry is intensifying. As competition
(¥ Billion)
20,000
15,000
10,000
5,000
0
paign in North America for certain models of Toyota
increases, margins on financing transactions may
FY
’10
’11
’12
’13
’14
and Lexus vehicles related to floor mat entrapment
decrease and market share may also decline as
of accelerator pedals, and later expanded it to
customers obtain financing for Toyota vehicles from
include additional models. In January 2010, Toyota
alternative sources.
announced a recall in North America for certain
Toyota’s financial services operations mainly
models of Toyota vehicles related to sticking and
include loans and leasing programs for customers
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [3 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following table provides information regarding Toyota’s finance receivables and operating leases in the
the end of the lease term. See discussion in “Critical
card receivables as of March 31, 2014 increased by
past two fiscal years.
Accounting Estimates — Investment in Operating
¥42.8 billion from March 31, 2013 to ¥380.9 billion.
Finance Receivables
Retail
Finance leases
Wholesale and other dealer loans
Deferred origination costs
Unearned income
Allowance for credit losses
Retail
Finance leases
Wholesale and other dealer loans
Total finance receivables, net
Less—Current portion
Noncurrent finance receivables, net
Operating Leases
Vehicles
Equipment
Less—Deferred income and other
Less—Accumulated depreciation
Less—Allowance for credit losses
Vehicles and equipment on operating leases, net
Yen in millions
March 31,
2013
2014
9,047,782
1,029,887
2,615,728
12,693,397
135,398
(628,340)
(83,858)
(28,928)
(26,243)
(139,029)
12,061,426
(5,117,660)
6,943,766
2,999,294
104,351
(65,634)
3,038,011
(749,238)
(8,020)
2,280,753
10,523,364
1,071,179
2,875,650
14,470,193
161,956
(754,539)
(89,439)
(30,585)
(26,358)
(146,382)
13,731,228
(5,628,934)
8,102,294
3,674,969
129,029
(94,438)
3,709,560
(808,764)
(7,220)
2,893,576
Leases” and note 2 to the consolidated financial
statements in Toyota’s annual report on Form 20-F.
Other Business Operations
Toyota enters into interest rate swap agreements
Toyota’s other business operations consist of hous-
and cross currency interest rate swap agreements
ing (including the manufacture and sale of prefabri-
to convert its fixed-rate debt to variable-rate func-
cated homes), information technology related
tional currency debt. A portion of the derivative
businesses (including information technology and
instruments are entered into to hedge interest rate
telecommunications, intelligent transport systems
risk from an economic perspective and are not des-
and GAZOO) and other businesses.
ignated as a hedge of specific assets or liabilities on
Toyota does not expect its other business opera-
Toyota’s consolidated balance sheet and according-
tions to materially contribute to Toyota’s consolidat-
ly, unrealized gains or losses related to derivatives
ed results of operations.
that are not designated as a hedge are recognized
currently in operations. See discussion in “Critical
Currency Fluctuations
Accounting Estimates — Derivatives and Other
Toyota is affected by fluctuations in foreign currency
Contracts at Fair Value” and “Quantitative and
exchange rates. Toyota is exposed to fluctuations in
Qualitative Disclosures about Market Risk” and notes
the value of the Japanese yen against the U.S. dol-
20 and 26 to the consolidated financial statements
lar and the euro and, to a lesser extent, the
in Toyota’s annual report on Form 20-F.
Australian dollar, the Russian ruble, the Canadian
The fluctuations in funding costs can affect the
dollar, the British pound, and others. Toyota’s con-
profitability of Toyota’s financial services operations.
solidated financial statements, which are presented
Funding costs are affected by a number of factors,
in Japanese yen, are affected by foreign currency
some of which are not in Toyota’s control. These
exchange fluctuations through both translation risk
factors include general economic conditions, pre-
and transaction risk.
Toyota’s finance receivables are subject to col-
consolidated financial statements in Toyota’s annual
vailing interest rates and Toyota’s financial strength.
Translation risk is the risk that Toyota’s consoli-
lectability risks. These risks include consumer and
report on Form 20-F.
Funding costs decreased during fiscal 2013 and
dated financial statements for a particular period or
dealer insolvencies and insufficient collateral values
Toyota continues to originate leases to finance
2014, mainly as a result of lower interest rates.
for a particular date will be affected by changes in
(less costs to sell) to realize the full carrying values
new Toyota vehicles. These leasing activities are
Toyota launched its credit card business in Japan
the prevailing exchange rates of the currencies in
of these receivables. See discussion in “Critical
subject to residual value risk. Residual value losses
in April 2001. As of March 31, 2014, Toyota had
those countries in which Toyota does business
Accounting Estimates — Allowance for Doubtful
could be incurred when the lessee of a vehicle does
12.7 million cardholders, an increase of 0.9 million
compared with the Japanese yen. Even though the
Accounts and Credit Losses” and note 10 to the
not exercise the option to purchase the vehicle at
cardholders compared with March 31, 2013. Credit
fluctuations of currency exchange rates to the
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [4 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Japanese yen can be substantial, and, therefore,
but not eliminated, the effects of foreign currency
statements and do not conform with U.S. GAAP.
Management allocates resources to, and assesses
significantly impact comparisons with prior periods
exchange rate fluctuations, which in some years
Furthermore, Toyota does not believe that these
the performance of, its automotive operations as a
and among the various geographic markets, the
can be significant. See notes 20 and 26 to the con-
measures are a substitute for U.S. GAAP measures.
single business segment on a worldwide basis.
translation risk is a reporting consideration and does
solidated financial statements in Toyota’s annual
However, Toyota believes that such results excluding
Toyota does not manage any subset of its automo-
not reflect Toyota’s underlying results of operations.
report on Form 20-F for additional information.
the impact of currency fluctuations year-on-year pro-
tive operations, such as domestic or overseas oper-
Toyota does not hedge against translation risk.
Generally, a weakening of the Japanese yen
vide additional useful information to investors
ations or parts, as separate management units.
Transaction risk is the risk that the currency struc-
against other currencies has a positive effect on
regarding the operating performance on a local cur-
The management of the automotive operations is
ture of Toyota’s costs and liabilities will deviate from
Toyota’s revenues, operating income and net
rency basis.
the currency structure of sales proceeds and
income attributable to Toyota Motor Corporation.
assets. Transaction risk relates primarily to sales
A strengthening of the Japanese yen against other
Segmentation
organized by function, with a manager having over-
sight responsibility for each function within the seg-
ment. Management assesses financial and
proceeds from Toyota’s non-domestic operations
currencies has the opposite effect. In fiscal 2014,
Toyota’s most significant business segment is its
non-financial data such as vehicle unit sales, pro-
from vehicles produced in Japan.
the Japanese yen was on average and at the end of
automotive operations. Toyota carries out its auto-
duction volume, market share information, vehicle
Toyota believes that the location of its production
the fiscal year weaker against the U.S. dollar and
motive operations as a global competitor in the
model plans and plant location costs to allocate
facilities in different parts of the world has signifi-
the euro in comparison to fiscal 2013. See further
worldwide automotive market.
resources within the automotive operations.
cantly reduced the level of transaction risk. As part
discussion in “Quantitative and Qualitative
of its globalization strategy, Toyota has continued to
Disclosures about Market Risk — Market Risk
localize production by constructing production facili-
Disclosures — Foreign Currency Exchange Rate
M Geographic Breakdown
ties in the major markets in which it sells its vehi-
Risk” in Toyota’s annual report on Form 20-F.
cles. In calendar 2012 and 2013, Toyota produced
During 2014, the average exchange rate of the
75.4% and 76.3%, respectively, of its non-domestic
Japanese yen against the U.S. dollar and the euro
sales outside Japan. In North America, 75.3% and
compared to the prior fiscal year fluctuated as
73.7% of vehicles sold in calendar 2012 and 2013,
described above. The operating results excluding
respectively, were produced locally. In Europe,
the impact of currency fluctuations described in
58.5% and 69.4% of vehicles sold in calendar 2012
“Results of Operations — Fiscal 2014 Compared
and 2013, respectively, were produced locally.
with Fiscal 2013” show results of net revenues
Localizing production enables Toyota to locally pur-
obtained by applying the Japanese yen’s average
chase many of the supplies and resources used in
exchange rate in the previous fiscal year to the local
the production process, which allows for a better
currency-denominated net revenues for fiscal 2013
The following table sets forth Toyota’s net revenues in each geographic
market based on the country of location of the parent company or the
subsidiaries that transacted the sale with the external customer for the
Revenues by Market
FY2014
(cid:31) Japan (cid:31) North America (cid:31) Europe
(cid:31) Asia (cid:31) All Other Markets
past three fiscal years.
Yen in millions
Years Ended March 31,
2013
7,910,456
6,167,821
2,003,113
4,058,629
1,924,173
2012
7,293,804
4,644,348
1,917,408
3,116,849
1,611,244
2014
8,532,875
7,938,615
2,614,070
4,475,382
2,130,969
Japan
North America
Europe
Asia
Other*
8.3%
17.4%
33.2%
10.2%
30.9%
match of local currency revenues with local curren-
and 2014, respectively, as if the value of the
* “Other” consists of Central and South America, Oceania, Africa and the Middle East.
cy expenses.
Japanese yen had remained constant for the com-
Toyota also enters into foreign currency transac-
parable periods. Results excluding the impact of
tions and other hedging instruments to address
currency fluctuations year-on-year are not on the
a portion of its transaction risk. This has reduced,
same basis as Toyota’s consolidated financial
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [5 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
M Results of Operations — Fiscal 2014 Compared with Fiscal 2013
Net revenues:
Japan
North America
Europe
Asia
Other*
Intersegment elimination/unallocated amount
Total
Operating income:
Japan
North America
Europe
Asia
Other*
Intersegment elimination/unallocated amount
Total
Operating margin
Income before income taxes and
equity in earnings of affiliated companies
Net margin from income before income taxes
and equity in earnings of affiliated companies
Equity in earnings of affiliated companies
Net income attributable to
Toyota Motor Corporation
Net margin attributable to
Toyota Motor Corporation
Yen in millions
Years ended March 31,
2013
2014
2014 vs. 2013 Change
Amount
Percentage (%)
12,821,018
14,297,470
6,284,425
8,117,099
2,083,113
2,724,959
4,385,476
4,877,672
2,094,265
2,336,641
(5,604,105) (6,661,930)
22,064,192
25,691,911
576,335
221,925
26,462
376,055
133,744
(13,633)
1,320,888
6.0%
1,510,165
326,052
58,228
395,737
42,568
(40,638)
2,292,112
8.9%
1,476,452
1,832,674
641,846
492,196
242,376
(1,057,825)
3,627,719
933,830
104,127
31,766
19,682
(91,176)
(27,005)
971,224
2.9%
+11.5
+29.2
+30.8
+11.2
+11.6
—
+16.4
+162.0
+46.9
+120.0
+5.2
–68.2
—
+73.5
1,403,649
2,441,080
1,037,431
+73.9
6.4%
231,519
9.5%
318,376
3.1%
86,857
+37.5
962,163
1,823,119
860,956
+89.5
4.4%
7.1%
2.7%
* “Other” consists of Central and South America, Oceania, Africa and Middle East.
Net Revenues
automotive market conditions, Toyota’s consolidat-
Toyota had net revenues for fiscal 2014 of
ed vehicle unit sales increased by 2.8% compared
¥25,691.9 billion, an increase of ¥3,627.7 billion, or
with the prior fiscal year to 9,116 thousand vehicles.
16.4%, compared with the prior fiscal year. This
increase mainly reflected the favorable impact of
fluctuations in foreign currency translation rates of
Net Revenues
¥2,510.4 billion and changes in vehicle unit sales
and sales mix of ¥300.0 billion. Excluding the
impact of changes in the Japanese yen values used
for translation purposes of ¥2,510.4 billion, net rev-
enues would have been ¥23,181.4 billion during fis-
cal 2014, a 5.1% increase compared with the prior
fiscal year. The automotive market in calendar year
2013 increased by 7.9% in North America and in
fiscal 2014 increased by 5.9% in Japan compared
with the prior year due to the market in the U.S. and
Japan progressing in a steady manner. Under these
(¥ Billion)
30,000
25,000
20,000
15,000
10,000
5,000
0
FY
’10
’11
’12
’13
’14
The table below shows Toyota’s net revenues from external customers by product category and by business.
Vehicles
Parts and components for overseas production
Parts and components for after service
Other
Total Automotive
All Other
Total sales of products
Financial services
Total
Yen in millions
Years ended March 31,
2013
2014
17,446,473
20,353,340
356,756
431,760
1,577,690
1,843,478
997,843
1,105,277
20,378,762
23,733,855
535,388
578,789
20,914,150
24,312,644
1,150,042
1,379,267
22,064,192
25,691,911
2014 vs. 2013 Change
Amount
2,906,867
75,004
265,788
107,434
3,355,093
43,401
3,398,494
229,225
3,627,719
Percentage (%)
+16.7
+21.0
+16.8
+10.8
+16.5
+8.1
+16.2
+19.9
+16.4
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [6 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Toyota’s net revenues include net revenues from
products would have been ¥22,000.6 billion during
The following is a discussion of net revenues in each geographic market (before the elimination of
sales of products, consisting of net revenues from
fiscal 2014, a 5.2% increase compared with the
intersegment revenues).
automotive operations and all other operations,
prior fiscal year. The increase in net revenues from
Japan
which increased by 16.2% during fiscal 2014 com-
sales of products is mainly due to an increase in
pared with the prior fiscal year to ¥24,312.6 billion,
Toyota vehicle unit sales of 245 thousand vehicles.
and net revenues from financial services operations
Excluding the impact of changes in the Japanese
which increased by 19.9% during fiscal 2014 com-
yen values used for translation purposes of ¥198.5
pared with the prior fiscal year to ¥1,379.2 billion.
billion, net revenues from financial services opera-
Excluding the impact of changes in the Japanese
tions would have been ¥1,180.7 billion during fiscal
yen values used for translation purposes of
2014, a 2.7% increase compared with the prior fis-
¥2,311.9 billion, net revenues from sales of
cal year.
The following table shows the number of financing contracts by geographic region at the end of fiscal 2014
and 2013, respectively.
Toyota’s consolidated vehicle unit sales*
* including number of exported vehicle unit sales
Net revenues:
Sales of products
Financial services
Total
Thousands of units
Years ended March 31,
2013
2014
4,202
4,220
2014 vs. 2013 Change
Amount
18
Percentage (%)
+0.4
Yen in millions
Years ended March 31,
2013
2014
2014 vs. 2013 Change
Amount
Percentage (%)
12,687,092
133,926
12,821,018
14,179,710
117,760
14,297,470
1,492,618
(16,166)
1,476,452
+11.8
–12.1
+11.5
Number of financing contracts in thousands
Toyota’s domestic and exported vehicle unit sales
the prior fiscal year due primarily to favorable mar-
2014 vs. 2013 Change
increased by 18 thousand vehicles compared with
ket conditions.
Japan
North America
Europe
Asia
Other*
Total
Years ended March 31,
2013
2014
1,765
1,813
4,596
4,791
825
879
868
1,167
618
688
8,672
9,338
Amount
48
195
54
299
70
666
Percentage (%)
+2.7
+4.3
+6.5
+34.5
+11.3
+7.7
North America
Toyota’s consolidated vehicle unit sales
* “Other” consists of Central and South America, Oceania and Africa.
Geographically, net revenues (before the elimina-
¥2,510.4 billion, net revenues in fiscal 2014 would
tion of intersegment revenues) for fiscal 2014
have increased by 11.5% in Japan, 8.4% in North
increased by 11.5% in Japan, 29.2% in North
America, 6.5% in Europe and 5.9% in Other com-
America, 30.8% in Europe, 11.2% in Asia, and
pared with the prior fiscal year, and would have
11.6% in Other compared with the prior fiscal year.
decreased by 4.9% in Asia compared with the prior
Excluding the impact of changes in the Japanese
fiscal year.
yen values used for translation purposes of
Net revenues:
Sales of products
Financial services
Total
Thousands of units
Years ended March 31,
2013
2014
2,469
2,529
2014 vs. 2013 Change
Amount
60
Percentage (%)
+2.5
Yen in millions
Years ended March 31,
2013
2014
2014 vs. 2013 Change
Amount
Percentage (%)
5,564,183
720,242
6,284,425
7,234,376
882,723
8,117,099
1,670,193
162,481
1,832,674
+30.0
+22.6
+29.2
Net revenues in North America increased due pri-
The vehicle unit sales increased due mainly to the
marily to the 60 thousand vehicles increase in vehi-
market progressing in a steady manner and strong
cle unit sales compared with the prior fiscal year.
sales of the RAV4, IS and other new car models.
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [7 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Europe
Other
Toyota’s consolidated vehicle unit sales
Net revenues:
Sales of products
Financial services
Total
Thousands of units
Years ended March 31,
2013
2014
799
844
2014 vs. 2013 Change
Amount
45
Percentage (%)
+5.6
Yen in millions
Years ended March 31,
2013
2014
2014 vs. 2013 Change
Amount
Percentage (%)
2,007,207
75,906
2,083,113
2,630,408
94,551
2,724,959
623,201
18,645
641,846
+31.0
+24.6
+30.8
Toyota’s consolidated vehicle unit sales
Net revenues:
Sales of products
Financial services
Total
Thousands of units
Years ended March 31,
2013
2014
1,640
1,769
2014 vs. 2013 Change
Amount
129
Percentage (%)
+7.8
Yen in millions
Years ended March 31,
2013
2014
2014 vs. 2013 Change
Amount
Percentage (%)
1,942,215
152,050
2,094,265
2,162,505
174,136
2,336,641
220,290
22,086
242,376
+11.3
+14.5
+11.6
Net revenues in Europe increased due primarily to
vehicle unit sales increased due mainly to the strong
Net revenues in Other increased due primarily to the
sales increased due mainly to the strong sales of
the 45 thousand vehicles increase in vehicle unit
sales of the RAV4, Corolla and other car models.
129 thousand vehicles increase in vehicle unit sales
the Etios in Central and South America.
sales compared with the prior fiscal year. The
compared with the prior fiscal year. The vehicle unit
Asia
Toyota’s consolidated vehicle unit sales
Net revenues:
Sales of products
Financial services
Total
Thousands of units
Years ended March 31,
2013
2014
1,684
1,609
2014 vs. 2013 Change
Amount
(75)
Percentage (%)
–4.5
Yen in millions
Years ended March 31,
2013
2014
2014 vs. 2013 Change
Amount
Percentage (%)
4,307,943
77,533
4,385,476
4,755,114
122,558
4,877,672
447,171
45,025
492,196
+10.4
+58.1
+11.2
Excluding the favorable impact of fluctuations in for-
vehicle unit sales was due mainly to decreased
eign currency translation rates, net revenues in Asia
sales in Thailand and India, which in turn was due
would have decreased due primarily to the 75 thou-
mainly to the shrinking of the market and competi-
sand vehicles decrease in vehicle unit sales com-
tive market conditions.
pared with the prior fiscal year. The decrease in
Operating Costs and Expenses
Operating costs and expenses:
Cost of products sold
Cost of financing operations
Selling, general and administrative
Total
Yen in millions
Years ended March 31,
2013
2014
2014 vs. 2013 Change
Amount
Percentage (%)
18,010,569
630,426
2,102,309
20,743,304
19,988,245
812,894
2,598,660
23,399,799
1,977,676
182,468
496,351
2,656,495
+11.0
+28.9
+23.6
+12.8
Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix
Effect of fluctuation in foreign currency translation rates
Effect of cost reduction efforts
Effect of increase in miscellaneous costs and others
Total
Yen in millions
2014 vs. 2013
Change
120,000
2,378,900
(290,000)
447,595
2,656,495
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [8 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Operating costs and expenses increased by
2014, continued cost reduction efforts together with
Cost of Financing Operations
Southern District of New York to resolve its investi-
¥2,656.4 billion, or 12.8%, to ¥23,399.7 billion dur-
suppliers contributed to the improvement in earn-
Cost of financing operations increased by ¥182.4
gation, partially offset by the ¥90.0 billion charge for
ing fiscal 2014 compared with the prior fiscal year.
ings. These cost reduction efforts related to ongoing
billion, or 28.9%, to ¥812.8 billion during fiscal 2014
costs related to the settlement of the economic loss
This increase resulted mainly from the ¥2,378.9 bil-
value engineering and value analysis activities, the
compared with the prior fiscal year. The increase
claims in the consolidated federal action in the U.S.
lion unfavorable impact of fluctuations in foreign
use of common parts resulting in a reduction of part
resulted mainly from the ¥183.0 billion unfavorable
recorded in the prior fiscal year.
currency translation rates, the ¥447.5 billion
types and other manufacturing initiatives designed
impact of fluctuations in foreign currency translation
increase in miscellaneous costs and others, and the
to reduce the costs of vehicle production.
rates.
¥120.0 billion impact of changes in vehicle unit
sales and sales mix, partially offset by the ¥290.0
Cost of Products Sold
Selling, General and Administrative Expenses
billion impact of cost reduction efforts.
Cost of products sold increased by ¥1,977.6 billion,
Selling, general and administrative expenses
The increase in miscellaneous costs and others
or 11.0%, to ¥19,988.2 billion during fiscal 2014
increased by ¥496.3 billion, or 23.6%, to ¥2,598.6
was due mainly to the ¥125.0 billion payment to the
compared with the prior fiscal year. The increase
billion during fiscal 2014 compared with the prior
U.S. government based on the agreement with the
resulted mainly from the ¥1,866.5 billion unfavorable
fiscal year. This increase mainly reflected the ¥329.3
U.S. Attorney’s Office for the Southern District of
impact of fluctuations in foreign currency translation
billion unfavorable impact of fluctuations in foreign
New York to resolve its investigation, the ¥100.0 bil-
rates, the ¥105.0 billion impact of changes in vehi-
currency translation rates, and the ¥125.0 billion
lion increase in labor costs, the ¥100.0 billion
cle unit sales and sales mix, the ¥100.0 billion
payment to the U.S. government based on the
R&D Expenses
(cid:31)(cid:31) R&D expenses (cid:30)(cid:30) % of net revenues (Right scale)
(¥ Billion)
1,000
800
600
400
200
0
(%)
5
4
3
2
1
0
increase in research and development expenses,
increase in research and development expenses,
agreement with the U.S. Attorney’s Office for the
FY
’10
’11
’12
’13
’14
and the ¥83.0 billion increase in costs related to
and the ¥80.0 billion increase in costs related to
ending the vehicle and engine production in
ending the vehicle and engine production in
Operating Income
Australia, partially offset by the ¥90.0 billion charge
Australia, partially offset by the ¥290.0 billion impact
for costs related to the settlement of the economic
of cost reduction efforts.
loss claims in the consolidated federal action in the
U.S. recorded in the prior fiscal year.
Cost Reduction Efforts
During fiscal 2014, Toyota’s continued cost reduc-
tion efforts reduced operating costs and expenses
by ¥290.0 billion. The amount of the effect of cost
reduction efforts includes the impact of fluctuation
in the price of steel, precious metals, non-ferrous
alloys including aluminum, plastic parts and other
production materials and parts. In fiscal
Cost of Products Sold
(cid:31)(cid:31) Cost of products sold (cid:30)(cid:30) % of net revenues (Right scale)
(¥ Billion)
20,000
15,000
10,000
5,000
0
FY
’10
’11
’12
’13
’14
(%)
100
75
50
25
0
Changes in operating income and loss:
Effect of changes in exchange rates
Effect of cost reduction efforts
Effect of marketing efforts
Effect of increase of miscellaneous costs and others
Other
Total
Yen in millions
2014 vs. 2013 Change
900,000
290,000
180,000
(480,000)
81,224
971,224
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [9 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Toyota’s operating income increased by ¥971.2 bil-
During fiscal 2014, operating income (before
North America
lion, or 73.5%, to ¥2,292.1 billion during fiscal 2014
elimination of intersegment profits), compared with
compared with the prior fiscal year. This increase
the prior fiscal year increased by ¥933.8 billion, or
was due mainly to the ¥900.0 billion favorable
162.0%, in Japan, ¥104.1 billion, or 46.9%, in
impact of changes in exchange rates, ¥290.0 billion
North America, ¥31.7 billion, or 120.0%, in Europe,
impact of cost reduction efforts, and ¥180.0 billion
¥19.6 billion, or 5.2%, in Asia, and decreased by
impact of marketing efforts, partially offset by the
¥91.1 billion, or 68.2%, in Other.
¥480.0 billion increase in miscellaneous costs and
others. The increase in miscellaneous costs and
others was due mainly to the ¥125.0 billion pay-
ment to the U.S. government based on the agree-
ment with the U.S. Attorney’s Office for the
Southern District of New York to resolve its investi-
gation, the ¥100.0 billion increase in labor costs, the
¥100.0 billion increase in research and development
expenses, and the ¥83.0 billion increase in costs
related to ending the vehicle and engine production
in Australia, partially offset by the ¥90.0 billion
charge for costs related to the settlement of the
economic loss claims in the consolidated federal
action in the U.S. recorded in the prior fiscal year.
Operating Income
(cid:31)(cid:31) Operating income (cid:30)(cid:30) % of net revenues (Right scale)
(¥ Billion)
2,500
2,000
1,500
1,000
500
0
FY
’10
’11
’12
’13
’14
(%)
10
8
6
4
2
0
The following is a description of operating income in each geographic market.
Japan
Changes in operating income and loss:
Effect of changes in exchange rates
Effect of cost reduction efforts
Effect of marketing efforts
Effect of increase of miscellaneous costs and others
Other
Total
Yen in millions
2014 vs. 2013 Change
940,000
175,000
180,000
(370,000)
8,830
933,830
Changes in operating income and loss:
Effect of cost reduction efforts
Effect of marketing activities
Effect of decrease of miscellaneous costs and others
Other
Total
Europe
Changes in operating income and loss:
Effect of cost reduction efforts
Effect of marketing efforts
Effect of increase of miscellaneous costs and others
Other
Total
Asia
Changes in operating income and loss:
Effect of changes in exchange rates
Effect of cost reduction efforts
Effect of marketing activities
Effect of increase of miscellaneous costs and others
Other
Total
Other
Changes in operating income and loss:
Effect of cost reduction efforts
Effect of marketing efforts
Effect of increase of miscellaneous costs and others
Other
Total
Yen in millions
2014 vs. 2013 Change
75,000
(25,000)
50,000
4,127
104,127
Yen in millions
2014 vs. 2013 Change
15,000
25,000
(10,000)
1,766
31,766
Yen in millions
2014 vs. 2013 Change
25,000
35,000
(40,000)
(50,000)
49,682
19,682
Yen in millions
2014 vs. 2013 Change
(10,000)
40,000
(100,000)
(21,176)
(91,176)
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [10 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Other Income and Expenses
the increase in income before income taxes and
Other Comprehensive Income and Loss
Interest and dividend income increased by ¥16.7
equity in earnings of affiliated companies. The effec-
Other comprehensive income increased by ¥61.5
billion, or 17.0%, to ¥115.4 billion during fiscal 2014
tive tax rate for fiscal 2014 was 31.5%, which was
billion to ¥884.2 billion for fiscal 2014 compared
compared with the prior fiscal year.
lower than the statutory tax rate in Japan. This was
with the prior fiscal year. This increase resulted from
Interest expense decreased by ¥3.3 billion, or
due mainly to the increase in tax credits and income
unrealized holding gains on securities in fiscal 2014
Net Income Attributable to
Toyota Motor Corporation and ROE
(cid:31)(cid:31) Net income attributable to Toyota Motor Corporation
(cid:30)(cid:30) ROE (Right scale)
(¥ Billion)
2,000
14.5%, to ¥19.6 billion during fiscal 2014 compared
before income taxes and equity in earnings of affili-
of ¥493.7 billion compared with gains of ¥368.5 bil-
1,500
with the prior fiscal year.
ated companies from foreign subsidiaries where
lion in the prior fiscal year, and from pension liability
Foreign exchange gain, net increased by ¥44.7
statutory tax rates are lower than that of Japan.
adjustments in fiscal 2014 of ¥93.5 billion com-
billion, or 805.4%, to ¥50.2 billion during fiscal 2014
compared with the prior fiscal year. Foreign
exchange gains and losses include the differences
between the value of foreign currency denominated
Net Income Attributable to Noncontrolling
Interests and Equity in Earnings of
Affiliated Companies
pared with gains of ¥19.5 billion in the prior fiscal
year, partially offset by unfavorable foreign currency
translation adjustments gains of ¥296.9 billion in fis-
cal 2014 compared with gains of ¥434.6 billion in
1,000
500
0
assets and liabilities recognized through transac-
Net income attributable to noncontrolling interests
the prior fiscal year.
tions in foreign currencies translated at prevailing
increased by ¥47.2 billion, or 38.9%, to ¥168.5 bil-
exchange rates and the value at the date the trans-
lion during fiscal 2014 compared with the prior fiscal
Segment Information
FY
’10
’11
’12
’13
’14
action settled during the fiscal year, including those
year. This was due mainly to an increase during fis-
The following is a discussion of the results of operations for each of Toyota’s operating segments. The
settled using forward foreign currency exchange
cal 2014 in net income attributable to the share-
amounts presented are prior to intersegment elimination.
(%)
20
15
10
5
0
contracts, or the value translated by appropriate
holders of consolidated subsidiaries.
year-end exchange rates. The ¥44.7 billion increase
Equity in earnings of affiliated companies during
in foreign exchange gain, net was due mainly to the
fiscal 2014 increased by ¥86.8 billion, or 37.5%, to
losses recorded in fiscal 2013 resulting from the
¥318.3 billion compared with the prior fiscal year.
Japanese yen being stronger against foreign cur-
This increase was due mainly to an increase during
rencies at the time foreign currency bonds were
fiscal 2014 in net income attributable to the share-
redeemed during that fiscal year than the Japanese
holders of affiliated companies accounted for by the
yen at the time of purchase.
equity method.
Other loss, net increased by ¥1.4 billion, or
94.7%, to ¥2.9 billion during fiscal 2014 compared
with the prior fiscal year.
Income Taxes
Net Income Attributable to Toyota Motor
Corporation
Automotive:
Financial Services:
All Other:
Intersegment elimination/
unallocated amount:
Net revenues
Operating income
Net revenues
Operating income
Net revenues
Operating income
Net revenues
Operating income
Yen in millions
Years ended March 31,
2013
2014
20,419,100
23,781,404
944,704
1,938,778
1,170,670
1,421,047
315,820
294,891
1,066,461
1,151,280
53,616
64,270
(592,039)
(661,820)
6,748
(5,827)
2014 vs. 2013 Change
Amount
3,362,304
994,074
250,377
(20,929)
84,819
10,654
(69,781)
(12,575)
Percentage (%)
+16.5
+105.2
+21.4
–6.6
+8.0
+19.9
—
—
Automotive Operations Segment
favorable impact of fluctuations in foreign currency
Net income attributable to the shareholders of
The automotive operations segment is Toyota’s
translation rates and the ¥300.0 billion favorable
Toyota Motor Corporation increased by ¥860.9 bil-
largest operating segment by net revenues. Net rev-
impact of changes in vehicle unit sales and
The provision for income taxes increased by ¥216.1
lion, or 89.5%, to ¥1,823.1 billion during fiscal 2014
enues for the automotive segment increased during
sales mix.
billion, or 39.2%, to ¥767.8 billion during fiscal 2014
compared with the prior fiscal year.
fiscal 2014 by ¥3,362.3 billion, or 16.5%, to
Operating income from the automotive operations
compared with the prior fiscal year due mainly to
¥23,781.4 billion compared with the prior fiscal year.
increased by ¥994.0 billion, or 105.2%, to ¥1,938.7
The increase mainly reflects the ¥2,304.9 billion
billion during fiscal 2014 compared with the prior
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [11 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
fiscal year. This increase in operating income was
Financial Services Operations Segment
due mainly to the ¥900.0 billion favorable impact of
Net revenues for the financial services operations
changes in exchange rates, the ¥290.0 billion
increased during fiscal 2014 by ¥250.3 billion, or
impact of cost reduction efforts, and the ¥190.0 bil-
21.4%, to ¥1,421.0 billion compared with the prior
lion of favorable impact of changes in vehicle unit
fiscal year. This increase was primarily due to the
sales and sales mix, partially offset by the ¥480.0
¥199.8 billion favorable impact of fluctuations in for-
billion increase in miscellaneous costs and others.
eign currency translation rates.
The changes in vehicle unit sales and changes in
Operating income from financial services opera-
sales mix were due primarily to the increase in
tions decreased by ¥20.9 billion, or 6.6%, to ¥294.8
Toyota’s vehicle unit sales by 245 thousand vehicles
billion during fiscal 2014 compared with the prior
compared with the prior fiscal year resulting from
fiscal year. This decrease was due primarily to the
the increase in vehicle unit sales in North America,
recording of ¥22.0 billion of valuation losses on
Europe and Other. The increase in miscellaneous
interest rate swaps stated at fair value.
costs and others was due mainly to the ¥125.0 bil-
lion payment to the U.S. government based on the
All Other Operations Segment
agreement with the U.S. Attorney’s Office for the
Net revenues for Toyota’s other operations seg-
Southern District of New York to resolve its investi-
ments increased by ¥84.8 billion, or 8.0%, to
gation, the ¥100.0 billion increase in labor costs, the
¥1,151.2 billion during fiscal 2014 compared with
¥100.0 billion increase in research and development
the prior fiscal year.
expenses, and the ¥83.0 billion increase in costs
Operating income from Toyota’s other operations
related to ending the vehicle and engine production
segments increased by ¥10.6 billion, or 19.9%, to
in Australia, partially offset by the ¥90.0 billion
¥64.2 billion during fiscal 2014 compared with the
charge for costs related to the settlement of the
prior fiscal year.
economic loss claims in the consolidated federal
action in the U.S. recorded in the prior fiscal year.
M Outlook
As for our future business environment, the world
efforts and marketing efforts, partially offset by an
economy is expected to benefit from ongoing mod-
increase in miscellaneous costs, decrease in vehicle
erate recovery in the U.S. and a gradual move
unit sales and changes in sales mix and the unfa-
toward recovery in Europe, meanwhile, some
vorable impact of fluctuations in foreign currency
emerging countries show signs of uncertainty. The
rates. Toyota expects that income before income
Japanese economy is expected to remain on a
taxes and equity in earnings of affiliated companies
recovery trend, backed by an improved environment
and net income attributable to Toyota Motor
for exports and the effects of various policy mea-
Corporation will decrease in fiscal 2015 due to for-
sures. Due attention should be paid, however, to
eign exchange gains and losses and other factors.
downside risks mainly from the continuing uncer-
For the purposes of this outlook discussion,
tainty of overseas economies, especially in emerg-
Toyota is assuming an average exchange rate of
ing countries, and the downturn in consumption
¥100 to the U.S. dollar and ¥140 to the euro.
following a surge in last-minute demand spurred by
Exchange rate fluctuations can materially affect
the consumption tax increase in Japan.
Toyota’s operating results. In particular, a strength-
The automotive market is expected to see expan-
ening of the Japanese yen against the U.S. dollar
sion mainly in the U.S.; however, amid the change in
can have a material adverse effect on Toyota’s oper-
market structure, as seen in the expansion and
ating results. See “Operating and Financial Review
diversification of demand for eco-cars backed by
and Prospects — Operating Results — Overview —
rising environmental consciousness and rapid
Currency Fluctuations” for further discussion in
advances in information and communications tech-
Toyota’s annual report on Form 20-F.
nology, fierce competition exists on a global scale.
The foregoing statements are forward-looking state-
In light of the foregoing external factors, Toyota
ments based upon Toyota’s management’s assump-
expects that net revenues for fiscal 2015 will
tions and beliefs regarding exchange rates, market
increase compared with fiscal 2014 due to price
demand for Toyota’s products, economic conditions
revisions and other factors, partially offset by the
and others. See “Cautionary Statement Concerning
unfavorable impact of fluctuations in foreign curren-
Forward-Looking Statements”. Toyota’s actual results
cy translation rates and a decrease in vehicle unit
of operations could vary significantly from those
sales. Toyota expects that operating income will
described above as a result of unanticipated changes
increase in fiscal 2015 compared with fiscal 2014
in the factors described above or other factors, includ-
due mainly to the favorable impact of cost reduction
ing those described in “Risk Factors”.
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [12 of 14]
Consolidated Financial Statements
M Liquidity and Capital Resources
Historically, Toyota has funded its capital expenditures and research and development activities through cash
generated by operations.
Net Cash Provided by
Operating Activities and
Free Cash Flow*
(cid:31)(cid:31) Net cash provided by operating activities
(cid:31)(cid:31) Free cash flow
(¥ Billion)
4,000
3,000
2,000
1,000
0
Capital Expenditures for
Property, Plant and Equipment*
and Depreciation
(cid:31)(cid:31) Capital expenditures (cid:31)(cid:31) Depreciation
Cash and Cash Equivalents
at End of Year
(¥ Billion)
1,500
1,200
900
600
300
0
(¥ Billion)
2,500
2,000
1,500
1,000
500
0
’12
FY ’10
’13
’11
* (Net cash provided by operating activities)-
(Capital expenditures for property, plant and
equipment, excluding vehicles and
equipment on operating leases)
’14
FY ’10
’11
’12
’13
’14
FY ’10
’11
’12
’13
’14
* Excluding vehicles and equipment on operating leases
fiscal 2014, compared with ¥2,451.3 billion for fiscal
Net cash provided by financing activities
2013. The increase was primarily attributable to the
increased by ¥442.2 billion to ¥919.4 billion for fis-
¥971.2 billion increase in operating income. This
cal 2014, compared with ¥477.2 billion for fiscal
increase in operating income was due mainly to the
2013. The increase was primarily attributable to the
¥900.0 billion favorable impact of changes in
¥699.0 billion increase in proceeds from issuance of
exchange rates, the ¥290.0 billion impact of cost
long-term debt, partially offset by the ¥306.7 billion
reduction efforts and the ¥180.0 billion impact of
increase in payments of long-term debt.
marketing efforts, partially offset by the ¥480.0 bil-
Total capital expenditures for property, plant and
lion increase in miscellaneous costs and others.
equipment, excluding vehicles and equipment on
Results of operations are recorded on an accrual
operating leases, were ¥970.0 billion during fiscal
basis and are therefore different from cash provided
2014, an increase of 13.5% from the ¥854.5 billion
or used in operating activities. Other than operating
in total capital expenditures during the prior fiscal
income, the increase of net cash provided by oper-
year. This increase was due primarily to an increase
ating activities was primarily attributable to the
in investments in Japan and Asia.
¥438.5 billion increase in “accrued income taxes”
Total capital expenditures for vehicles and equip-
resulting from the increase in income before income
ment on operating leases were ¥1,708.6 billion dur-
taxes and equity in earnings of affiliated companies,
ing fiscal 2014, an increase of 52.6% from the
compared with an increase of ¥22.1 billion for fiscal
¥1,119.5 billion in total capital expenditures during
2013 resulting from the increase in operating
the prior fiscal year. This increase was due primarily
income that was partially offset by the usage of
to an increase in investments in the financial servic-
In fiscal 2015, Toyota expects to sufficiently fund
and 2014, and information concerning Toyota’s
operating loss carryforwards. The increases in
es operations.
its capital expenditures and research and develop-
principal capital expenditures and divestitures cur-
“operating income” and “accrued income taxes” in
Toyota expects investments in property, plant and
ment activities through cash and cash equivalents
rently in progress.
fiscal 2014 were partially offset by the ¥160.0 billion
equipment, excluding vehicles and equipment on
on hand, and cash generated by operations. Toyota
Toyota funds its financing programs for custom-
in “deferred income taxes” for fiscal 2013 mainly
operating leases, to be approximately ¥1,020.0 bil-
will use its funds for the development of environ-
ers and dealers, including loans and leasing pro-
due to the usage of operating loss carryforwards.
lion during fiscal 2015.
ment technologies, maintenance and replacement
grams, from both cash generated by operations
Net cash used in investing activities increased by
Based on currently available information, Toyota
of manufacturing facilities, and the introduction of
and borrowings by its sales finance subsidiaries.
¥1,308.9 billion to ¥4,336.2 billion for fiscal 2014,
does not expect environmental matters to have a
new products. See “Information on the Company —
Toyota seeks to expand its ability to raise funds
compared with ¥3,027.3 billion for fiscal 2013. The
material impact on its financial position, results of
Business Overview — Capital Expenditures and
locally in markets throughout the world by expand-
increase was primarily attributable to the ¥675.6 bil-
operations, liquidity or cash flows during fiscal 2015.
Divestitures” in Toyota’s annual report on Form-20F
ing its network of finance subsidiaries.
for information regarding Toyota’s material capital
Net cash provided by operating activities
lion increase in purchases of marketable securities
However, uncertainty exists with respect to
and security investments and to the ¥589.0 billion
Toyota’s obligations under current and future envi-
expenditures and divestitures for fiscal 2012, 2013
increased by ¥1,194.7 billion to ¥3,646.0 billion for
increase in purchases of equipment leased to others.
ronment regulations as described in “Information on
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [13 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Liquid Assets*
(¥ Billion)
10,000
8,000
6,000
4,000
2,000
0
Shareholders’ Equity and Equity Ratio
(cid:31)(cid:31) Shareholders’ equity (cid:30)(cid:30) Equity ratio (Right scale)
(¥ Billion)
15,000
12,500
10,000
7,500
5,000
2,500
0
common stocks and purchase of marketable secu-
41.79%, and maturity dates ranging from 2014 to
rities and security investments.
2047. The current portion of long-term debt
Property, plant and equipment increased during
increased during fiscal 2014 by ¥245.2 billion, or
fiscal 2014 by ¥790.0 billion, or 11.5%, primarily
9.1%, to ¥2,949.6 billion and the non-current por-
reflecting fluctuations in foreign currency translation
tion increased by ¥1,209.0 billion, or 16.5%, to
rates and the increase in the capital expenditures,
¥8,546.9 billion. The increase in total borrowings
partially offset by the impacts of depreciation charg-
resulted mainly from an increase in medium-term
es during the year.
notes. As of March 31, 2014, approximately 43% of
Accounts and notes payable increased during
long-term debt was denominated in U.S. dollars,
fiscal 2014 by ¥99.4 billion, or 4.7%. This increase
14% in Japanese yen, 11% in Australian dollars,
(%)
60
50
40
30
20
10
0
FY ’10
’11
’12
’13
’14
FY
’10
’11
’12
’13
’14
was due mainly to the increase in production vol-
and 32% in other currencies. Toyota hedges interest
* Cash and cash equivalents, time deposits, marketable debt securities and
investment in monetary trust funds
ume in the fourth quarter of fiscal 2014.
rate risk exposure of fixed-rate borrowings by enter-
Accrued expenses increased during fiscal 2014
ing into interest rate swaps. There are no material
by ¥127.6 billion, or 5.8%. This increase was due
seasonal variations in Toyota’s borrowings
the Company — Business Overview — Governmental
foreign currency translation rates.
mainly to the increase in product quality related
requirements.
Regulation, Environmental and Safety Standards” in
Inventories increased during fiscal 2014 by
expenses.
As of March 31, 2014, Toyota’s total interest
Toyota’s annual report on Form 20-F.
¥178.9 billion, or 10.4%, to ¥1,894.7 billion. This
Income taxes payable increased during fiscal
bearing debt was 112.8% of Toyota Motor
Cash and cash equivalents were ¥2,041.1 billion
increase was due mainly to the fluctuations in
2014 by ¥438.5 billion, or 280.7%. This increase
Corporation shareholders’ equity, compared with
as of March 31, 2014. Most of Toyota’s cash and
foreign currency translation rates.
was due mainly to the increase in income before
116.3% as of March 31, 2013.
cash equivalents are held in Japanese yen or in
Total finance receivables, net increased during
income taxes and equity in earnings of affiliated
The following table provides information for credit
U.S. dollars. In addition, time deposits were ¥180.2
fiscal 2014 by ¥1,669.8 billion, or 13.8%, to
companies.
rating of Toyota’s short-term borrowing and long-
billion and marketable securities were ¥2,046.8 bil-
¥13,731.2 billion. This increase was due mainly to
Toyota’s total borrowings increased during fiscal
term debt from rating agencies, Standard & Poor’s
lion as of March 31, 2014.
the fluctuations in foreign currency translation rates
2014 by ¥2,195.6 billion, or 15.5%. Toyota’s short-
Ratings Group (S&P), Moody’s Investors Services
Liquid assets, which Toyota defines as cash and
and an increase in the number of financing con-
term borrowings consist of loans with a weighted-
(Moody’s), and Rating and Investment Information,
cash equivalents, time deposits, marketable debt
tracts. As of March 31, 2014, finance receivables
average interest rate of 2.57% and commercial
Inc. (R&I), as of May 31, 2014. A credit rating is not
securities and its investment in monetary trust
were geographically distributed as follows: in North
paper with a weighted-average interest rate of
a recommendation to buy, sell or hold securities. A
funds, increased during fiscal 2014 by ¥1,954.5 bil-
America 57.1%, in Asia 11.4%, in Europe 10.8%, in
0.49%. Short-term borrowings increased during fis-
credit rating may be subject to withdrawal or revi-
lion, or 28.7%, to ¥8,759.0 billion.
Japan 8.9% and in Other 11.8%.
cal 2014 by ¥741.2 billion, or 18.1%, to ¥4,830.8
sion at any time. Each rating should be evaluated
Trade accounts and notes receivable, less allow-
Marketable securities and other securities invest-
billion. Toyota’s long-term debt consists of unse-
separately of any other rating.
ance for doubtful accounts increased during fiscal
ments, including those included in current assets,
cured and secured loans, medium-term notes,
2014 by ¥64.5 billion, or 3.3%, to ¥2,036.2 billion.
increased during fiscal 2014 by ¥2,189.6 billion, or
unsecured notes and long-term capital lease obliga-
This increase was due mainly to the fluctuations in
33.1%, reflecting an increase in the fair values of
tions with interest rates ranging from 0.00% to
Short-term borrowing
Long-term debt
S&P
A-1+
AA-
Moody’s
P-1
Aa3
R&I
—
AA+
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations [14 of 14]
Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Toyota’s unfunded pension liabilities of Japanese
short-term fluctuations. Toyota believes that it main-
plans decreased during fiscal 2014 by ¥91.0 billion,
tains sufficient liquidity for its present requirements
or 18.1%, to ¥413.0 billion. The liabilities of foreign
and that by maintaining its high credit ratings, it will
plans also decreased during fiscal 2014 by ¥29.3
continue to be able to access funds from external
billion, or 19.0%, to ¥124.6 billion. The unfunded
sources in large amounts and at relatively low costs.
amounts will be funded through future cash contri-
Toyota’s ability to maintain its high credit ratings is
butions by Toyota or in some cases will be settled
subject to a number of factors, some of which are
on the retirement date of each covered employee.
not within Toyota’s control. These factors include
The decrease in unfunded pension liabilities of the
general economic conditions in Japan and the other
Japanese plans as of the end of fiscal 2014 com-
major markets in which Toyota does business, as
pared with the prior fiscal year end reflects mainly
well as Toyota’s successful implementation of its
an increase in pension assets due to an increase in
business strategy.
equity security prices, despite an increase in pen-
sion benefit obligations that resulted from a decline
in discount rate. The decrease in unfunded pension
liabilities of foreign plans also reflects the increase in
pension assets resulting mainly from an increase in
equity security prices. See note 19 to the consoli-
dated financial statements in Toyota’s annual report
on Form 20-F.
Toyota’s treasury policy is to maintain controls on
all exposures, to adhere to stringent counterparty
credit standards, and to actively monitor market-
place exposures. Toyota remains centralized, and is
pursuing global efficiency of its financial services
operations through Toyota Financial Services
Corporation.
The key element of Toyota’s financial strategy is
maintaining a strong financial position that will allow
Toyota to fund its research and development initia-
tives, capital expenditures and financial services
operations efficiently even if earnings are subject to
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements [1 of 5]
Consolidated Balance Sheets
Toyota Motor Corporation
March 31, 2013 and 2014
ASSETS
Current assets
Cash and cash equivalents
Time deposits
Marketable securities
Trade accounts and notes receivable, less allowance for
doubtful accounts of ¥15,875 million in 2013 and
¥18,780 million in 2014
Finance receivables, net
Other receivables
Inventories
Deferred income taxes
Prepaid expenses and other current assets
Total current assets
Yen in millions
2013
2014
1,718,297
106,700
1,445,663
2,041,170
180,207
2,046,877
1,971,659
5,117,660
432,693
1,715,786
749,398
527,034
13,784,890
2,036,232
5,628,934
351,182
1,894,704
866,386
672,014
15,717,706
Noncurrent finance receivables, net
6,943,766
8,102,294
Investments and other assets
Marketable securities and other securities investments
Affiliated companies
Employees receivables
Other
Total investments and other assets
Property, plant and equipment
Land
Buildings
Machinery and equipment
Vehicles and equipment on operating leases
Construction in progress
Total property, plant and equipment, at cost
Less—Accumulated depreciation
Total property, plant and equipment, net
Total assets
5,176,582
2,103,283
53,741
569,816
7,903,422
6,765,043
2,429,778
44,966
736,388
9,976,175
1,303,611
3,874,279
9,716,180
3,038,011
291,539
18,223,620
(11,372,381)
6,851,239
35,483,317
1,314,040
4,073,335
10,381,285
3,709,560
286,571
19,764,791
(12,123,493)
7,641,298
41,437,473
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings
Current portion of long-term debt
Accounts payable
Other payables
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
Long-term liabilities
Long-term debt
Accrued pension and severance costs
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
Shareholders’ equity
Toyota Motor Corporation shareholders’ equity
Common stock, no par value,
authorized: 10,000,000,000 shares in 2013 and 2014;
issued: 3,447,997,492 shares in 2013 and 2014
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock, at cost, 280,568,824 shares in 2013 and
278,231,473 shares in 2014
Total Toyota Motor Corporation shareholders’ equity
Noncontrolling interests
Total shareholders’ equity
Commitments and contingencies
Yen in millions
2013
2014
4,089,528
2,704,428
2,113,778
721,065
2,185,537
156,266
941,918
12,912,520
4,830,820
2,949,663
2,213,218
845,426
2,313,160
594,829
933,569
14,680,685
7,337,824
766,112
1,385,927
308,078
9,797,941
8,546,910
767,618
1,811,846
411,427
11,537,801
397,050
551,040
12,689,206
(356,123)
(1,133,138)
12,148,035
624,821
12,772,856
397,050
551,308
14,116,295
528,161
(1,123,666)
14,469,148
749,839
15,218,987
Total liabilities and shareholders’ equity
35,483,317
41,437,473
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements [2 of 5]
Consolidated Statements of Income
Toyota Motor Corporation
For the years ended March 31, 2012, 2013 and 2014
Net revenues
Sales of products
Financing operations
Total net revenues
Costs and expenses
Cost of products sold
Cost of financing operations
Selling, general and administrative
Total costs and expenses
Operating income
Other income (expense)
Interest and dividend income
Interest expense
Foreign exchange gain, net
Other income (loss), net
Total other income (expense)
Income before income taxes and equity in earnings of affiliated companies
Provision for income taxes
Equity in earnings of affiliated companies
Net income
Less: Net income attributable to noncontrolling interests
2012
17,511,916
1,071,737
18,583,653
15,795,918
592,646
1,839,462
18,228,026
Yen in millions
2013
20,914,150
1,150,042
22,064,192
18,010,569
630,426
2,102,309
20,743,304
2014
24,312,644
1,379,267
25,691,911
19,988,245
812,894
2,598,660
23,399,799
355,627
1,320,888
2,292,112
99,865
(22,922)
37,105
(36,802)
77,246
432,873
262,272
197,701
368,302
(84,743)
98,673
(22,967)
5,551
1,504
82,761
1,403,649
551,686
231,519
1,083,482
115,410
(19,630)
50,260
2,928
148,968
2,441,080
767,808
318,376
1,991,648
(121,319)
(168,529)
Net income attributable to Toyota Motor Corporation
283,559
962,163
1,823,119
Net income attributable to Toyota Motor Corporation per share
— Basic
— Diluted
90.21
90.20
Yen
303.82
303.78
575.30
574.92
Cash dividends per share
50.00
90.00
165.00
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements [3 of 5]
Consolidated Statements of Comprehensive Income
Toyota Motor Corporation
For the years ended March 31, 2012, 2013 and 2014
Net income
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
Unrealized gains (losses) on securities
Pension liability adjustments
Total other comprehensive income (loss)
Comprehensive income
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Toyota Motor Corporation
2012
368,302
(93,292)
131,794
(65,110)
(26,608)
341,694
(85,744)
255,950
Yen in millions
2013
1,083,482
461,754
374,209
14,711
850,674
1,934,156
(149,283)
1,784,873
2014
1,991,648
301,889
499,560
99,404
900,853
2,892,501
(185,098)
2,707,403
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements [4 of 5]
Consolidated Statements of Shareholders’ Equity
Toyota Motor Corporation
For the years ended March 31, 2012, 2013 and 2014
Balances at March 31, 2011
Equity transaction with noncontrolling interests and other
Issuance during the year
Comprehensive income
Net income
Other comprehensive income (loss)
Foreign currency translation adjustments
Unrealized gains (losses) on securities
Pension liability adjustments
Total comprehensive income
Dividends paid to Toyota Motor Corporation shareholders
Dividends paid to noncontrolling interests
Repurchase and reissuance of treasury stock
Balances at March 31, 2012
Equity transaction with noncontrolling interests and other
Issuance during the year
Comprehensive income
Net income
Other comprehensive income (loss)
Foreign currency translation adjustments
Unrealized gains (losses) on securities
Pension liability adjustments
Total comprehensive income
Dividends paid to Toyota Motor Corporation shareholders
Dividends paid to noncontrolling interests
Repurchase and reissuance of treasury stock
Balances at March 31, 2013
Equity transaction with noncontrolling interests and other
Issuance during the year
Comprehensive income
Net income
Other comprehensive income (loss)
Foreign currency translation adjustments
Unrealized gains (losses) on securities
Pension liability adjustments
Total comprehensive income
Dividends paid to Toyota Motor Corporation shareholders
Dividends paid to noncontrolling interests
Repurchase and reissuance of treasury stock
Balances at March 31, 2013
Yen in millions
Accumulated other
comprehensive
income (loss)
(1,144,721)
(6,503)
Treasury stock,
at cost
(1,261,383)
125,819
Total Toyota Motor
Corporation
shareholders’ equity
10,332,371
117,262
1,483
Noncontrolling
interests
587,653
(119,824)
Total shareholders’
equity
10,920,024
(2,562)
1,483
Common
stock
397,050
Additional paid-in
capital
505,760
43,311
1,483
Retained
earnings
11,835,665
(45,365)
283,559
(156,785)
(87,729)
129,328
(69,208)
397,050
96
550,650
675
11,917,074
(1,178,833)
(116)
(1,135,680)
283,559
84,743
368,302
(87,729)
129,328
(69,208)
255,950
(156,785)
(20)
10,550,261
675
(5,563)
2,466
4,098
85,744
(37,356)
516,217
4,961
(93,292)
131,794
(65,110)
341,694
(156,785)
(37,356)
(20)
11,066,478
5,636
962,163
962,163
121,319
1,083,482
434,638
368,507
19,565
397,050
(285)
551,040
528
(190,008)
(23)
12,689,206
(356,123)
2,542
(1,133,138)
434,638
368,507
19,565
1,784,873
(190,008)
2,234
12,148,035
528
27,116
5,702
(4,854)
149,283
(45,640)
624,821
2,985
461,754
374,209
14,711
1,934,156
(190,008)
(45,640)
2,234
12,772,856
3,513
1,823,119
1,823,119
168,529
1,991,648
296,942
493,750
93,592
(396,030)
296,942
493,750
93,592
2,707,403
(396,030)
397,050
(260)
551,308
14,116,295
528,161
9,472
(1,123,666)
9,212
14,469,148
4,947
5,810
5,812
185,098
(63,065)
749,839
301,889
499,560
99,404
2,892,501
(396,030)
(63,065)
9,212
15,218,987
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Selected Financial Summary (U.S. GAAP)
Consolidated Segment Information
Consolidated Quarterly Financial Summary
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements [5 of 6]
Consolidated Statements of Cash Flows
Toyota Motor Corporation
For the years ended March 31, 2012, 2013 and 2014
Cash flows from operating activities
Net income
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation
Provision for doubtful accounts and
credit losses
Pension and severance costs, less payments
Losses on disposal of fixed assets
Unrealized losses on available-for-sale
securities, net
Deferred income taxes
Equity in earnings of affiliated companies
Changes in operating assets and liabilities,
and other
Increase in accounts and notes receivable
(Increase) decrease in inventories
Increase in other current assets
Increase (decrease) in accounts payable
Increase in accrued income taxes
Increase in other current liabilities
Other
Net cash provided by operating activities
2012
Yen in millions
2013
2014
368,302
1,083,482
1,991,648
1,067,830
1,105,109
1,250,853
9,623
16,711
33,528
53,831
27,367
(20,429)
32,221
2,104
49,718
20,654
28,657
6,197
6,395
(197,701)
160,008
(231,519)
(56,279)
(318,376)
(585,464)
(344,923)
(180,529)
756,363
20,943
316,366
111,160
1,452,435
(168,260)
50,483
(47,033)
(209,284)
22,127
280,083
364,857
2,451,316
(121,926)
(110,819)
(77,645)
65,312
438,527
277,659
201,855
3,646,035
Cash flows from investing activities
Additions to finance receivables
Collection of finance receivables
Proceeds from sales of finance receivables
Additions to fixed assets excluding equipment
leased to others
2012
Yen in millions
2013
2014
(8,333,248)
8,007,711
53,999
(10,004,928)
9,063,011
39,845
(11,953,064)
10,990,546
34,807
(723,537)
(854,561)
(970,021)
Additions to equipment leased to others
(808,545)
(1,119,591)
(1,708,670)
Proceeds from sales of fixed assets excluding
equipment leased to others
Proceeds from sales of equipment leased
to others
Purchases of marketable securities and
security investments
Proceeds from sales of marketable securities
and security investments
Proceeds upon maturity of marketable
securities and security investments
Payment for additional investments in
affiliated companies, net of cash acquired
Changes in investments and other assets,
and other
36,633
39,191
39,191
431,313
533,441
744,339
(3,173,634)
(3,412,423)
(4,738,278)
162,160
35,178
538,894
2,694,665
2,633,913
2,780,433
(147)
16,216
6,603
209,972
3,396
(101,028)
Net cash used in investing activities
(1,442,658)
(3,027,312)
(4,336,248)
Cash flows from financing activities
Proceeds from issuance of long-term debt
Payments of long-term debt
Increase in short-term borrowings
Dividends paid to Toyota Motor Corporation
shareholders
Dividends paid to noncontrolling interests
Reissuance (repurchase) of treasury stock
Net cash provided by (used in)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net increase (decrease) in cash and
cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2,394,807
(2,867,572)
311,651
3,191,223
(2,682,136)
201,261
3,890,310
(2,988,923)
467,976
(156,785)
(190,008)
(396,030)
(37,356)
(92)
(45,640)
2,542
(63,065)
9,212
(355,347)
477,242
919,480
(55,939)
137,851
93,606
(401,509)
39,097
322,873
2,080,709
1,679,200
1,679,200
1,718,297
1,718,297
2,041,170
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Toyota Jidosha Kabushiki Kaisha
(“Toyota Motor Corporation”)
In our opinion, the accompanying consolidated
responsibility is to express opinions on these
included performing such other procedures as we
acquisition, use, or disposition of the company’s
balance sheets and the related consolidated
financial statements and on the Company’s internal
considered necessary in the circumstances. We
assets that could have a material effect on the
statements of income, comprehensive income,
control over financial reporting based on our
believe that our audits provide a reasonable basis
financial statements.
shareholders’ equity and cash flows present fairly, in
integrated audits. We conducted our audits in
for our opinions.
Because of its inherent limitations, internal control
all material respects, the financial position of Toyota
accordance with the standards of the Public
A company’s internal control over financial
over financial reporting may not prevent or detect
Motor Corporation and its subsidiaries at March 31,
Company Accounting Oversight Board (United
reporting is a process designed to provide
misstatements. Also, projections of any evaluation
2013 and 2014, and the results of their operations
States). Those standards require that we plan and
reasonable assurance regarding the reliability of
of effectiveness to future periods are subject to the
and their cash flows for each of the three years in
perform the audits to obtain reasonable assurance
financial reporting and the preparation of financial
risk that controls may become inadequate because
the period ended March 31, 2014 in conformity with
about whether the financial statements are free of
statements for external purposes in accordance
of changes in conditions, or that the degree of
accounting principles generally accepted in the
material misstatement and whether effective internal
with generally accepted accounting principles. A
compliance with the policies or procedures may
United States of America. Also in our opinion, the
control over financial reporting was maintained in all
company’s internal control over financial reporting
deteriorate.
Company maintained, in all material respects,
material respects. Our audits of the financial
includes those policies and procedures that (i)
effective internal control over financial reporting as
statements included examining, on a test basis,
pertain to the maintenance of records that, in
of March 31, 2014, based on criteria established in
evidence supporting the amounts and disclosures in
reasonable detail, accurately and fairly reflect the
Internal Control - Integrated Framework (1992)
the financial statements, assessing the accounting
transactions and dispositions of the assets of the
issued by the Committee of Sponsoring
principles used and significant estimates made by
company; (ii) provide reasonable assurance that
Organizations of the Treadway Commission
management, and evaluating the overall financial
transactions are recorded as necessary to permit
(COSO). The Company’s management is
statement presentation. Our audit of internal control
preparation of financial statements in accordance
responsible for these financial statements, for
over financial reporting included obtaining an
with generally accepted accounting principles, and
maintaining effective internal control over financial
understanding of internal control over financial
that receipts and expenditures of the company are
reporting and for its assessment of the effectiveness
reporting, assessing the risk that a material
being made only in accordance with authorizations
of internal control over financial reporting, included
weakness exists, and testing and evaluating the
of management and directors of the company; and
in the accompanying Management’s Annual Report
design and operating effectiveness of internal
(iii) provide reasonable assurance regarding
Nagoya, Japan
on Internal Control Over Financial Reporting. Our
control based on the assessed risk. Our audits also
prevention or timely detection of unauthorized
June 24, 2014
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Investor Information (As of March 31, 2014)
Corporate Data
Company Name: Toyota Motor Corporation
Established:
August 28, 1937
Common Stock: ¥397,049 million
Fiscal Year-End: March 31
Public Accounting Firm:
PricewaterhouseCoopers Aarata
Number of Affiliates:
[Consolidated Subsidiaries] 509
[Affiliates Accounted for by the Equity Method] 56
Number of Employees:
68,240 (Consolidated: 338,875)
Corporate Web Site:
[Corporate Information]
http://www.toyota-global.com
[IR Information]
http://www.toyota-global.com/investors
Stock Data
Number of Shares Authorized:
10,000,000,000 shares
Number of Shares Issued:
3,447,997,492 shares
Number of Treasury Stock:
278,231,473 shares
Number of Shareholders:
613,648
Number of Shares per Trading Unit:
100 shares
Stock Listings:
[Japan] Tokyo, Nagoya, Osaka, Fukuoka, Sapporo
[Overseas] New York, London
Securities Code:
[Japan] 7203
American Depositary Receipts (ADR):
[Ratio] 1 ADR=2 common stocks [Symbol] TM
Transfer Agent in Japan:
Mitsubishi UFJ Trust and Banking Corporation
10-11, Higashisuna, 7-chome, Koutou-ku, Tokyo 137-8081, Japan
Japan Toll-Free: (0120)232-711
Depositary and Transfer Agent for ADR: The Bank of New York Mellon
101 Barclay Street, New York, NY 10286, U.S.A.
Tel: (866)238-8978 U.S. Toll-Free: (888)269-2377, (888) BNY-ADRS
[Depositary Receipts] http://www.adrbnymellon.com
[Transfer Agent] http://www.bnymellon.com/shareowner
Contact Points for Investors
Japan Toyota City Head Office
Tokyo Head Office
1, Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan
Tel: (0565)28-2121 Fax: (0565)23-5721
4-18, Koraku 1-chome, Bunkyo-ku
Tokyo 112-8701, Japan
Tel: (03)3817-7111 Fax: (03)3817-9092
U.S.A.
Toyota Motor North America, Inc.
601 Lexington Avenue, 49th Floor, New York, NY 10022, U.S.A.
Tel: (212)223-0303 Fax: (212)759-7670
U.K.
Toyota Motor Europe NV/SA
Curzon Square, 25 Park Lane, London W1K 1RA, U.K.
Tel: (207)290-8513 Fax: (207)290-8502
Major Shareholders (Top 10)
Ownership Breakdown
Name
Number of Shares
Held (Thousands)
Japan Trustee Services Bank, Ltd.
Toyota Industries Corporation
The Master Trust Bank of Japan, Ltd.
State Street Bank and Trust Company
(Standing proxy: Settlement & Clearing Service
Division, Mizuho Bank, Ltd.)
Nippon Life Insurance Company
The Bank of New York Mellon as Depositary
Bank for Depositary Receipt Holders
Trust & Custody Services Bank, Ltd.
DENSO CORPORATION
Mitsui Sumitomo Insurance Company, Limited
State Street Bank and Trust Company
(Standing proxy: The Hong Kong and Shanghai
Banking Corporation Limited, Tokyo Branch)
331,408
223,515
181,754
128,118
122,323
83,412
70,824
69,533
66,063
55,260
Other
corporate
entities
17.86%
Financial
institutions,
Brokerages
31.11%
Individuals,
etc.
20.67%
Foreign corporate
entities and others
30.36%
Note: Individuals, etc, include shares of 278 million treasury stock.
Toyota’s Stock Price and Trading Volume on the Tokyo Stock Exchange
Stock price (¥)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Trading volume
(Million shares)
400
300
200
100
0
FY2010
4,235
3,140
3,745
High (¥)
Low (¥)
At
Year-End
(¥)
FY2011
3,955
2,800
3,350
FY2012
3,635
2,330
3,570
FY2013
5,050
2,795
4,860
FY2014
6,760
4,610
5,826
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