Annual
Report
2018
Annual Report 2018
Fiscal year ended March 31, 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Table of Contents
The Annual Report 2018 is intended to communicate to stakeholders Toyota’s long-term strategies for enhancing its cor-
porate value and the ways that it is contributing to the sustainable development of society. More detailed information on
Toyota’s ESG-related initiatives is published in the Sustainability Data Book 2018.
(Published October 2018)
Table of Contents
1 Table of Contents
2 Message from the President
5 Toward the Mobility Society of the Future
5 Management Team
Toyota’s Reports and Publications
Annual Report 2018
Securities Reports/SEC Filings
Financial Results/Operating Results
Corporate Governance Reports
Sustainability Data Book 2018
Environmental Report 2018
—Toward Toyota Environmental Challenge 2050—
* Toyota also publishes information on business and sustainability initiatives not included in the above reports and publications via its offi cial website.
Investors https://www.toyota-global.com/investors/
Sustainability https://www.toyota-global.com/sustainability/
Period Covered: Fiscal 2018 (April 2017 to March 2018) Some of the initiatives in fi scal 2019 are also included
Scope of Report: Toyota Motor Corporation (TMC)’s own initiatives and examples of those of its domestic and overseas
consolidated affi liates, and so on.
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1
TOYOTA Annual Report 2018
6
10
12
15
Using Connected Technologies to Expand the Freedom, Safety,
and Excitement of a Smart Mobility Society
Strengthening Our Competitiveness to Deliver Ever-Better Mobility
to Customers around the World
Eliminating CO2 Emissions from New Vehicles by 2050:
Popularizing Electrifi ed Vehicles
Making Ever-better Cars: Continuing to Make Cars That Will Be
Beloved
17 Developing Our People and Our Cars: GAZOO Racing
18 Steady Progress toward Automated Driving
21 Partner Robots
Toyota’s Business Innovation:
23
Organizational Framework, the Toyota Group, External
Collaboration, and TPS and Cost Reduction
24 Developing People: The True Source of Toyota’s Competitiveness
25 Message from the CFO
26 Capital Policy
27 Initiatives for Sustainable Growth
29 Corporate Philosophy
30 Corporate Governance
32 Messages from the Outside Directors
35 Toyota Environmental Challenge 2050 and 2030 Milestones
37 Employees
40 Risk Management
41 Compliance
42 Customer First and Quality First Measures
43 Respect for Human Rights and Supply Chain Management
Working to Better the World around Us
44
The Toyota Mobility Foundation, Olympic and Paralympic
Worldwide Partnerships, Social Contribution Activities
46 Corporate Data
46 At a Glance
47 History
48 Financial Summary
50 Non-Automotive Businesses
51 Corporate Information and Stock Information
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Message from the President
Surviving a Once-in-a-Century Period of Profound Transformation
Over the past century, an estimated 15 million horses in
Electrifi cation, automation, connectivity, sharing—
the United States were replaced by the same number of
technological innovation in these and other areas is
cars. We may now be facing a paradigm shift of equal, if
advancing rapidly. A contest with new rivals, under
not greater, magnitude. Every day, I am reminded anew
new rules of competition—not to win or lose, but to
that the automotive industry has truly entered a once-in-
survive or perish—is now beginning.
a-century period of profound transformation.
Mobility for All
I am determined to transform Toyota from a car-
Conversations like these have reaffi rmed my belief
making company into a mobility company. This means
that mobility for all—bringing the joy and freedom of
that Toyota will provide all kinds of services related to
movement to all people—is the goal that we must
transportation to people around the world.
work toward as an automotive company.
About two years ago, a Paralympian told me some-
As we move forward we must also always keep in
thing that greatly infl uenced how I think about mobility.
mind the importance of creating mobility that will be
She said, “Since I lost my future to a car accident, I
beloved. People feel a unique attachment to their
have hated cars. But today, hearing that Toyota will
cars. As a company whose roots are in making cars,
sponsor the Paralympic Games, I realized that cars
Toyota will therefore remain committed to ensuring
could also help rebuild my future.” On another occa-
that the mobility it offers will inspire love.
sion, Sir Philip Craven, a former President of the
International Paralympic Committee and current inde-
pendent director of Toyota, told me, “Freedom of
movement is key to enabling the physically challenged
to more actively participate in society.”
Our Real-world Track Record and Virtual-world Potential
At the beginning of 2018, we presented the e-Palette
Sport Concept in Tokyo. In character, these two mod-
Concept Vehicle in Las Vegas and the GR Super
els are as different as they could be: the former is
2
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Message from the President
designed provide to mobility services, and the latter to
Our decades-long production of such much-beloved,
be “Fun to Drive.” Both, however, are examples of
long-selling models as the Crown and Corolla is part
next-generation mobility, featuring such cutting-edge
of our real-world track record. Our consistent produc-
technologies as electrifi cation, automated driving, and
tion of better cars at better prices for more customers
connectivity. While these are still concept models, we
to enjoy using the Toyota Production System is part of
have begun equipping mass-market models, such as
our real-world track record, too. I myself have sat
the new Crown and Corolla Sport launched in Japan
behind the wheel on roads around the world with fel-
in June, with connected technology. In doing so, we
low car lovers and spent my life developing cars that
are advancing the full-scale promotion of the spread
are safe, reliable, and emotionally appealing—this,
of connected cars. Spearheading these efforts are
too, is part of our real-world track record. All of these
Toyota companies leading the way in developing the
achievements have been built through the application
virtual world, including Toyota Connected and Toyota
of a Genchi Genbutsu (onsite, hands-on experience)
Research Institute, the latter of which specializes in
approach and ongoing, real-world effort.
cutting-edge research into automated driving.
Whether we are considering future mobility or design-
real world and great potential in the virtual world will,
ing current mass-market models, we always start by
I think, be a strength going forward.
That Toyota boasts both such a track record in the
paying close attention to our customers and their
needs. Building the necessary customer rapport for
We will continue to leverage the strengths we have
this takes time and sustained effort. Here, our exten-
amassed in the real world while blazing the way for-
sive history of working with our customers gives us
ward in the virtual world. In doing so, we aim to create
a unique advantage.
new sources of strength for the future.
Uniting the Toyota Group to Take on the Future
Perhaps the greatest hindrance to reforms and inno-
based on past sales volumes and profi ts and there-
vation at Toyota is its experience of past success.
fore cannot guarantee future growth. I want to make
sure that every model and every region is the absolute
In the process of growing to be a full line-up car
top priority of someone in the Toyota Group. To place
maker with annual global sales of 10 million units, cer-
greater priority on the businesses and regions that will
tain priorities inadvertently took hold within Toyota. For
drive our future growth, we are reorganizing Toyota’s
example, developed markets came to be prioritized
businesses at the Group-wide level using a perspec-
over emerging markets and passenger vehicles over
tive we call “home and away.”
commercial vehicles. These priorities, however, are
3
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Message from the President
Rather than relying just on its own abilities, Toyota is
The electronic components and the African market are
bringing together the full strength of the Group. We are
critical parts of the mobility society of the future. As
identifying the strengths that make up each company’s
such, we decided to consolidate operations in these
“home” turf to increase productivity and reinforce the
areas at group companies that consider them home
competitive strength of the Group as a whole.
turf, thereby raising their priority within the Group. In
this urgent time, there is no room for intra-Group com-
In June, we announced the consolidation within
petition; the future of the Toyota Group depends on
DENSO of the Group’s core electronic component
enhancing its competitiveness as a united whole.
operations as well as an agreement to transfer all
sales and marketing operations in Africa to Toyota
Tsusho. Both these moves embody our “home and
away” approach.
Creating the Mobility Society of the Future
At the same time, I do not imagine that we can do
frameworks, rally like-minded partners, and leverage our
everything purely within the Toyota Group alone.
respective strengths as we continually take on the future.
Having operated this long in the auto industry, working
with vast networks of companies, we deeply under-
I intend to personally lead the charge, fi ghting along-
stand the importance of collaboration. More than ever,
side all Toyota Group employees every day to survive
we will need the help of a wide range of partners as
and thrive in this once-in-a-century period of profound
we transform Toyota into a mobility company.
transformation. I ask for your continued confi dence
and support as we move forward.
An acquaintance of mine shared with me some
insights on the kinds of thinking and action that the
October 2018
coming era will require. As this person saw it, the key
to action will not be adherence to precedent, but rath-
er speed and disregard for precedent; the leadership
needed will not be consensus building, but the ability
to rally people behind a cause.
We are serious about creating the mobility society of
President, Member of the Board of Directors
the future. Accordingly, we must look beyond existing
Toyota Motor Corporation
Akio Toyoda
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TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Management Team
Executive Vice President
Koji Kobayashi
TPS and cost-reduction are
Toyota’s backbone. I will
pursue them on all fronts.
Executive Vice President
Didier Leroy
I want to bring Energy, Passion,
and Fighting spirit to achieve true
competitiveness.
Executive Vice President
Shigeki Terashi
It is time to unite globally as one
Toyota to realize freedom of
movement for all.
Executive Vice President
Mitsuru Kawai
Only by applying human
wisdom and skill can we
realize the evolution of
machines—that’s why I would
like to nurture our people.
President
Akio Toyoda
Executive Vice President
Moritaka Yoshida
I want to continue making
beloved cars that are as
exciting to watch as they
are to ride in.
Fellow
Gill A. Pratt
My personal mission is
to help Toyota gain
agility while maintaining
its strength to improve
quality of life for all
mankind.
Executive Vice President
Shigeki Tomoyama
The key to realizing mobility
services is connected technology.
I hope that cars will continue to
amaze and inspire for the next
100 years.
5
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Using Connected Technologies to Expand the Freedom, Safety, and Excitement of a Smart Mobility Society
As cars rapidly developed and became commonplace
in the 20th century, reducing fossil fuel consumption,
cutting CO2 emissions to prevent global warming, and
preventing air pollution gradually became the major
social issues demanding global solutions that they are
today. In response, many counties and regions have
made plans to shift to electrifi ed vehicles, and auto-
makers are accelerating the development of such
vehicles. Indeed, the electrifi cation of cars is an
essential part of solving these challenges.
At the same time, new social issues are also
emerging, such as increased traffi c congestion due
to rising population density in urban centers, shrink-
ing working populations and increased numbers of
mobility-challenged individuals in developed coun-
tries due to demographic graying, and deepening
logistics crises due to changes in consumer behavior.
In the midst of these social changes, the auto
industry is entering a once-in-a-century period of
profound transformation. Toyota provides freedom of
movement—a form of social infrastructure. As such,
we are fi rmly determined to contribute to solving
social issues by changing the very ways that people,
things, and information fl ow through the world.
Based on this commitment, Toyota aims to connect
cars, people, and communities and thereby create
a smart mobility society that offers freedom of move-
ment, safety, and excitement for all.
Shigeki Tomoyama
Executive Vice President
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TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Using Connected Technologies to Expand the Freedom, Safety, and Excitement of a Smart Mobility Society
Our Connected Strategy for Realizing
Connected Platforms
Connecting cars is not only providing new value and
services to customers, but creating new modes of
use and new roles in society for cars.
To stay at the forefront of this evolution, Toyota
established the in-house Connected Company in
April 2016 and announced its Connected Strategy in
November of the same year. This strategy comprises
three arrows that we are releasing simultaneously.
Toyota’s Connected Strategy
1st Arrow
Connect
All Cars
2nd Arrow
Creation of
New Value
and Business
Revolution
3rd Arrow
Creation of
New Mobility
Services
“Connect” all cars and
Promote the use of big
Collaborate with vari-
complete the connected
data and contribute to
ous industries and IT
platform
the good of customers
companies to produce
and society while revo-
new mobility services
lutionizing Toyota’s own
businesses
The Start of the Full-Scale Connected
Car Rollout
Key to the fi rst arrow, connecting all cars, are our
data communication modules (DCMs). In 2002,
Toyota commercialized its DCMs and launched the
G-BOOK service for Toyota vehicles (this service was
replaced by T-Connect in 2014). In 2005, DCMs
were made a standard feature in Lexus cars, and
Toyota launched the G-Link service in Japan before
expanding it to North America and China. As the fi rst
step toward connecting all vehicles, in June 2018,
Toyota launched sales in Japan of the new Crown
and Corolla Sport with DCMs as standard features
for all grades. This marked the start of our full-scale
roll out of connected cars.
Toyota plans to adopt common standards for its
worldwide DCMs by 2019, equip virtually all passen-
ger vehicles it sells in Japan and the United States
with DCMs by 2020, and steadily equip more vehi-
cles with DCMs in other major markets around the
world going forward.
Connected Technologies: Creating
Services That Offer Safety and Peace of
Mind to Customers and Society
Turning to the second arrow, as the number of con-
nected cars on the road increases, so does the big
data they generate. Toyota is using this data to con-
tribute to the good of customers and society while
revolutionizing its own businesses.
Aggregate route history maps were made publicly
available after the Great East Japan Earthquake, and
such data has subsequently been used in evacua-
tion, response, and recovery operations following
several natural disasters.
Furthermore, by analyzing the diverse information
collected from cars on the road using big data
approaches, we will be able to utilize that information
to create and enhance services that provide safety
and peace of mind.
Making DCMs standard features also makes our
online services more convenient and easier to use for
our customers. The voice recognition enabled artifi -
cial intelligence (AI) virtual agent can understand pas-
sengers’ natural speech to set the destination for the
navigation system and perform other tasks. Of
course, we also have operators standing by 24 hours
a day, 365 days a year, to provide more in-depth
response to customer requests. By offering virtual
(AI) and real-world (operators) service, Toyota seeks
to provide what it calls “Human Connected Service.”
Route History Maps to the Rescue after
Natural Disasters
Toyota’s route history maps use aggregate data on where cars
have actually been collected from Toyota vehicles equipped with
DCMs to provide traffi c information in a map format. The data is
constantly updated, and has been used to inform response dur-
ing and efforts after natural disasters.
Services for Connected Cars
Voice Recognition-enabled AI Virtual Agent
Our voice-recognition service has evolved into an AI virtual agent. Merely by talking to the agent, users can set the desti-
nation for the navigation system, even while the car is moving.
Just press talk on the steering wheel and speak
The virtual agent analyzes your words and responds
Customer
Is there a soba restaurant in
Nagano with a parking lot?
Navigation
One such destination found.
Should I set it as your destination?
Agent
What’s the weather like
at my destination?
What’s radar cruise control?
It’s sunny.
Weather
Using vehicle features
A system for cruising at a preset speed
that automatically maintains
a safe distance from other vehicles.
e-Care (Driving Guidance)
• Indicator lights turn on when an abnormality occurs ((cid:2)). Vehicle data is then analyzed ((cid:3),(cid:4)) and sent to an operator and
the customer’s dealer ((cid:5)).
• Using the navigation panel ((cid:6)), customers connect to the e-Care call center ((cid:7)), and an operator provides appropriate
driving guidance.
• Operators hand over customer response to the customer’s dealer ((cid:8)), which guides the customer through any necessary
vehicle servicing ((cid:9)).
(cid:6) Operator call
screen
(cid:7) Call and support
Toyota Smart Center
(cid:2) Indicator light
Car
(cid:3) Diagnostic data
Big data
(cid:5) Data
(cid:129) Vehicle data analysis
(cid:129) Determine likely cause
(cid:4)
of abnormality
(cid:129) Vehicle operability decision
(cid:129) Advice generation
(cid:9) Support and guidance
Operator
(cid:8) Customer response handover
Dealer
7
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Using Connected Technologies to Expand the Freedom, Safety, and Excitement of a Smart Mobility Society
Accelerating Cross-industry
Collaboration as a Mobility Service
Platform Provider
Under the third arrow, we are accelerating cross-
industry collaboration through the Mobility Service
Platform (MSPF). Using the MSPF, Toyota is taking
an open approach, linking with all kinds of service
providers to contribute to the creation of new mobili-
ty services.
We have already begun a range of collaborative ini-
tiatives. In May 2016, Toyota and Uber Technologies
Inc. began to consider a partnership in ride-sharing.
In 2017, we conducted a pilot program for our Smart
Key Box with U.S. car-sharing company Getaround,
Inc.; began a partnership with Grab Holdings Inc.,
the leading ride-hailing service company in Southeast
Asia; and began verifi cation testing of connected
taxis with the Tokyo Taxi-Hire Association. In 2018,
we are working to deepen these and other initiatives
in order to create new mobility services and acceler-
ate their commercialization.
Efforts to Deepen Collaborations in 2018
Expanded Partnership with Grab in the Area Mobility as a Service
In June 2018, Toyota concluded an agreement with Grab to
strengthen our existing partnership in the area of Mobility as a
Service (MaaS) in Southeast Asia and announced our decision
to invest US$1 billion (approximately ¥110 billion) in Grab.
This expansion is aimed at expanding connected services
across Southeast Asia. Specifi cally, we aim to achieve con-
nectivity for Grab’s rental car fl eet across the region and to
utilize vehicle data collected by the MSPF to roll out driving-
data-based automotive insurance as well as fi nancial servic-
es for Grab drivers and maintenance services currently
under development.
Service
charge
Service
Finance
Car
insurance
Mobility Service
Platform (MSPF)
Telematics
insurance
Toyota
Big Data
Center (TBDC)
Vehicle data/
Driving
behavior
data
Vehicle
management
system
Dealer
Maintenance
TOYOTA
device
TOYOTA
device
TOYOTA
device
Maintenance
for ride sharing
Pilot Testing of AI-based Taxi Dispatch Support System
Aiming to Accelerate Service Development for Taxi Industry Transformation
Vehicle
dispatch
service
platform
Vehicle
dispatch
data
Driver
User
Toyota, JapanTaxi Co., Ltd., KDDI Corporation, and
Accenture Japan Ltd have partnered to develop a taxi dis-
patch support system that releases demand projections for
taxi services based on a combination of data from taxi ser-
vice logs, demographic data, event information and other
inputs. Pilot testing of the system has now begun in Tokyo.
Going forward, the companies plan to steadily install
Toyota’s TransLog data-transmitting driving recorder in more
taxis, analyzing visual driving data from these devices to fi nd
factors that correlate with taxi demand and then working
with the taxi dispatch support system to apply the results of
this research.
Taxi
service
log
Demographic
prediction
Mobility Service Platform
Use AI to
predict
taxi
demand
Big Data
Weather
Public
transport
service
availability
Event
TransLog
driving
image
Taxi
dispatch
App
Number of
unoccupied
taxis
Recommended
routes to find
passengers
Taxi Company/
Driver
receive
on tablet
8
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Using Connected Technologies to Expand the Freedom, Safety, and Excitement of a Smart Mobility Society
mobility society that offers freedom of movement,
safety, and excitement for all.
More details
Guardian system, p. 18
Collaboration with Uber
We are jointly developing dedicated automated MaaS vehicles for introduction in Uber’s ridesharing service network from 2021.
UTI/ATG
Ridesharing platform
and autonomous
driving technology
Software updates
Data/dispatch
Uber
autonomous
driving system
Toyota
Guardian
System
Vehicle control interface
Vehicle control system
TMC/TRI/TRI-AD
Vehicle and automated
driving technology
Software updates
Data
MSPF
Collect and
analyze data
NEXT
* Guardian is a system designed to monitor, assist, and help safeguard a human driver or an autonomous driving system through the vehicle control interface.
Business image of a joint venture company with Softbank
Expanding Mobility Services in
the Near Future
Toyota is analyzing and processing the big data generat-
ed by cars to create information that is useful for cus-
tomers and a variety of connected services. We want
the car to be a seamless extension of customers’
phones and computers, a kind of personal assistant on
wheels that is able to anticipate their needs using AI.
Based on this concept, we created the e-Palette
Concept Vehicle. Using connected and automated driv-
ing technologies, the e-Palette will serve as a common
mobility platform that meets the needs of a wide range
of service providers and business applications, including
car-sharing, ride-sharing, parcel delivery, and retail.
In other words, a single e-Palette Concept Vehicle
could, depending on the time or other conditions, be
used for a range of purposes by different operators.
This is the vision of mobility service that the e-Palette
makes possible.
Furthermore, vehicle information constantly gath-
ered through the MSPF will help optimize maintenance
as well as the collection of data that can be used to
anticipate demand for goods and services. Based on
such capabilities, we are aiming to achieve the ulti-
mate in just-in-time service, in which, when a custom-
er summons an e-Palette Concept Vehicle, not only
does it set out immediately, but it is already nearby.
The technologies and expertise created in the
AI-based dispatch system being tested in collabora-
tion with JapanTaxi, KDDI, and Accenture are being
applied to enhance such demand prediction functions.
Creating Automated Driving
Mobility Services
In August 2018, Toyota and Uber announced an
agreement to expand their collaboration with the prin-
cipal aim of advancing the development of and bring-
ing to market ride-sharing services leveraging
automated driving technologies. To this end, Toyota’s
Sienna Minivan will be modifi ed to create the initial
fl eet of dedicated “Autono-MaaS” (autonomous
mobility as a service) vehicles. These Autono-MaaS
vehicles will be constantly connected to the MSPF
and equipped with both Uber’s autonomous driving
system and the Toyota Guardian automated safety
support system. By using both systems together, we
aim to better monitor vehicle surroundings in real time
to realize even safer, more reliable automated driving
mobility services. Deployments of these vehicles on
the Uber ride-sharing network will begin in 2021.
In October 2018, Toyota and SoftBank Corp.
agreed to form a strategic partnership to facilitate the
creation of new mobility services. The two companies
plan to establish a joint venture company, MONET
Technologies Corporation, before the end of fi scal
2019. MONET will provide coordination between
Toyota’s MSPF and SoftBank’s IoT Platform. By utiliz-
ing a wide range of data related to the movement of
people and vehicles, MONET will seek to optimally
balance supply and demand in transportation and
launch new MaaS businesses capable of resolving
mobility-related social issues and creating new value.
Through MONET, we plan to roll out Autono-MaaS
businesses based on e-Palette by the mid-2020s.
Toyota is accelerating initiatives as a mobility ser-
vice platform provider, aiming to create a smart
9
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Strengthening Our Competitiveness to Deliver Ever-Better Mobility to Customers around the World
Toyota believes that the true value of mobility is the
freedom it enables. No matter how times change,
Toyota’s love of cars will never fade. At the same
time, our passion for mobility is not limited to cars.
Technologies for making transport easier, more
convenient, and more enjoyable for people around
the world are evolving, and the value that Toyota
provides is expanding on numerous fronts. This is
why Toyota announced its intention to transform into
a mobility company.
As Toyota works to reinforce its efforts related to
a wide range of mobility services, its approach of
seeking to be the “best in town” will be essential.
When creating new services, the business environ-
ment, particular challenges, and distributors in each
region vary greatly. Toyota must provide cars and
mobility services that are closely tailored to customer
lifestyles and regional characteristics and make itself
an indispensable presence in local communities.
Seeking to be the best in town is an approach that
reinforces competitiveness and thereby leads to
sustained growth.
In this way, Toyota’s vision is extremely clear.
To achieve this vision with emphasis on speed and
openness, Toyota is working to reform businesses
throughout the Group—and sometimes extending
beyond the Group—based on a “home and away”
perspective. “Home” refers to operations and regions
in which we can add value ourselves through Genchi
Genbutsu (onsite, hands-on experience) and in which
we have competitive advantages over our rivals.
“Away,” meanwhile, refers to operations and
regions in which we will work with other companies
that have more advantages than we do in terms of
expertise. By reexamining our businesses and effec-
tively allocating management resources to “home”
and “away” companies, we can increase productivity
and make the entire Toyota Group more competitive.
And, above all, Toyota believes that applying Genchi
Genbutsu in their work at more specialized compa-
nies will help our human resources grow and develop.
Furthermore, under the “home and away”
approach, we will transcend the borders of the
Group’s operations. By developing working relation-
ships with other companies which have same aspira-
tions with us, we can make an enormous impact in
this time of immense change.
If it’s not fun, it’s not a car. As the value consumers
seek in cars diversifi es, Toyota will continue to listen
carefully to its customers, reinforce its competitive-
ness, and deliver ever-better mobility to even more
customers.
Shifting to a Region-based Approach
in Japan, Toyota’s Home Market
Conditions in Japan’s automotive market are expect-
ed to become more diffi cult than ever. The market is
contracting as a result of such social issues as the
declining and graying population, urbanization, and
rural depopulation. At the same time, the market is
changing, with increased use of IT, AI, automated
driving, and other technological innovations, as well
as the emergence of new rivals.
To adapt to future market changes, Toyota launched
in 2016 the J-ReBORN Plan under which it has been
working to transform the domestic car sales business.
Until now, Toyota’s growth in the Japanese market
has been based on sales efforts that were focused
on channels and uniformly implemented nationwide.
Going forward, however, we will need to look more
closely at Japan’s individual regions. We must
understand the desires of and problems faced by the
people living in each region and work to solve those
problems in collaboration with not just our dealers
and members of the Toyota Group, but also regional
governments and local companies. As such, in
January 2018, we reorganized the Japan Sales
Business Group. Also, we changed our domestic
sales policies, moving from a uniform approach
throughout the country to a focus on individual
regions, and are speedily carrying out said policies.
Furthermore, to strengthen our competitiveness
and to create and provide new mobility services, in
addition to ongoing business reinforcement efforts,
we established Toyota Mobility Service Co., Ltd. in
April 2018. This new subsidiary will develop and
provide solution services for corporate customers,
connected services using communications devices
in cars, car sharing, and other new services.
Tokyo, in particular, is the earliest adopter of mobil-
ity service, seeing a shift from car ownership to car
usage. Targeting the Tokyo region, we plan to inte-
grate Tokyo Toyota Motor Co., Ltd., Tokyo Toyopet
Motor Sales Co., Ltd., Toyota Tokyo Corolla Co.,
Ltd., and Netz Toyota Tokyo Co., Ltd., to form a new
company in 2019. By effi ciently developing its dealer
network and by concentrating its resources, Toyota
will continue working to be the best in town.
Changes in Japan’s Market Environment
(cid:129) Declining, graying population
(cid:129) Urbanization, rural depopulation
Further market contraction
Changes in the Automotive Business
(cid:129) Increased use of IT, AI, automated driving, and other technological
innovations
(cid:129) Emergence of new rivals
(cid:129) Expansion of car sharing (non-ownership)
The speed of market change is an order of magnitude greater than ever before
J-ReBORN Plan
With an urgency unmatched since our founding, we are pushing forward ambitiously alongside
dealers to truly thrive in this period of immense change, for the sake of our future customers’
peace of mind and for the sake of our sustainable future
10
TOYOTA Annual Report 2018
Didier Leroy
Executive Vice President,
Member of the Board of Directors
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Strengthening Our Competitiveness to Deliver Ever-Better Mobility to Customers around the World
Reinforcing Group Competitiveness—Collaboration with Toyota Tsusho
Beginning with the export of the Land Cruiser and
other models to Africa in the 1950s, Toyota has
worked closely with customers in sub-Saharan coun-
tries and throughout the continent. Today, Toyota
South Africa Motors (Pty) Ltd. serves as a manufactur-
ing and export base and boasts South Africa’s highest
vehicle production volume.
Africa is sometimes called the “last frontier”—as this
appellation suggests, it is a market with enormous
potential. Toyota Group company Toyota Tsusho
Corporation (TTC) has signifi cant business strength on
the continent, with a dedicated Africa Division and
over 10,000 Group employees in the region.
Toyota is now advancing preparations to transfer all
its sales and marketing operations in African markets
to TTC in January 2019. This move embodies our
aspiration to be the best in town in the region by con-
centrating operations at TTC, a Group company that
has a “home” in Africa.
To facilitate greater coordination, Toyota has select-
ed a former TTC executive who has a wealth of expe-
rience in local operations as its CEO of Africa region.
By reinforcing human resource development at both
companies, we will further accelerate businesses
in Africa.
Learning from the “Let’s Do It” Spirit—Collaboration with Suzuki
Toyota has learned a great deal over the years through
open collaboration with competing manufacturers.
Our partnership with Suzuki is one such effort. While
Toyota has built strong business foundations in
Southeast Asia, it has yet to effectively exercise its
strength in other emerging nations, such as India,
where Suzuki has utilized its famous “Let’s Do It” spirit
to the fullest and built a solid position.
In February 2017, Toyota and Suzuki concluded a
memorandum regarding a business partnership.
Moving toward concrete collaboration, in November
2017, the two companies agreed to discuss setting
up a cooperative structure for introducing electric
vehicles in the Indian market around 2020. Then, in
March 2018, Toyota and Suzuki concluded a basic
agreement to supply one another with hybrid and
other vehicles, with the aim of bolstering both
companies’ product
lineups and encour-
aging competition in
the Indian automotive
market. In May 2018,
we agreed to begin
discussions related to
three joint projects in
such areas as car
production and powertrain development assistance.
Toyota will continue to learn from Suzuki’s “Let’s Do
It” spirit, working as a member of Indian industry to
realize a freer, more enjoyable future mobility society.
Together, we are advancing toward a day when “Made
in India” cars will be widely loved not only in India, but
also in Africa and other regions around the world.
The “One Toyota” Initiative, Focused on Sustainable Growth—From Visitor to Neighbor
In April 2014, Toyota announced the “One Toyota” ini-
tiative aimed at consolidating its regional head offi ce
functions in North America. The July 2017 grand
opening of Toyota’s new North American headquarters
in Plano, Texas, was the fi rst new opening under the
initiative. Previously, Toyota’s North American functions
were in four locations—California, Kentucky, Michigan,
and New York. Now, the sales management, fi nancial
services, external relations, public relations, and
research functions have been consolidated in Plano,
while purchasing and production engineering have
been consolidated at a Technical Center in Ann Arbor,
Michigan, and a Production Engineering and
Manufacturing Center in Georgetown, Kentucky, respec-
tively. By strengthening cross-functional coordination,
Toyota has created a framework for responding to the
needs of North American customers faster in order to
make ever-better cars that exceed expectations.
Toyota began operations in the United States 61
years ago, in October 1957, with just a single dealer.
Today, Toyota’s businesses are deeply rooted in the
United States socially, economically, and culturally;
Toyota’s direct investments in the country to date total
approximately US$25 billion, and the Company oper-
ates 10 manufacturing assembly facilities, boasts
almost 1,500 dealers, and employs approximately
137,000 people nationwide (including direct and indi-
rect workers and dealer employees).
The new North American headquarters in Plano
sends the clear message that Toyota is here to stay
and contribute to the community.
With the opening of the new headquarters, approxi-
mately 3,000 employees have relocated from the four
previous sites, and Toyota has made about 1,000 new
hires. Toyota has also committed to investing approxi-
mately US$10 billion in the United States over fi ve
years. These funds are being put toward such endeav-
ors as the construction of the new headquarters and
reinforcing the competitiveness of existing plants.
Going forward, Toyota will continue to step up its com-
petitive strength as “One Toyota” in North America and
contribute as a neighbor, aiming to be the best in town.
TMS
(Sales HQ)
TMCC
(Financial &
insurance services)
Torrance, California
TMA
(External relations,
public relations,
research)
New York,
New York
TEMA
(R&D, manufacturing HQ)
Erlanger, Kentucky
New Headquarters
Plano, Texas
TMMK
(Production)
Georgetown, Kentucky
11
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Eliminating CO2 Emissions from New Vehicles by 2050: Popularizing Electrifi ed Vehicles
In December 2017, Toyota announced its plans to sell
more than 5.5 million electrifi ed vehicles per year
globally by 2030. As part of the Toyota Environmental
Challenge 2050, launched in 2015 to contribute to
the realization of a sustainable society, we set for our-
selves the New Vehicle Zero CO2 Emissions Challenge,
under which we aim to reduce Toyota’s global aver-
age new vehicle CO2 emissions in 2050 by 90% com-
pared with the 2010 level. This new initiative to
popularize electrifi ed vehicles is one of our medium-
to long-term measures to achieve this target.
Toyota believes that eco-friendly vehicles can best
help protect the environment if they are in widespread
use. To consistently provide products that meet
customer expectations and needs as a mass manu-
facturer, a diverse lineup of electrifi ed vehicles is
essential. At the same time, Toyota is advancing
initiatives on all fronts, including technological innova-
tion as well as social infrastructure development tai-
lored to the energy and usage conditions of specifi c
countries and regions.
Toyota regards the current once-in-a-century
transformation of the automobile industry—including
the promotion of electrifi cation—as an unparalleled
opportunity to deliver new value to customers and
expand its business.
A New Push to Popularize Electrifi ed
Vehicles by 2030
Toyota aims to sustainably grow while steadily solidi-
fying its business base through the three values of
safety and peace of mind, Waku-doki (excitement
and exhilaration that wows you), and environmental
sustainability. By doing so, we hope to contribute to
the creation of a sustainable mobility society and
bring smiles to our customers’ faces.
Electrifi cation will be indispensable to reducing
vehicle CO2 emissions and thus addressing global
warming, a challenge facing by the entire planet.
Toyota is steadily advancing efforts in this area under
the Toyota Environmental Challenge 2050 estab-
lished in October 2015.
In particular, to popularize electrifi ed vehicles, Toyota
is aiming for at least 50% of all the vehicles it sells
globally in 2030 to be electrifi ed, and, of those, for
more than 10% to be battery electric vehicles (BEVs)
or fuel cell electric vehicles (FCEVs). To this end, we
have set the following three intermediary targets.
First, from 2020 onward, we will advance the full-
scale roll-out of BEVs. Specifi cally, we will launch
mass-market BEVs developed by Toyota for the
Chinese market in 2020, then expand sales to Japan,
India, the United States, Europe, and around the
globe. We plan to introduce more than 10 BEV mod-
els in the fi rst half of the decade.
Next, while expanding our lineup of dedicated
electrifi ed models, such as the Prius and Mirai, we
will make electrifi ed versions available for other mod-
els, as well, aiming to have no models lacking an
electrifi ed option by around 2025.
Basing calculations on our current global sales, by
2030 we aim for annual sales of more than 5.5 million
electrifi ed vehicles, including hybrid electric vehicles
(HEVs), plug-in hybrid vehicles (PHEVs), BEVs, and
FCEVs. Of this total, we are aiming for more than 1 mil-
lion to be BEVs, FCEVs, or other zero-emission vehicles.
In the 20 years since launching the Prius in 1997,
Toyota has sold more than 12 million electrifi ed vehi-
cles around the world, helping to cut CO2 emissions
by more than 94 million tons.* Today, Toyota offers
36 electrifi ed models in more than 90 countries and
regions, maintains an electrifi ed vehicle development
staff numbering 4,500 within the Company alone,
and sells more than 1.5 million of these vehicles each
year. These fi gures are a testament to the trust that
customers have in these vehicles’ quality, durability,
and reliability; customer support for this type of vehi-
cle over the years; the vast technological expertise
built up by the Group; and Toyota’s successful estab-
lishment of electrifi ed vehicle mass production tech-
nologies in Japan and around the world. The
electrifi ed vehicle technologies and expertise it has
Toyota’s Major Recent Initiatives in Electrifi cation
Vehicle Electrifi cation Milestones
June 2018
May 2018
April 2018
Announced a joint next-generation convenience store project with Seven-Eleven
Japan to begin in autumn 2019, aimed at greatly reducing CO2 emissions
Move to expand fuel cell stacks and high-pressure hydrogen tank production
equipment, aiming to increase sales of FCEVs from around 2020
Launched the fi rst Aichi Low-carbon Hydrogen Supply Chain project, aimed at realiz-
ing a hydrogen-powered society in cooperation with the Aichi prefectural government,
local companies, municipal authorities and other partners
February 2018
Announced that sales of electrifi ed vehicles in 2017 reached an all-time high, surpass-
ing 1.52 million and achieving one of the Toyota Environmental Challenge 2050
targets three years early
January 2018
Presented the e-Palette Concept Vehicle, a BEV for mobility services, at CES
December 2017
Announced an initiative to popularize electrifi ed vehicles from 2020 to 2030
December 2017
Began a feasibility study with Panasonic Corporation of a joint automotive prismatic
battery business
September 2017
Established EV C.A. Spirit Corporation with Mazda and DENSO to jointly develop
technologies for electric vehicles
2030
Electrified vehicles
>50%
BEV/FCEVs
>10%
Engine-powered vehicles
1997
World’s first
mass-production
HEV
2014
FCEVs
Around 2025
Electrified
versions available
for all models
2020
Start of
full-scale
BEV rollout
HEVs
2050
Zero CO2
Emissions
Challenge
PHEVs
FCEVs
BEVs
12
TOYOTA Annual Report 2018
1990
2000
2010
2020
2030
2040
2050
Shigeki Terashi
Executive Vice President,
Member of the Board of Directors
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Eliminating CO2 Emissions from New Vehicles by 2050: Popularizing Electrifi ed Vehicles
accumulated over the decades are a vital strength of
Toyota and will provide a solid foundation for the
popularization of electrifi ed vehicles going forward.
develop applications for our fuel cell technologies in
a range of industrial fi elds.
More details
Hydrogen-related initiatives, p. 14
* As of April 30, 2018
Comprehensive Initiatives Related to
Products, Technologies, and
Social Infrastructure
For Toyota to continue to meet diverse customer
needs, it will need to implement robust initiatives cov-
ering products, technologies, and social infrastructure.
In terms of products, as society undergoes major
changes and the needs of customers and markets
rapidly diversify, applying technologies in ways that
break with convention to diversify our electrifi ed vehi-
cles will be key their popularization.
For example, in BEVs, in addition to mini-, mid-
size, and full-size vehicles, we will expand to buses
and trucks and work as a Group to create products
for a wide range of applications, including commer-
cial and sharing services.
As for FCEVs, we will expand our lineups of pas-
senger and commercial vehicles in the 2020s.
Furthermore, working with Group companies, we will
In addition, Toyota believes that HEVs, the trailblaz-
ers of the electrifi ed vehicle fi eld, still have a large role
to play. In addition to further enhancing Toyota’s
existing hybrid technologies in terms of fuel economy,
cost, and driving performance, we will develop a
range of new HEV types. These may include, for
example, sports models with superb acceleration;
high-power models capable of towing camping trail-
ers; one-motor, mild hybrid or other types of afford-
able hybrids for emerging markets; or models using
multi-stage hybrid systems like that in the Lexus LS.
More details
Powertrains for hybrid vehicle, p. 14
Turning to technologies, Toyota has established a
global mass production platform that boasts an
annual capacity of more than 1.5 million HEVs. This
platform can readily be used to produce other types
of electrifi ed vehicles, such as BEVs and FCEVs.
However, a far vaster and more advanced production
network than any that now exists will be needed for
the more than 5.5 million electrifi ed vehicles a year
that Toyota is targeting.
In particular, a key factor in the popularization of
electrifi ed vehicles is batteries. For example, the bat-
teries used in BEVs currently on the market already
have capacities several tens of times as large as
those used in HEVs, yet that capacity needs to be
signifi cantly improved if their cruising range is to be
on par with that of HEVs.
To address this diffi culty, in December 2017,
Toyota began a feasibility study with Panasonic
Corporation of a joint automotive prismatic battery
business. Furthermore, Toyota is developing solid-
state batteries, aiming to commercialize the technol-
ogy by the early 2020s. Compared with conventional
batteries, solid-state batteries are expected to be
smaller and safer while achieving dramatically
improved performance.
To realize the improvements in performance, cost,
and supply capacity necessary to meet its targets for
2030, Toyota will invest approximately 1.5 trillion yen,
bolstering R&D and capital expenditure related to
batteries. By doing so, we will accelerate efforts to
transform the electrifi ed vehicle business to sell more
than 5.5 million electrifi ed vehicles in 2030.
Finally, looking at social infrastructure, we must
approach the electrifi cation of mobility and problems
related to resources and energy comprehensively.
Without the establishment of systems for reusing and
recycling materials, the ongoing popularization of
electrifi ed vehicles runs the risk of driving up rare
metal prices and increasing industrial waste. Toyota
has for some time been involved in the reuse and
recycling of HEV batteries. For example, these bat-
teries are being used in fi xed electricity storage sys-
tems, helping to realize stable energy circulation at
power plants and factories.
From an energy standpoint, Toyota aims to help
create a society that utilizes both electricity and
hydrogen. We are advancing a variety of initiatives,
including pilot projects aimed at utilizing renewable
energy and building a low-carbon society. In the long
run, we envision a society that is built on diverse
energy sources and that effectively utilizes electricity
and hydrogen. To achieve this vision, we are working
with the entire Group as well as outside corporate,
government, and other partners to help develop a
sustainable mobility society.
Toyota is currently the electrifi ed vehicle market leader;
approximately one in two such vehicles sold around the
world is a Toyota. Going forward, Toyota will seek to
maintain this lead by advancing initiatives related to
products and the technologies and social infrastructure
that support them. Through these initiatives to popular-
ize electrifi ed vehicles, together with initiatives related to
connected technologies and automated driving leverag-
ing AI, we will continue to ambitiously strive toward the
realization of the mobility society of the future.
Core Technologies Shared Across Electrifi ed Vehicles
Diversifi ed Electrifi ed Vehicles
Toyota’s Battery Development
Motor, Battery, Inverter
= Core technology across
electrified vehicles
Applied to all electrified vehicles
HEV/
PHEVs
Bus
FCEVs
1925 Public call for Sakichi Battery
1939 Established Battery Research Laboratory
Electric
motor
Battery
Inverter
(PCU)
Engine
Engine
Charging
Fuel cell
H 2
Charging
Hydrogen tank
H2
O2
HEVs
PHEVs
BEVs
FCEVs
BEVs
e
z
i
s
Small home-delivery vehicles
Passenger cars
HEV
FCEV (Bus)
Full-size truck
1997 1st-gen. Prius launched (nickel-metal hydride battery)
2003 Lithium-ion batteries
l
i
e
c
h
e
V
Short-distance use
BEV
PHEV
Personal mobility
FCEV
Delivery truck
Sakichi Toyoda
Travel distance
Ideal energy storage device
High energy density, retains charge, fast charging,
low resistance, easy to manufacture, highly durable
2020s Solid-state
batteries
Metal-air batteries
Diversification of HEVs, PHEVs, BEVs, and FCEVs becoming more important
Since its founding, Toyota has recognized the importance of and advanced the development of batteries
13
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Eliminating CO2 Emissions from New Vehicles by 2050: Popularizing Electrifi ed Vehicles
Aiming for a Decarbonized Society in 2050:
Leveraging Hydrogen Energy
Toyota regards hydrogen as a high-potential future
energy source and believes that FCEVs, with their
high capacity to contribute to society, are the ulti-
mate eco-cars. Toyota’s development of FCEVs
began even before the release of the Prius, back in
1992. We released the Mirai in Japan in December
2014 and in the United States and Europe the fol-
lowing autumn; currently, we offer the Mirai in a total
of eleven countries. In March 2018, Toyota
launched the Sora production model FC bus. We
expect to introduce over 100 of these buses, mainly
within the Tokyo metropolitan area, by the time of
the 2020 Tokyo Olympics and Paralympics.
To popularize FCEVs, we are aiming for annual
global sales of the Mirai and other FCEVs of over
30,000 units from around 2020. Going forward, we
plan to expand production facilities for core FCEV
components, namely fuel cell stacks and the high-
pressure hydrogen fuel tanks to meet growing
demand for FCEVs.
To realize a sustainable society, it will be impor-
tant to effectively use electricity and hydrogen
together in order to fully leverage CO2-free renew-
able energy sources. Hydrogen allows for the stor-
age and effi cient use of electricity derived from
fl uctuating natural energy sources. Furthermore,
hydrogen can be used as a direct energy source in
FCEVs and industrial applications. While hydrogen
will thus be highly useful going forward, realizing a
hydrogen-powered society will require a great deal
of time and investment. In addition, cooperation
with a diverse range of stakeholders will be indis-
pensable. Toyota performs a leading role in the
Hydrogen Council, a global initiative promoting
a united vision and long-term goals for the transition
to new energy using hydrogen, as well as Japan H2
Mobility, LLC, which aims to develop a network of
hydrogen stations across Japan. Through these and
other efforts, we are proactively contributing to the
creation of a hydrogen-powered society.
WEB
Toward Realizing a Decarbonized Society in 2050:
Use of Hydrogen Energy (Sustainability Data Book 2018,
pp. 100-102)
Innovating Powertrains to Enhance both Driving and
Environmental Performance
Toyota’s environmental technology strategy is based
on the three pillars of saving energy, using diverse
fuels, and the understanding that eco-friendly vehi-
cles can best help protect the environment if they
are in widespread use. We expect that 90% of the
vehicles we sell in 2030 will have conventional
engines (as gasoline-powered vehicles, HEVs or
PHEVs). As such, to reduce CO2 emissions, the
continued improvement of powertrain fuel economy
is vital.
Accordingly, Toyota is working to achieve both
excellent driving performance and excellent environ-
mental performance by remaking and signifi cantly
evolving its engines, transmissions, and hybrid tech-
nology through Toyota New Global Architecture
(TNGA), its program of structural innovation aimed
at making ever-better cars. Through development
under TNGA, we are thoroughly examining all
aspects of basic performance for opportunities for
improvement, including making components lighter
and more compact, creating vehicles with lower
centers of gravity, utilizing high-speed combustion
in engines, and employing more gears to make
transmissions more effi cient.
Toyota will continue to use TNGA-based modular
development to rapidly bring these powertrains to
numerous models. We plan to introduce these new
powertrains in 37 variations of 19 models by 2021.*
Plans call for expanding sales of such vehicles to
approximately 80% of all new vehicles sold in 2023
on a non-consolidated basis (in Japan, the United
States, Europe and China). We estimate that the
increased fuel economy of the new TNGA power-
trains alone will reduce the CO2 emissions from the
cars sold by Toyota on a non-consolidated basis in
2023 by at least 18%.
* Variations include FF vs. FR layouts, passenger vs. commercial
applications, conventional vs. hybrid vehicles, and differences in
torque capacity
Energy Use in a Sustainable Mobility Society
90% of Toyota Vehicles Sold in 2030 Will Have Conventional Engines
Introduction of TNGA Powertrains (as of February 2018)
Using electricity and hydrogen for a society built on diversified energy
Renewable
energy
Wind power
Solar power
City/home
BEVs/PHEVs
Power storage facilities
Electricity grid
Hydrogen
–Electricity
conversion
Thermal power
Industrial use
Fossil fuels
Hybrid cars
LNG
OIL
Electrolysis
Power-generator unit
Biomass
Sewage treatment
H2
Hydrogen tank
High-capacity,
long-term storage
Hydrogen grid
City/home
Oil refinery/chemical plant
City/home
H2
Automotive fuel
FCEV cars
and buses
Chemical plant
Energy flow
Electricity Hydrogen Fossil fuels
2030
HEVs
Electrified vehicles
>50%
BEV/FCEVs
>10%
90%
PHEVs
FCEVs
TNGA
powertrains
Vehicles with
conventional
engines
s
e
a
s
l
l
i
e
c
h
e
V
THS-II
(2.0L)
THS-II
(1.8L)
THS-II
(2.5L)
6MT
Direct
Shift-CVT
Multi-stage
THS-II
Direct
Shift-8AT
17 variations of 9 engines
10 variations of 4 transmissions
10 variations of 6 hybrid systems
BEVs
3.5 - liter
twin-turbo
Dynamic Force
Engine (2.5L)
Dynamic Force
Engine (2.0L)
2010
2020
2030
2050
14
TOYOTA Annual Report 2018
Direct
Shift-10AT
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Making Ever-better Cars: Continuing to Make Cars That Will Be Beloved
The automotive industry is in the midst of a period of
profound change. For Toyota to continue to grow
going forward, it must, above all, make its cars even
more appealing and continue to deliver cars that will
enhance users’ lives and be beloved by customers. As
information, intelligence, and electrifi cation technolo-
gies develop, the nature of mobility will surely change,
but Toyota will remain committed to ensuring that its
cars will be beloved as it makes ever-better cars that
are more convenient, safer, and more eco-friendly.
To this end, we are implementing structural innova-
tion across our global car making business. Namely,
we have launched Toyota New Global Architecture
(TNGA), under which we are changing our cars from
the basic architecture outward to greatly enhance
basic performance and product appeal. Building on
this foundation, we have also adopted a product-
based in-house company system aimed at creating
even more distinctive fi nished cars. We will continue
to reinforce both TNGA and the product-based
in-house company system, aiming to more quickly
respond to customer demand.
Since its founding, Toyota has made cars in line
with its Customer First policy. Through these efforts,
it has developed unique methods and values, such
as the Toyota Production System (TPS) and Kaizen,
which have been passed down as wellsprings of
competitive strength. By actively applying these
strengths at development and production preparation
sites going forward, we will endeavor to make ever-
better cars that surpass customer expectations.
TNGA So Far
TNGA is a program of structural innovation aimed at
making ever-better cars, starting by changing their
basic architecture. Through TNGA, we are completely
remaking the basic frames of our cars while dramatically
enhancing design to catch our customers’ eyes and
capture their hearts and improving basic perfor-
mance to provide a driving experience that custom-
ers will want to never end. At the same time, we are
advancing total optimization by pursuing smart shar-
ing, thereby improving effi ciency and reducing costs.
These efforts are greatly increasing our potential to
create cars that will be beloved by customers.
Building on the foundation provided by TNGA, the
in-house companies consider each region’s market
needs and consumer preferences to craft distinctive,
appealing cars that customers will love.
Toyota began its TNGA initiatives with the develop-
ment of the fourth-generation Prius (launched in
Japan in December 2015) and then applied them to
create two other mid-size models, the C-HR and
Prius PHV. We next applied TNGA to full-sized mod-
els, announcing the Camry and the Lexus LC and LS
in 2017 and the Crown and Corolla Sport in 2018.
While these cars share TNGA components, the char-
acter of each is completely distinct, as is immediately
apparent in terms of design and ride. The in-house
companies have created these distinctive cars to suit
different customer preferences, so that every cus-
tomer can fi nd a car they will love. Going forward, we
will expand TNGA to compact-class cars, as well, to
serve even more customers.
Moritaka Yoshida
Executive Vice President
Making Ever-better Cars: Toyota’s Approach and Structure
TNGA Product Roll-out
TNGA
Individual
optimization
Making
Aspects of
cars tailored
to customer
distinctive cars
tastes
Total optimization
Total
Making better
optimization
products and
through
practicing smart
standardiza-
sharing
tion
In-house Company System
Structure
Work Process
Car creation focused on each car type
Decision making by in-house company presidents
i
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p
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c
t
Planning
Design
Execution
Manufacturing
Production
engineering
One team
uniting four
functions
(cid:129) Faster decision making
(cid:129) Streamlined planning/
development
(cid:129) Reduced need to
re-do work
15
TOYOTA Annual Report 2018
Compact
class
Lexus
(premium class)
Full-size
class
Lexus LC
Lexus LS
Mid-size
class
Camry
Crown
Prius PHV
C-HR
Corolla
Sport
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Making Ever-better Cars: Continuing to Make Cars That Will Be Beloved
Until now, we have developed such different cars
separately. By implementing TNGA across the
Company, however, we are able to more quickly
introduce new models. And, by reinvesting the
resources saved through these initiatives in further
enhancing quality and product appeal, we are accel-
erating a virtuous cycle that enables us to deliver
ever-better cars even faster.
The Next Evolution of Making
Ever-better Cars
While we have thus made progress, certain areas
that still need work have also come to our attention.
As a result of our focus on improving performance
and product appeal, we have heard from some cus-
tomers that, while they can tell that our cars have
gotten better, they fi nd the prices rather high. To
ensure that we continue to provide cars that will be
irreplaceable and beloved by our customers, we will
push forward with further cost reductions.
For example, we are taking on new initiatives to
create individual project-oriented organizations that
cover everything from planning to manufacturing and
promoting quick judgment and quick decisions to
make ever-better cars cheaper, more quickly, and
more easily. At the same time, we are utilizing these
cross-functional organizations as channels to
advance human resource development and imple-
ment work style reforms.
Furthermore, through alliances with other compa-
nies and through our subsidiary Daihatsu Motor Co.,
Ltd., we are learning more effi cient development
methods and steadfastly applying Kaizen to make
ever-better cars that exceed customer expectations.
We also need mechanisms to ensure, from start to
fi nish, that we are making cars that are appealing
from the customer’s perspective. We are doing away
with the antiquated idea that it is only natural for quali-
ty products to be expensive and reforming our devel-
opment process to plan products from the customer’s
viewpoint, develop them to suit customer needs and
regional characteristics, and fi nally produce cars that
balance product appeal, specifi cations, and price.
Bringing the Toyota Production System
to Development
The TPS is a system for completely eliminating over-
burden and waste to improve productivity within fl ow
of things and people. Until now, the TPS has been
applied mainly at production sites, where it has been
refi ned and developed through many years of use.
Now, we are introducing the principles of the TPS at
development and manufacturing technology units.
One of the motivations behind this move is our strong
desire to develop our human resources in these units
by having them apply Genchi Genbutsu (onsite,
hands-on experience) to think about the cars they are
working on and the entire process from development
to production preparation. By doing so, we hope that
they will learn to completely eliminate waste.
As a model project, we have created a team con-
sisting mainly of young employees from design and
performance evaluation and production preparation
units, which develop vehicles, to implement the TPS
approach. Each day, the team members meet to
identify overburden and waste in the day’s work,
come up with ideas for improvement, and immedi-
ately put these ideas into action. This initiative has
only just begun, but already the team members more
deeply understand one another’s work, have identi-
fi ed redundancies and other waste in the operations
of their units, and are working as one to fi nd opportu-
nities for improvement.
I think that introducing the TPS in development
units will not only help shorten development lead
times and reduce costs, but will also contribute
greatly to human resource development. We will use
these initiatives to help make ever-better cars that will
be beloved by customers.
Making Ever-better Cars That Will Be Beloved
What Customers
Love about Cars
Fun of
driving
Comfort
Safety
Joy of
ownership
Lifestyle
enhancement
Cars that
will be beloved
by each individual
customer
Making Ever-better Cars
Planning and development in line with customer needs
and regional characteristics
Balance of product appeal, specifications, and price
Connected cars
Eco-cars
Social contribution
(commercial
vehicles)
Luxury vehicles
(Lexus)
New concept
cars
Welcab
Advanced safety
(automated
driving)
16
TOYOTA Annual Report 2018
Application of the TPS
New initiatives
Existing initiatives
Planning
Development
Production
preparation
Production
Customers
Introducing the TPS principles
Logistics
Suppliers
Identifying and eliminating waste
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Developing Our People and Our Cars: GAZOO Racing
“In an ideal world, machines would work just as we intend them
to. But when we actually try to run them, unforeseen results fre-
quently prove our human reasoning exceedingly shallow. And
there is no better way to test our cars and discover how to
improve them than auto racing.
Just as Olympic athletes give every last drop of effort to test
their strength, in racing, automobiles are pushed to the limit—
a point that is contested through progressive improvements and
lights up the hearts of motor racing fans.”
Through motor sports, Toyota aims to bring excite-
ment and joy to customers, fans, and communities
around the world. Above all, developing our people
and our cars in order to make and deliver ever-better
cars is the unwavering core of Toyota motor sports.
Motor Sports: In Our Roots
The above passage comes from the fi nal work of
Toyota founder Kiichiro Toyoda, “Auto Racing and
the Japanese Automobile Industry,” written shortly
before his death.
The demanding environment of competition will
drive the development of our people and cars—car-
rying on this belief, Toyota competes in a number of
types of auto racing.
In April 2017, ten years after our fi rst foray into the
Nürburgring 24 Hours race, we established GAZOO
Racing Company, creating a stronger framework for
an ongoing motor sports business and marking the
start of a new chapter.
The Road Builds the People,
and the People Build the Cars
One of the major competitions in which Toyota par-
ticipates is the FIA World Rally Championship (WRC).
Competitors in the WRC drive modifi ed production
cars on closed sections of public roads. They race
on bumpy unpaved roads, through high-speed cor-
ners on high mountain passes, and over icy patches
hidden beneath snow. In the words of Toyota presi-
dent Akio Toyoda, “Rallying—a form of racing that
takes place on all kinds of roads—is the perfect set-
ting to develop our people and cars.” We are apply-
ing the know-how, technologies, skills, and spirit
gained from these competitions to the cars we man-
ufacture for sale.
Kiichiro Toyoda,
Toyota’s founder
Toyota also competes in the FIA World Endurance
Championship (WEC), comprising the 24 Hours of Le
Mans and other endurance races around the world.
Toyota fi rst entered the 24 Hours of Le Mans in 1985
and took its fi rst win in 2018, its 20th time compet-
ing. Toyota’s two cars started the race at the very
front of the pack and held the top two positions all
the way to the end. This marks the fi rst time that a
Japanese driver in a Japanese car has won Le Mans.
In 2016, the Toyota team suffered a mechanical fail-
ure just three minutes before the end of the race. In
2017, they fi nished just 8th overall. Going into 2018,
they completely revamped their approach. The devel-
opment goal was changed from optimal lap time to
ensuring that the car could get back to the pit no mat-
ter what problems arose—in other words, to survive
no matter what. The team created a list of likely prob-
lems, and then made them happen on test courses,
practicing recovering using the car’s remaining func-
tions over and over. Doing so enabled the drivers,
mechanics and engineers to push further than ever
before and gave rise to Kaizen (improvement) based
on Genchi Genbutsu (onsite, hands-on experience).
Lastly, Toyota also competes in the 24 Hours of
Nürburgring endurance race. This race takes place
on the Nürburgring, one of the world’s most diffi cult
courses. Laid out to resemble ordinary European
country roads, the Nürburgring has an exceptionally
long circuit of 25 km, narrow track widths, a maxi-
mum altitude difference of around 300 m, and more
than 170 corners. Toyota’s team in this 24-hour
endurance race comprises mainly mechanics and
engineers who are regular Toyota employees. In
2014, all three of Toyota’s cars in the race won
“best-in-class” awards, including that for the
SP-PRO class. The Lexus LFA, in which president
Toyoda was a driver, fi nished 13th overall, taking the
top position in the SP8 class.
Evolving Ever-better Cars Using
Development Methods from Racing
One of Toyota’s new endeavors is the GR Super Sport
Concept. Under this concept, Toyota is using mostly
the same main parts and development methods as
those employed for the race cars that it competes
with in the WEC and applying technologies honed
through racing to create a next-generation sports car.
Because race cars are expensive, advancing
development without making prototypes is funda-
mental. We therefore mainly use model-based devel-
opment, in which the entire car is considered and
simulations are run to determine how each function
should run to achieve the desired performance. This
approach enhances performance in less time and
with fewer people even before prototypes are built.
Within the fi nely subdivided organizational structure
for mass-market car development, which is opti-
mized for effi ciency, this kind of approach—looking
at the entire car to optimize each function in concert
with all the others—is diffi cult to apply. Using model-
based development, Toyota aims to further acceler-
ate efforts to make ever-better cars.
WEB
TOYOTA GAZOO Racing
President Toyoda (left), the late master driver Hiromu Naruse
“I don’t want to be preached to about cars by some-
one who doesn’t even know the basics of driving. We
test drivers put our lives on the line to make better
cars. You’ve got to understand that.” This frank
remark in 2002 was the start of a teacher-pupil rela-
tionship between the late master driver Hiromu
Naruse and Akio Toyoda. Wanting to be able to cor-
rectly judge cars, Toyoda joined Naruse’s team and
commenced training. In 2007, at Naruse’s sugges-
tion, Toyota decided to enter the 24 Hours of
Nürburgring endurance race. GAZOO Racing, made
up of Toyota employees, competed for the fi rst time
that year. It was there that Toyoda, then an executive
vice president, fi rst used the pseudonym Morizo to
compete as a driver.
As Naruse said, “There is no better way to pass on
skills and develop people than racing. What’s impor-
tant isn’t discussing automaking with words and
data, but getting in the actual car, touching it, and
discussing with the hands and eyes.” To put this sen-
timent into action, Toyota uses modifi ed versions of
its production cars in the 24 Hours of Nürburgring
endurance race. By understanding the strengths and
the areas that need improvement of the base cars,
then making them into vehicles that are reliable even
in the most extreme driving conditions, we aim to
learn precisely what it is that makes a car good. This
know-how is then utilized in the GR sports car series.
17
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Steady Progress toward Automated Driving
Toyota’s ultimate goal in developing automated driv-
ing technologies is not simply to create autonomy for
cars, but to create a world in which mobility is safe,
convenient, enjoyable, and available to everyone.
Safety is our topmost priority as we pursue this goal.
We believe that we can enhance safety by building
partnerships between drivers and their cars.
Even in a future where some driving is automated,
we believe that cars will continue to be loved. Toyota
believes that safe and fun automated driving technol-
ogies have the potential to expand freedom of
movement for all and bring cars and people even
closer together.
Toyota’s Unique Approach to
Automated Driving
Since the 1990s, Toyota has engaged in automated
driving technology research and development aimed
at contributing to the complete elimination of traffi c
casualties. Today, Toyota is advancing development
in this area based on its Mobility Teammate Concept.
This concept is an expression of Toyota’s unique
approach to automated driving and is built on the
belief that people and vehicles can work together in
the service of safe, convenient, and effi cient mobility.
As implied by the word “teammate,” the inclusion
of people is central to this approach, based on our
belief that people should have choices. The true
value of automated driving technologies, we believe,
lies not in the technology itself, but in the social value
it creates—helping to create a rich mobility society in
which everyone can enjoy safe, convenient, and
enjoyable transportation.
Moreover, we believe that the most important fac-
tor in the development of automated driving is safety.
This conviction is in line with our long-held stance of
prioritizing the improvement of safety with the ultimate
goal of eliminating casualties from traffi c accidents.
Achieving this goal will require the development of
safe driving systems that are highly effective in real-
life situations as quickly as possible and the promo-
tion of their uptake as widely as possible. To do this,
Toyota is promoting, in parallel, the development of
advanced safety technologies and the utilization of
insights gained through such development to further
develop popularized technologies. We have already
put our active safety technologies on the market,
packaged as Toyota Safety Sense and Lexus Safety
System+. Such packages are now offered as stan-
dard or optional features on almost all new Toyota
and Lexus models sold in Japan, Europe, and the
United States. Furthermore, with the new Lexus LS,
the brand fl agship, we have introduced the Lexus
Safety System + A, which includes such new fea-
tures as Active Steering Assist, a world-fi rst technol-
ogy, and Front Cross Traffi c Alert (FCTA), which helps
prevent collisions at intersections. In systems for the
non-luxury market, as well, we have introduced the
second-generation Toyota Safety Sense, featuring
expanded hazard detection for a broadened scope
of protection against severe accidents.
Toyota’s Specifi c Approaches to
Automated Driving
Under the Mobility Teammate Concept, Toyota is
developing automated driving systems based on two
approaches: Guardian and Chauffeur.
The Guardian approach assumes that a human will
drive the car, while automated driving systems oper-
ating alongside the driver provide support, such as
added braking, acceleration and steering, when
needed, for example, when the car is in danger of
collision, to protect the car’s passengers and people
outside the car. Chauffeur refers to automated driving
as defi ned by the U.S. non-profi t SAE International,
where the autonomy drives for extended period of
time instead of the human driver.
The Mobility Teammate Concept offers the freedom
of choice by allowing users to enjoy the benefi ts of
automated driving technologies while still allowing
them to drive safely, enjoyably and freely when they
wish. Drivers will be able to choose Chauffeur mode
for some situations, such as expressway and long-
distance travel. Guardian mode will always attempt to
protect people both inside and outside the car, wheth-
er the human or the automated Chauffeur is driving.
TRI Advanced Safety Research Vehicle Demo
(YouTube, 3:57)
Our Guiding
Development Philosophy
Developing and Promoting the Use of Advanced Technologies
Advanced
technologies
A u t o m a t e d d r i v i n g
t e c h n o l o g i e s
N e x t g e n e r a t i o n
A d v a n c e d d r i v i n g
a s s i s t a n c e t e c h n o l o g i e s
N e w L e x u s L S
Society with
zero traffic accident
casualties
Toyota’s unique approach to
automated driving is built on
the belief people and vehicles
can work together in the ser-
vice of safe, convenient, and
effi cient mobility.
L e x u s L S
S t e p u p
(cid:115)(cid:0)(cid:41)(cid:78)(cid:84)(cid:69)(cid:71)(cid:82)(cid:65)(cid:84)(cid:69)
(cid:115)(cid:0)(cid:50)(cid:69)(cid:68)(cid:85)(cid:67)(cid:69)(cid:0)(cid:83)(cid:73)(cid:90)(cid:69)
(cid:115)(cid:0)(cid:50)(cid:69)(cid:68)(cid:85)(cid:67)(cid:69)(cid:0)(cid:67)(cid:79)(cid:83)(cid:84)
Popularized
technologies
T o y o t a
S a f e t y S e n s e
S t e p u p
N e x t g e n e r a t i o n
l o w i n g
F o l
g e n e r a t i o n
18
TOYOTA Annual Report 2018
Gill A. Pratt
Fellow
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Steady Progress toward Automated Driving
Developing Automated
Driving Technologies on
Two Complementary Fronts
Toyota is advancing the development of automated
driving technologies on two fronts: personally owned
vehicles (POVs) and Mobility as a Service (MaaS).
By offering affordable, on-demand mobility, MaaS
will provide platforms that facilitate the road transport
of more people around the world—for example,
people with disabilities, people who cannot afford to,
or prefer not to, own a car—as well as the logistics
and commerce that are deeply embedded in, and fun-
damental to, everyday life. These on-demand mobility
services will transform cities, helping to invigorate
economies and make society more effi cient. To
expand such possibilities of mobility, Toyota has
unveiled e-Palette, a concept vehicle envisioned for
the 2030s that is fully electric and specifi cally
designed for MaaS applications.
MaaS platforms will also produce the vast
amounts of data essential to automated driving
technologies, helping to reduce the per passenger-
mile cost of transportation. Lower costs, in turn, will
generate unprecedented consumer demand, provid-
ing more data and leading to a virtuous cycle of
enhancing mobility, safety, and convenience. As a
result, automated driving technologies will develop
further and be widely adopted by society and con-
sumers. In this way, the introduction of MaaS will
help us achieve the important benefi ts of automated
driving faster than personal car ownership alone.
In terms of evolving POVs, in January 2018, Toyota
Research Institute, Inc. (TRI) unveiled its next-gener-
ation automated driving research vehicle, Platform
3.0. Built on the Lexus LS 600hL, Platform 3.0 uses
a LIDAR* system made by U.S.-based Luminar
Technologies to “see” 200 meters in all directions,
making it one of the most perceptive automated driv-
ing research vehicles on the road. On top of being
highly functional, the vehicle’s cameras and other
sensors are arranged in a compact package styled
to harmonize with the design of the Lexus LS. The
integrated packaging of the automated driving equip-
ment also makes it easy to reproduce and adapt in
order to build a fl eet at scale.
* LIDAR: Short for light detection and ranging. Technologies or devices that
use lasers to gather 3D information about the surrounding environment.
Three Types of Intelligence and Initiatives
Aimed at Commercialization
Realizing automated driving will require three types of
intelligence. The fi rst is driving intelligence, entailing tech-
nologies to accurately understand the vehicle’s position
and fi nd safe routes. The second is connected intelli-
gence technology to transmit vast volumes of data
about constantly changing road and traffi c conditions to
and from cars. The last is interactive intelligence, based
on Toyota’s belief that, in addition to improving the tech-
nologies themselves, it is vital to optimize the user inter-
face to maximize automated driving technologies’
usability. TRI is advancing research on all three types of
intelligence toward the creation of systems that enable
people and cars to work together.
Achieving fully autonomous driving will require deep
learning using data on the surrounding environment pro-
vided by autonomous sensors, such as cameras,
RADAR, and LIDAR, to learn how to avoid collisions.
Chainer, a neural network platform developed by
Preferred Networks, in which Toyota is an investor, will
provide one of the necessary deep learning frameworks.
Chainer was written using CUDA, a computing platform
that runs on graphics processing units (GPUs) devel-
oped by the major GPU manufacturer NVIDIA.
To accelerate the development of intelligence soft-
ware, in March 2018, Toyota established Toyota
Research Institute Advanced Development (TRI-AD)
in Tokyo. Applying the ideas of the Toyota Production
System (TPS) to software development, TRI-AD is
creating an integrated software development model
spanning research to commercialization. Furthermore,
in the advanced development of automated driving
technologies, Toyota has invested in ALBERT Inc.,
aiming to accelerate technological development by
reinforcing big data analytic processes.
As for the creation of systems that enable people
and cars to work together, we are studying such
questions as how to create user interfaces that
enable the safe transition from human-controlled to
system-controlled driving, actively using simulated
experiments to test our ideas. These initiatives refl ect
TRI’s human-centric approach.
TRI-AD is advancing automated driving research
using Highway Teammate research vehicles, which we
aim to commercialize by around 2020. These vehicles
will enable driver-supervised automated driving on
expressways that includes merging onto and exiting
expressways, maintaining and changing lanes, and
maintaining appropriate distance from other vehicles.
Testing of Highway Teammate vehicles for use on
Japan’s Metropolitan Expressway and other particu-
larly diffi cult-to-drive types of expressway is ongoing.
Approach to Developing Automated Driving Technologies
Intelligence in Driving: The Potential of Deep Learning in Recognition Technology
n
o
i
t
a
m
o
t
u
a
f
o
l
e
v
e
L
Level 4
Level 3
Level 2
Fully automated
driving
Transport services
(MaaS)
Personally owned
vehicles (POVs)
Gradual improvement
Platform 3.0, Next-Generation Automated
Driving Research Vehicle
Limited
(Local laws; road, traffic, and environmental conditions; speed; driver; etc.)
Limitless
Developing POVs and transport services in parallel
(Recognition)
100％
70％
Previous
technologies
Deep
learning
AI technology (deep learning)
Recognition
using data
on entire
surroundings
Source: NVIDIA
Source: Google
Previous technologies
Works with less data,
but recognition is limited
Learns
features
from vast
volumes of
images
Data volume
Using
big data
Recognizes only
the edges of
white lines
(cannot detect
if edges are
blurred)
Recognizes
only individual
features
19
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Steady Progress toward Automated Driving
(3) Strengthen collaboration within the Toyota Group
in the domains of research and advanced
development.
(4) Recruit and employ top-level engineers globally
while cultivating and coordinating the strong
talent within the Toyota Group.
WEB
TRI-AD
TRI Establishes Corporate
Venture Capital Fund
In July 2017, TRI established Toyota AI Ventures
(TAIV), a venture capital fund to invest in start-ups.
TAIV invests in recently established promising start-
ups in the fi elds of artifi cial intelligence, data and
cloud technology, autonomous mobility, and robot-
ics. In just its fi rst year, TAIV invested in 11 start-ups
in the United States, the United Kingdom, and
Israel.
In July 2018, TAIV unveiled a “call for innovation”
global program to support start-ups in partnership
with TRI. This program is designed to spur entrepre-
neurial innovation by identifying key technology
gaps and putting out a call for solutions from start-
ups. Promising start-ups in the areas of the identi-
fi ed gaps will have the opportunity to secure from
$500,000 to $2,000,000 in venture capital funding
from TAIV as well as the possibility of partnering on
a proof of concept project with TRI.
Going forward, TAIV will boldly take on diffi cult
1,000-member Intelligence Software
Development Company Launched
Doctors Pratt (left) and Kuffner
Toyota established Toyota Research Institute-
Advanced Development (TRI-AD), a new, Tokyo-
based company, to accelerate its advanced
development of automated driving technologies. The
new company will be funded by Toyota, Aisin Seiki
Co., Ltd., and DENSO Corporation, which have con-
cluded a memorandum of understanding to invest
a total of more than ¥300 billion in development.
Dr. James Kuffner, former Chief Technology Offi cer
of TRI, will lead TRI-AD as its CEO. The new compa-
ny is targeting a staff of approximately 1,000 employ-
ees, comprising staff sourced from Toyota, TRI, Aisin,
and DENSO along with new hires. A next-generation
company test model, the company is formulating
new ways of doing work and internal rules, including
making English its internal business language.
TRI-AD is applying the Toyota Production System
(TPS) approach to software development in order to
achieve the following key objectives.
(1) Create a smooth software pipeline from research
to commercialization, leveraging data-handling
capabilities.
(2) Strengthen coordination with TRI and effi ciently
link research results to product development.
challenges, expanding collaboration with and
support for highly motivated entrepreneurs.
WEB
TAIV
TRI to Open Automated Vehicle
Test Facility in Michigan
TRI is building a new automated vehicle test course
on a 60-acre site within the existing test course of
Michigan Technical Resource Park (MITRP) in
Ottawa Lake, Michigan. The new facility will be used
to safely replicate demanding “edge case” driving
scenarios that are too dangerous to perform on
public roads, accelerating the development of
Guardian Mode research vehicles. The course will
include models of congested urban environments,
slick surfaces, entrance and exit ramps, and a four-
lane divided highway.
for use in developing and testing automated driving
systems designed to ensure the stability of auto-
mated vehicles in myriad situations that are not
always testable in the real world. Developed by the
CVC, it is open source and hosted on GitHub.2
CARLA offers a multitude of realistic environmental
conditions and is designed to be extended and
easily modifi ed to fi t specifi c project needs.
1. Open source: A model of software development in which the
source code is made broadly available for use and distribution by third
parties.
2. GitHub: A web-based software development platform. Users can
upload and publish their work (such as program code or design
data), enabling collaborative review with the millions of developers
on the platform and project management.
TRI Supporting the Development of
Open-Source Automated Driving Simulator
TRI has donated $100,000 to the Computer Vision
Center (CVC) at the Universitat Autònoma de
Barcelona to promote the development of Car
Learning to Act (CARLA), an open source1 automat-
ed driving simulator. CARLA is a simulation platform
The Toyota AI Ventures team and its portfolio companies
visited TMNA headquarters in Plano, TX to participate in the
fi rst-ever Toyota Startup Summit.
20
TOYOTA Annual Report 2018
TRI Accelerating Robotics
Research Using Simulators
TRI is accelerating robotics research—one of the
purposes of its establishment—by actively utilizing
experiments run with simulators. Many robots cur-
rently in use are controlled using visual information.
Toyota is adding force and touch sensors to allow
robots to better understand their contact with other
objects and more precisely adjust the force they
apply. Through this research, we hope to quickly
move toward a world where indoor robots assist
people in daily life.
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Solutions for the Problems Facing a Graying Society: Partner Robots
Since the announcement of its development vision
in 2007, Toyota has been applying its technology
and know-how developed for industrial robots
used in vehicle manufacturing to create partner
robots that offer support for everyday living, work-
ing to bring these robots to market. So-called ser-
vice robots for non-industrial use include robots
designed to inspect infrastructure or provide emer-
gency response. Toyota, however, is focusing on
partner robots that work closely with people to
provide support for living. Japan is rapidly graying,
and its working-age population is decreasing.
Because of these shifts, the burden on the work-
ing-age population of supporting the elderly is
forecast to balloon to approximately three times
the 2000 level by 2050. Toyota aims to use partner
robots to instead keep this burden at around the
2000 level.
Under its vision for partner robot technology,
“freedom of mobility for all, and the joy of self-reli-
ance,” Toyota is working to bring to market prod-
ucts that can facilitate medical care, nursing, and
independent living.
Developing Core Technologies and Advancing Commercialization Based on Real, On-site Needs Gleaned through Ongoing Testing
Rehabilitation Robot: Welwalk
WW-1000
The Welwalk WW-1000 is designed
to aid in the gait training of patients
with lower limb paralysis due to
stroke or other factors. The robot
offers a range of rehabilitation sup-
port functions based on motor learn-
ing theory, including the ability to
adjust the diffi culty level of gait train-
ing to suit the patient and to provide
feedback about the patient’s gait
characteristics.
From May 2017, we began
accepting rental orders for the robot
from medical institutions, aiming to
rent out 100 units. In September
2017, we began coordinating with
companies that have strengths in the
medical fi eld to supply the robots to
hospitals and other facilities.
Social Robot: Pocobee
Human Support Robot: HSR
Humanoid Robot: T-HR3
Pocobee is designed to delay the
onset and progression of dementia
and reduce the burden on caregiv-
ers, all increasingly important issues
in light of the forecast increase in
Japan’s number of individuals with
dementia. Verifi cation tests of
Pocobee have been ongoing since
2016 at the National Center for
Geriatrics and Gerontology. Going
forward, to help users maintain their
health, we will enhance Pocobee’s
functions that provide goal-oriented
encouragement to users to do more
based on their individual abilities.
By having caregivers and robots
work together, we hope to safely
increase the activity of the elderly
and improve their vital functions
while helping to alleviate the burden
on caregivers.
The human support robot (HSR) can
perform such basic tasks as picking
up, fetching, and handing over
objects and is being developed and
tested for use in such areas as main-
taining senior independence and
health management.
Since 2015, Toyota has provided
this robot to universities and other
research institutions as a platform in
order to foster a development com-
munity and accelerate development
through open innovation.
The HSR was selected as a stan-
dard platform for the RoboCup@
Home competition at RoboCup2017
Nagoya Japan, and will be provided
as the platform robot for the World
Robot Summit 2018 and 2020
Partner Robot Challenge.
In November 2017, Toyota
announced the T-HR3 humanoid
robot. Controlled remotely by a
human operator, the entire body of
this robot moves smoothly using
Torque Servo technology.
The T-HR3 is a partner robot suit-
ed for use in ordinary living environ-
ments. Able to perform fi ne hand
and arm movements, walk like a
human, and retain its balance using
its entire body, the robot is being
developed to safely work alongside
humans in a range of scenarios,
such as the home and medical insti-
tutions, in order to provide gentle
support for everyday living.
In the future, we hope to expand
its applications to include work at
disaster sites, construction sites, and
even in space.
Commercialization Schedule and Development Status
2018
Around 2020
Gait training robot
The rehabilitation robot Welwalk WW-1000 received medical device certifi cation in November 2016. Rental of the robot began in autumn 2017.
Social robot
We are developing and testing the robot with the aim of both improving the vital functions of elderly users and reducing the burden on caregivers, working to quickly bring it to commercialization.
Target areas
Senior Life Support, Medical Support
Independence Support, Welfare Support
Standing personal mobility robot We are testing the robots at test-ride events in retail facilities and on public roads as we work with the police and government to expand areas where they can be used.
Senior Life Support
Balance training assist robot
The robot is in use at 21 medical institutions across Japan for clinical research. We are incorporating feedback from doctors, physical therapists, and other users as we work to bring the product to market using Genchi Genbutsu (onsite, hands-on experience).
Medical Support
Human support robot (HSR) We are creating a development community based on open innovation to accelerate technological development and testing aimed at commercialization.
Independence Support
Development
Pilot testing
Commercialization
21
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Connectivity, automated driving, and electrifi cation
are expanding the possibilities of cars
Toyota works closely with customers to
understand their needs and wants,
striving to enhance the freedom and fun of
Mobility for All
22
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Toyota’s Business Innovation:
Organizational Framework, the Toyota Group, External Collaboration, and TPS and Cost Reduction
There Is Always a Better Way: Revising
Our Organizations and Businesses
To further advance the goals of making ever-better
cars and human resource development, Toyota has
been revising its organizational framework and exec-
utive lineup. In terms of organizational framework,
Toyota introduced region-based management in
2011, followed by a business unit system in 2013. To
place greater priority on our Customer First policy
and facilitate quick judgment, quick decisions and
quick action based on Genchi Genbutsu (onsite,
hands-on experience), in April 2016 we established
product-based in-house companies, considerably
changing the orientation of our business structure
from a focus on functions to a focus on products. In
September 2017, we established a new company,
EV C.A. Spirit, to advance the development of basic
structural technologies for electric vehicles via an
approach that is open to the participation of other
companies. Through these and other measures, we
have proactively advanced business innovation.
Toyota has also been working to appoint diverse
human resources to the right positions in its execu-
tive lineup. Transcending practices of the past, efforts
have included appointing our fi rst non-Japanese
executive vice president in 2015 and fi rst executive
vice president whose career began on the factory
fl oor in 2017.
Today, the global Toyota Group* sells more than 10
million new vehicles per year. While maintaining and
developing Toyota’s existing businesses, we must boldly
move forward to transform into a mobility company.
Refl ecting the Toyota Group’s determination to
take on this era of profound transformation, in 2018
Toyota moved up the timing for changing its execu-
tive lineup from April to January. To transform the
roles and awareness of executives, we revised the
position of executives within the Company and, from
the perspective of putting the right people in the right
places, appointed people with high levels of exper-
tise, regardless of time with the company or age.
Going forward, all executives and employees will
continue to take on new challenges, acting with the
constant awareness that there is always a better way.
* Toyota Group (16 companies): A corporate group centered on Toyota
Motor Corporation and the company from which it emerged, Toyota
Industries Corporation. The Group comprises Toyota Industries
Corporation, Aichi Steel Corporation, JTEKT Corporation, Toyota
Auto Body Co., Ltd., Toyota Tsusho Corporation, Aisin Seiki Co.,
Ltd., DENSO Corporation, Toyota Boshoku Corporation, Towa Real
Estate Co., Ltd., Toyota Central R&D Labs., Inc., Toyota Motor East
Japan, Inc., Toyoda Gosei Co., Ltd., Hino Motors, Ltd., Daihatsu
Motor Co., Ltd., Toyota Housing Corporation, and Toyota Motor
Kyushu, Inc.
Speed and Openness, Home and Away
With the advance of electrifi cation, automation, con-
nectivity, and other technologies, the automotive
industry has now entered a new phase of coopera-
tion and competition that is transcending industry
lines. At the same time, the global automotive market
is expected to see continued expansion, chiefl y in
emerging nations and regions, such as Africa. In
order to bring together the strengths of the whole
Group and effectively use resources in this era of pro-
found transformation, we are applying a “home and
away” perspective as we rebuild the business struc-
ture of the Toyota Group as a whole.
“Home” refers to operations and regions in which
we can add value ourselves through Genchi
Genbutsu (onsite, hands-on experience) and in which
we have competitive advantages over our rivals.
“Away,” meanwhile, refers to operations and regions
in which we will work with other companies that have
more advantages than we do.
Rather than advancing alone, Toyota is bringing
together the full strength of the Group. We aim to identify
the strengths that make up each company’s “home” turf
to increase productivity and thereby reinforce the com-
petitive strength of the Group as a whole.
Our approach to alliances with partners outside the
Group is the same. Rather than seeking equity-based
business scale expansion, we aim to realize a better
mobility society through speedy, open collaboration
with partners who share our aspirations.
Returning to Our Fundamentals to Blaze
the Trail Forward
Toyota strives to effi ciently and quickly produce vehi-
cles of sound quality, one at a time, that fully satisfy
Major Actions to Strengthen the Toyota Group from 2016 to Present
June 2018
May 2018
Toyota and DENSO reach basic agreement to consolidate their electronic component operations at DENSO
Toyota and Toyota Tsusho reach basic agreement to consider the transfer of all Toyota’s sales and marketing operations in
African markets to Toyota Tsusho
Toyota Autoparts Philippines, Inc. is made a subsidiary of Aisin to strengthen its competitiveness in the manual transmission
business
March 2018
Toyota Research Institute-Advanced Development, funded by Toyota, Aisin, and DENSO, is established to accelerate
the advanced development of automated driving technologies
September 2017 EV C.A. Spirit Corporation, funded by Mazda, DENSO, and Toyota, is established to jointly develop technologies for electric vehicles
* Subaru, Suzuki, Daihatsu and Hino joined the project effective December 28, 2017
December 2016
Toyota and Daihatsu launch Emerging-market Compact Car Company
January 2016
Toyota makes Daihatsu a wholly owned subsidiary to strengthen small car operations
23
TOYOTA Annual Report 2018
customer requirements. Underlying these efforts is
the Toyota Production System (TPS). The TPS is
based on the two concepts of Jidoka (automation
with a human touch) and Just-in-Time. Jidoka entails
that when a problem occurs, the equipment stops
immediately, preventing the production of defective
products. Just-in-Time means that, in each process,
only what is needed, when it is needed, and in the
amount needed is produced or transported. The
complete elimination of waste, achieved by applying
these two pillars, improves productivity, ultimately
reducing costs.
In this era of profound transformation for the auto-
motive industry, we must anticipate customer needs
to provide more personalized mobility services more
directly and in real time. In other words, we must cre-
ate a world in which the services that are needed are
provided when needed and as needed. This is pre-
cisely the essence of Just-in-Time.
The TPS and its approach to cost reduction are
wellsprings of competitive strength and unique
advantages for Toyota. Thoroughly honing these
strengths will be essential to Toyota’s future survival.
In January 2018, we established the TPS Group
with the aims of redoubling TPS efforts outside of
manufacturing divisions and enhancing competitive
strength and productivity. In June, we placed our
logistics division within the TPS Group. We are accel-
erating Company-wide initiatives that position the
TPS as the core of corporate management.
Toyota Production System
Jidoka
Just-in-Time
(automation with a
human touch)
Quality must be built in
during the manufacturing
process
Making or transporting
only what is needed,
when it is needed, and in
the amount needed
Cost reduction through the complete
elimination of waste
More details
Bringing the Toyota Production System to
Development, p. 16
More details
Applying the TPS and Accelerating Business
Innovation, p. 37
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Developing People: The True Source of Toyota’s Competitiveness
The heart and spirit of Toyota’s manufacturing is the
Toyota Way, and its method of creating things is the
Toyota Production System. Unwaveringly applying
these basic tenets in our global operations, we have
made prioritizing quality, reducing costs, and improv-
ing productivity our mission as we constantly work to
mass-produce ever-better cars at lower cost. Toyota’s
dedication to developing its people makes attaining
these goals possible and is the true source of the
Company’s competitiveness. To get through this once-
in-a-century period of profound transformation and
continue growing, it is imperative that we continually
nurture our people, creating strong manufacturing
teams that can handle each diffi culty and change by
taking on challenges with skill and perseverance.
The Toyota Production System (TPS) is based on
the concepts of Jidoka (automation with a human
touch) and Just-in-Time. Aiming to make only what is
needed, when it is needed, and in the amount need-
ed and to make ever-better products at lower cost,
we work to reduce costs through the complete elimi-
nation of waste. At Toyota, we believe that if we’re
not moving forward, we’re moving backward, and
that what comes after Kaizen (improvement) is
Kaizen—in other words, Kaizen never ends.
Accordingly, developing human resources who can
independently identify issues, think of solutions, and
continuously work toward improvement is essential.
For Toyota, Jidoka means that a machine must
come to a safe stop whenever an abnormality
occurs. Achieving Jidoka therefore requires building
and improving systems by hand until they are reliable
and safe. First, human engineers meticulously build
each new line component by hand to exacting stan-
dards, then, through incremental Kaizen, steadily
simplify its operations. Eventually, the value added by
the line’s human operators disappears, such that any
operator can use the line to produce the same result.
Only then is the Jidoka mechanism incorporated into
actual production lines. Through the repetition of this
process, machinery becomes simpler and less
expensive and maintenance becomes less time con-
suming and costly, enabling the creation of simple,
slim, fl exible lines that are adaptable to fl uctuations in
production volume.
The work done by hand in this process is the bed-
rock of engineering skill. Machines and robots do not
think for themselves or evolve on their own. Rather,
they evolve as we transfer our skills and craftsman-
ship to them. As shown in the example of the callig-
raphy robot, below, before transferring skills to
machines or robots, it is essential to fi rst develop
them in people.
Craftsmanship is achieved by learning the basic
principles of manufacturing through manual work,
then applying them on the factory fl oor to steadily
make improvements. Employees continually hone
their craftsmanship while striving to weave the
insights and techniques that doing so provides into
machines to create new technologies and manufac-
turing methods that, in turn, lead to new insights that
improve their skills. This virtuous cycle of improve-
ment in both human skills and technologies is the
essence of Toyota’s Jidoka. I think that advancing
Jidoka in this way helps to reinforce both our manu-
facturing competitiveness and human resource
development.
Human wisdom and ingenuity is indispensable to
delivering ever-better cars to customers. Going for-
ward, we will maintain our thoroughgoing dedication
to constantly developing human resources who can
think independently and implement Kaizen.
Mitsuru Kawai
Executive Vice President
Creating by Hand: The Foundation of Engineering Skill
Human Skill (Craftsmanship) Is Necessary to Teach the Robot to Write Beautifully
Virtuous Cycle of Skills and Technologies
Building Production Lines by Hand
(cid:129) Learning the basic principles of manufacturing (cid:129) Applying them on-site
Accumulation of Kaizen
Craftsmanship
Jidoka / Karakuri*
Simple, slim, fl exible lines
* Karakuri refers to mechanisms that do not use electricity or other energy sources
No calligraphy
experience
With calligraphy
experience
Striving to create new technologies
and manufacturing methods
Human
Robot
Robot being trained
24
TOYOTA Annual Report 2018
Virtuous Cycle
Skill
Technology
Craftsman-
ship
Digitization,
automation,
mass-
production
Reinforcing manufacturing competitive-
ness and human resource development
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Message from the CFO
My role as CFO and advisor to the president is to keep
watch over Toyota’s overall management, maintain
daily communication with the president, come up with
ways to realize the president’s aspirations, priorities,
and strategies, and give directions as appropriate.
Sustainably increasing corporate value is the duty
of all companies. As a mobility company, Toyota is
facing a once-in-a-century period of profound trans-
formation and therefore must advance aggressive
forward-looking investment and business model
innovation. Given this, I would like to share some of
my thoughts on the factors that will be important to
maintain and increase corporate value going forward.
Raising the Value of Our Human
Resources
A company’s true value lies not in its factories,
machinery, or other physical assets, but in the people
who use them. One of my favorite sayings is from
Shingen Takeda, a prominent 16th century lord and
general, and literally translates as “people are the
stone walls.” In other words, just as rocks of various
shapes and sizes can together form a strong stone
wall, developing and effectively deploying human
resources with diverse values and expertise is essen-
tial to building a strong company.
Management determines the Company’s strategy
and explains the hurdles that must be overcome to
bring out the best efforts of employees so that every-
one at Toyota will work hard and support one another
as a team. Employees hone their respective expertise
and carry out their responsibilities as professionals.
Such daily efforts are the essential elements of
increasing corporate value and the foundation that
supports Toyota.
Koji Kobayashi
Executive Vice President,
Member of the Board of Directors
President Toyoda (center) and vice presidents (from left) Tomoyama, Kawai, Leroy, Kobayashi, Terashi, and Yoshida
Cost Reduction, the TPS, and Next-
generation Investment
Maximizing Group Competitiveness
Cost reduction and the Toyota Production System
(TPS) are Toyota’s core strengths and traditions,
handed down from our predecessors. However, I
think that the true essence has not fully infi ltrated
Toyota at a more fundamental level.
Examining costs means examining actions. We
carefully scrutinize all costs, from each pencil used by
each individual all the way up to major projects, using
the full extent of our knowledge and abilities to deter-
mine which parts of our actions are wasteful so that
we can improve them. When I visit Toyota’s worksites
and talk with employees, I do my utmost to encour-
age them each to develop an awareness of costs
and a concrete view of the value appropriation for
specifi c things and actions. By implementing such
activities globally, we are securing the funds to sus-
tainably invest in electrifi cation, automation, connec-
tivity, and other next-generation technologies and to
accelerate investment in partner companies and
start-ups.
The Toyota Group has grown by building on the foun-
dation laid by Kiichiro Toyoda and constantly pushing
to do better. The strength of the Toyota Group is in its
shared set of basic values. As we prepare to take on
new rivals in as-yet unknown arenas, it is more impor-
tant than ever to return to the roots of the Group and
gather our full strength. By having each Group com-
pany focus on its particular areas of expertise, we will
further enhance our competitiveness. To do this, we
are rebuilding our existing frameworks. I think that the
common values shared by the companies of the
Group are what will enable the success of the “home
and away” strategy espoused by President Toyoda.
To achieve this strategy, we will reduce consolidated
fi xed costs, streamline development and investment,
reinforce cost competitiveness, and advance human
resource development to achieve greater results from
the efforts of the Group’s employees and thereby
increase the corporate value of the Group as a whole.
Going forward, I will be sure to report the yearly
progress and results of such initiatives to our inves-
tors and shareholders.
25
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toward the Mobility Society of the Future Management Team Connectivity Marketing Electrifi cation Ever-better Cars GAZOO Racing Automated Driving Partner Robots Business Innovation Developing People Message from the CFO Capital Policy
Capital Policy
Financial Strategy
Three Pillars
The three pillars of Toyota’s fi nancial strategy are sta-
bility, growth, and effi ciency. By maintaining adequate
stability while pursuing growth and effi ciency over the
medium and long terms, we aim to build a robust
fi nancial foundation to support sustainable growth.
1. Stability: Securing Liquidity
Having experienced fi nancial crises and the Great
East Japan Earthquake, in order to ensure business
continuity in any business environment, we maintain
a suffi cient level of liquidity to cover half a year of
both fi xed costs in the automotive business and refi -
nancing requirements in the fi nancial services business.
Ample liquidity is essential to maintaining a full line-up
in each region and retaining the ability to respond to all
options and opportunities in this era of profound trans-
formation in mobility. As such, it is a vital part of the foun-
dation supporting the creation of corporate value.
Dividend per Share and Net Income
(cid:2) Interim dividend (cid:2) Year-end dividend (cid:3) Net income (right axis)
2. Growth: Aggressive Forward-looking Investment
The auto industry is on the verge of a once-in-a-cen-
tury turning point. We believe that technological inno-
vation in such areas as connected technologies,
automated driving, sharing, and electrifi cation will be
key to the mobility of the future. Every year, we spend
more than 1 trillion yen on R&D. By enhancing effi -
ciency in existing areas, we are strategically increas-
ing the portion of R&D spending allotted to
cutting-edge fi elds like the above.
Furthermore, we are investing in new initiatives.
Examples of such investment include the establishment
of TRI-AD, which is funded by Toyota, DENSO and Aisin;
investment in start-ups through the Mirai Creation Fund
and Toyota AI Ventures; and investment in such busi-
ness partners as Grab, ALBERT, and Uber.
3. Effi ciency: Enhancing Capital Effi ciency
Using cost reduction and the thorough application of
the TPS, we are reinforcing the profi t structure and
securing funds to invest in advanced and cutting-
edge technologies.
development in existing fi elds, making equipment
more compact, shortening processes, and facilitating
faster response to changes in production quantities.
Furthermore, in addition to sustainably increasing ROE
by repurchasing shares, we are strengthening invest-
ment management by regularly evaluating the rationality
of our strategic shareholdings in terms of the needs of
our business strategies and economic utility. In these
ways, we are striving to enhance capital effi ciency.
Diversifying Our Funding Base
To diversify our means of funding, in 2015 Toyota
issued approximately 500 billion yen in Model AA
class shares to raise funds for long-term R&D activi-
ties and build a base of medium- and long-term
shareholders. The funds raised are being invested in
R&D related to advanced and cutting-edge technolo-
gies, such as fuel cells, infrastructure, information
technology, and highly intelligent mobility.
In capital expenditure other than R&D expenses, as
In 2018, we issued 2 billion U.S. dollars in international
well, we are carefully assigning priority to individual
projects and tracking their progress while advancing
measures to improve productivity, such as streamlining
straight bonds, our fi rst ever such offer overseas. The
proceeds are being used as operating capital and for
capital expenditure. Through such measures, we are
diversifying our funding base to ensure that we can
respond on all fronts to new challenges and opportuni-
ties in this time of profound transformation in mobility.
Shareholder Return
We prioritize shareholder return as part of our capital
policy. In principle, shareholder return is determined
on the basis of net income.
We strive to maintain stable and sustainable divi-
dend payments based on a benchmark consolidated
dividend payout ratio of 30% while considering such
factors as our fi nancial results, investment plans, and
liquidity. For the fi scal year ended March 31, 2018,
we paid an annual dividend of 220 yen per share.
We fl exibly consider the repurchase of shares in
light of long-term capital effi ciency and changes in
our business environment. For the fi scal year ended
March 31, 2018, we paid out 549.9 billion yen for the
repurchase of shares, resulting in a total of 74 million
shares acquired. Combined with dividends, this
brought the total annual shareholder return to 1.2 tril-
lion yen, for a consolidated payout ratio of 48.1%.
Going forward, we will strive to further improve net
income and ensure ongoing shareholder return
through dividends and share repurchases.
(Yen)
250
200
150
100
50
0
100
35
65
45
25
20
50
30
20
50
20
30
90
60
30
200
125
75
165
100
65
210
110
210
110
220220
120
100
100
100
Total Shareholder Return and Total Return Ratio
(cid:2) Total amount of dividends (common shares) (cid:2) Total amount of dividends (First Series Model AA Class Shares)
(cid:2) Share repurchase for shareholder returns (cid:2) Share repurchase to avoid dilution of common shares
(Billions of yen)
1,600
(Billions of yen)
2,500
2,000
1,500
1,000
500
0
-500
1,400
1,200
1,000
800
600
400
200
0
Repurchase in connection with
the disposition of shares to
Toyota Mobility Foundation
180.0
180.0
522.9
Repurchase in connection with
the issuance of First Series
Model AA Class Shares
1,800
349.9
293.3
631.3
’15/3
924.6
42.5%
639.3
2.4
645.5
449.9
4.9
627.5
549.9
7.4
1,200.1
642.6
’16/3
’17/3
’18/3
1,287.2
1,082.4
1,200.1
55.6%
59.1%
48.1%
(Years ended)
’09/3
’10/3
’11/3
’12/3
’13/3
’14/3
’15/3
’16/3
’17/3
’18/3
(Years ended)
’14/3
Total amount of payment
(billions of yen)
Payout ratio*
313.5
141.1
156.8
157.7
285.0
522.9
631.3
645.5
627.5
642.6
—
67.4%
38.4%
55.6%
29.6%
28.7%
29.0%
28.3%
34.6%
26.1%
Total shareholder
return*1 (billions of yen)
Total return ratio*1, 2
702.9
38.5%
* Payout ratio: This is the ratio of (i) the amount of dividend per common share to (ii) net income attributable to Toyota Motor Corporation per common share.
*1 Excluding repurchase made to avoid dilution of common shares.
*2 Total Return Ratio: This is the ratio of (i) the sum of dividends on both common shares and the First Series Model AA Class
Shares and the amount of repurchase of common shares for shareholder return to (ii) net income attributable to Toyota
Motor Corporation.
26
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Initiatives for Sustainable Growth
Toyota strives to implement a positive cycle of making ever-better cars that exceed customer expectations,
enriching lives of communities, being rewarded with the smiles of customers and communities and thus rein-
forcing its stable base of business. Through this cycle, Toyota aims to grow sustainably in concert with society.
Even as the business environment transforms and new challenges arise, Toyota will leverage the qualities,
honed over time, that make it unique as it shifts to a longer term strategic perspective in order to maintain and
enhance this positive cycle. By doing so, we will provide value to society in the forms of safety and peace of
mind, environmental sustainability and Waku-doki (excitement and exhilaration that wows you).
Business
Environment
Changes
Individual desires/
Societal demands
Lifestyle changes
Environmental
problems
Urbanization
Technological
innovation
Intelligent
technologies
IoT
Robotics
Fruit
Ever-Better
Cars
Fruit
Enriching
Lives of
Communities
Trunk
Stable Base
of Business
Roots
Toyota Values
The Five Main Principles of Toyoda
The Guiding Principles at Toyota
The Toyota Way
Strategic Shifts
Electrifi cation
Information
(Connectivity)
Intelligence
(Automated driving, AI)
Zero CCO2
emissiions
The Value Toyota Creates
Elimination of
traffic accident
casualtiess
Freedom of
m
mobility for everyone
Safety and
Peace of Mind
Toyota Safety Sense
(Collision Avoidance
Support Package)
Integrated Safety
Management Concept
Raising awareness of road
safety and ecological driving
Welcab
Personal mobility
ITS Connect
(road/car and car/car
communications)
Environmental initiatives
Environmental
Sustainability
Automated driving
Mobility Service
Platform (MSPF)
Ever-Better Cars
Enriching Lives of
Communities
Passing down
expertise
Toyota Production
System (TPS)
Human Support
Robot
Supporting sports
Waku-doki
(excitement and exhilaration
that wows you)
Vehicle
development
Recycling
Renewable
energy
MIRAI (FCEV)
Prius PHV
Lexus
Net popositiveve
society y
in harmonony
with naturere
Working toward
a hydrogen society
FC buses
Motor sports
27
TOYOTA Annual Report 2018
citement
inging
g
Brin
he exc
the
of cars
o
the w
rs to
world
onder and
New won
Ne
exhilar
aration
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Initiatives for Sustainable Growth
Toyota’s Approach to Sustainable
Growth
In cooperation with global society, Toyota is working
to contribute to the sustainable development of soci-
ety and the planet through its business activities. At
the root of these efforts are the Five Main Principles of
Toyoda, passed down as the core of Toyota’s corpo-
rate management, and the Guiding Principles, which
lay out how Toyota should be as a company. Based
on our experiences with the 2008 global fi nancial cri-
sis and the series of recalls in 2010, in 2011 we
announced the Toyota Global Vision, which lays out
what the Company should strive for going forward.
This approach and these values align with the aims
of the United Nations Sustainable Development Goals
(SDGs), promulgated in January 2016. In particular,
Toyota is using its strengths to help to solve global
social issues by reducing traffi c casualties (contribut-
ing to SDG 3), building sustainable cities and commu-
nities and improving mobility (SDG 11), and taking
action to address climate change (SDG 13).
Toyota regards addressing environmental issues as
an especially key aspect of sustainability. To help
achieve the Paris Agreement goal of keeping global
warming below 2°C, we are promoting initiatives
under the Toyota Environmental Challenge 2050. In
2018, we established medium-term goals under the
Challenge and are ambitiously working to effect posi-
tive change for the environment.
Furthermore, Toyota places value on all stakehold-
ers in the management of its businesses and strives
to maintain and develop sound relationships with
stakeholders through open, fair communication in
order to contribute to the sustainable development of
society and the planet. As our businesses develop,
our communications with stakeholders also broaden
and deepen. By working always hand-in-hand with
stakeholders and growing together, Toyota consis-
tently provides its three forms of value.
WEB
Stakeholder Engagement (Sustainability Data Book 2018,
p. 73)
Toyota’s Implementation Framework
As the automotive industry faces a once-in-a-century
period of profound transformation, quicker decision
making and greater operational effi ciency than ever
before are essential. At the same time, stakeholder
expectations are rising with regard to non-fi nancial
issues, particularly environmental (E), social (S), and
governance (G) issues.
To respond to these changes, Toyota established
the Sustainability Meeting in 2018. Chaired by the
chief risk offi cer, the meeting’s members include
Outside Directors and Outside Audit & Supervisory
Board Members. The meeting discusses non-
fi nancial considerations from a range of angles and
examines the overall direction of management.
Under the Sustainability Meeting, we have also set
up an ESG Committee, in which the operating offi -
cers in charge lead discussions aimed at promptly
solving specifi c issues.
Helping Solve Global Social Problems
Together with Our Stakeholders
Implementation Framework
Selected Initiatives Aimed at Contributing to the SDGs
Reducing traffi c
casualties
(SDG 3)
Improved mobility
and sustainable
urban development
(SDG 11)
Addressing
climate change
(SDG 13)
Active safety using Toyota Safety Sense
(cid:129) The number of vehicles with Toyota Safety Sense has surpassed
8 million globally (as of April 2018)
Realizing a prosperous mobility society while eliminating dispari-
ties in mobility through the Toyota Mobility Fund.
(cid:129) Example: Project to promote the shift to multiple transportation
modes in Vietnam
Toyota Environment Challenge 2050: New Vehicle Zero CO2
Emissions Challenge
(cid:129) Accelerate development with the goal of selling more than 5.5 million elec-
trifi ed vehicles in 2030 (including more than 1 million BEVs and FCEVs)
Local communities
Global society
Media
National and
local governments
Environmental
Sustainability
Safety and
Peace of Mind
Waku-doki
(excitement and
exhilaration that
wows you)
Economic
organizations
Industry
organizations
Employees
NPOs/NGOs
International
organizations
Academic
communities
Research
institutions
Shareholders’ Meeting
Board of Directors
Sustainability Meeting
Chairman: Chief Risk Offi cer (Executive Vice
Shareholders
President)
Attendees: Outside Directors, full-time and Outside
Audit & Supervisory Board Members,
relevant offi cers
Disclosure
Committee
ESG Committee
• Disclosure control
systems
• Environmental,
social, and gover-
nance issues
• Risk management
Business
partners
Customers
28
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Corporate Philosophy
The Guiding Principles at Toyota and
Their Implementation
The Five Main Principles of Toyoda have been
passed down since Toyota’s founding as the core of
its management. These principles embody the think-
ing of the Toyota Group’s founder, Sakichi Toyoda. In
1992, they were reorganized in light of changes in
society and business structure to create the Guiding
Principles at Toyota.
The Guiding Principles at Toyota lay out the kind of
company we want to be. Building on this, the Toyota
Way 2001 (hereinafter called the “Toyota Way”) was
established in 2001, laying out values and business
practices that everyone working at Toyota around the
world should embrace. The Toyota Way thus clearly
articulates and facilitates the global sharing of values
and practices that had previously been passed down
only as implicit knowledge.
The Toyota Way’s main pillars are the concepts of
continuous improvement and respect for people, with
the keywords of taking on challenges, Kaizen, and
Genchi Genbutsu (onsite, hands-on experience)
under the former and respect and teamwork under
the latter. Continuous improvement means never
being satisfi ed with the status quo and always doing
our utmost to create even greater added value.
Respect for people entails respect for all our stake-
holders and working to achieve business success by
promoting the growth of employees.
Rewarded with a Smile by Exceeding
Your Expectations.
The Toyota Global Vision
The Toyota Global Vision, published in March 2011,
was created through exhaustive, Company-wide
reexamination and discussion of the kind of company
that Toyota aspires to be and the values that it
esteems in light of the Company’s losses following
the global economic crisis of 2008 and the series of
recalls in 2010. We are implementing a positive cycle
of making ever-better cars that exceed customer
expectations, enriching lives of communities, being
rewarded with the smiles of customers and commu-
nities and thus reinforcing our stable base of busi-
ness. By maintaining and enhancing this cycle, we
aim to continuously provide value to society in the
forms of safety and peace of mind, environmental
sustainability and Waku-doki (excitement and exhila-
ration that wows you) while enhancing Toyota’s cor-
porate value.
WEB
Corporate Principles
(Sustainability Data Book 2018, p. 5)
The Two Pillars and Five Keywords of the Toyota Way
Toyota Global Vision
Continuous
Improvement
Respect
for People
Respect
We respect others, make every effort
to understand each other, take
responsibility and do our best to
build mutual trust.
Teamwork
We stimulate personal and profes-
sional growth, share the opportuni-
ties of development and maximize
individual and team performance.
Challenge
We form a long-term vision, meeting
challenges with courage and
creativity to realize our dreams.
Kaizen
We improve our business operations
continuously, always driving for
innovation and evolution.
Genchi Genbutsu
We practice genchi genbutsu... go
to the source to fi nd the facts to
make correct decisions, build con-
sensus and achieve goals at our
best speed.
Rewarded with a smile
by exceeding your expectations
Fruit
Ever-Better Cars
Develop vehicles which
exceed customer expectations
Fruit
Enriching Lives of
Communities
Contribute to communities
Contribute to the future of mobility
Toyota will lead the way to the future of mobility,
enriching lives around the world with the safest
and most responsible ways of moving people.
Through our commitment to quality,
constant innovation and respect for the planet,
we aim to exceed expectations
and be rewarded with a smile.
We will meet challenging goals
by engaging the talent and passion of people,
who believe there is always a better way.
29
TOYOTA Annual Report 2018
Sustainable
Growth
Trunk
Stable Base of
Business
Roots
Toyota Values
The Five Main Principles of Toyoda /
The Guiding Principles at Toyota /
The Toyota Way
WEB
Toyota Global Vision
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Corporate Governance
Fundamental Approach
Toyota regards sustainable growth and the stable,
long-term enhancement of corporate value as essen-
tial management priorities. Building positive relation-
ships with all stakeholders (including shareholders,
customers, business partners, local communities,
and employees) and consistently providing products
that satisfy customers are key to addressing these
priorities. To this end, Toyota constantly seeks to
enhance corporate governance. Moreover, the
Company complies with the general principles of the
Corporate Governance Code promulgated in June
2015. The specifi cs of these efforts are discussed by
the Sustainability Meeting and reported to the Board
of Directors.
Business Execution and Supervision
With the aim of achieving the Toyota Global Vision,
Toyota has been implementing ongoing revisions in
its operational framework in order to quickly respond
to the rapid, unprecedented changes occurring in the
external environment. Toyota introduced region-
based management in 2011, followed by the busi-
ness unit system in 2013 and the in-house company
system in 2016. In April 2017, to accelerate decision
making and business execution, Toyota more clearly
delineated the roles of the Members of the Board of
Directors as decision making and oversight, and the
role of operating offi cers as business execution.
In 2018, to accelerate business execution in con-
cert with other personnel and organizational changes,
we moved up the timing for changing the operating
offi cer lineup from April to January, revised the struc-
ture of our corporate management-related divisions,
and reorganized the Japan Sales Business Group,
shifting from a focus on channels to a focus on
regions. These efforts have yielded a business
Toyota’s Corporate Governance (Emphasizing Frontline Operations + Multidirectional Monitoring)
Toyota is a company with an Audit & Supervisory Board. Three of the nine members of Toyota’s Board of Directors are outside members, and three of the six members of its
Audit & Supervisory Board are outside members. In addition to auditing carried out by the Audit & Supervisory Board and an external accounting auditor, Toyota incorporates
the perspectives of diverse stakeholders, including outside experts, to deliberate on and monitor management and corporate conduct.
Appointment
Audit & Supervisory Board
(More than half of the Members are outside
Audit & Supervisory Board Members)
External Accounting Auditor
Audit for consolidated fi nancial
statements and internal control
over fi nancial reporting
Shareholders’ Meeting
Appointment
Board of Directors
(including outside directors)
Audit
Decision making and management oversight
Submission/Report
Supervise
Operating Offi cers
Operational Execution
Audit
Head Offi ce
Business Units
In-house
companies
Supervise
Sustainability Meeting
Governance and risk management
Suggestion
Executive Appointment Meeting/
Executive Compensation Meeting
International Advisory Board
Labor-Management Council/
Joint Labor-Management
Round Table Conference
Advice
Dialogue
Audit
Submission/Report
Submission/Report
Disclosure Committee
Disclosure control systems
Internal Auditing Department
Internal control systems
framework able to make decisions at points closer to
customers and front-line workplaces.
The operating offi cers—mainly the president and
executive vice presidents, to whom authority is dele-
gated by the Board of Directors—work closely with
the business units (the in-house companies and
Business Planning & Operation Unit) to realize prompt
decision making and move forward with initiatives
toward sustainable growth and the medium- to long-
term improvement of corporate value. As part of the
management oversight of operations, the
Sustainability Meeting deliberates the corporate
governance structure under which such initiatives are
carried out.
Toyota has also established an International
Advisory Board, comprising experts from around the
world. The board provides advice on management
issues from a global perspective as needed. Toyota
also deliberates on and monitors management and
corporate conduct from the diverse stakeholder per-
spectives provided by a wide variety of meetings,
such as the Labor-Management Council/Joint Labor-
Management Round Table Conference.
Initiatives to Reinforce Corporate Governance
2003
Reduced the number of directors (from 58 to 27)
Established the position of managing offi cer
(equivalent to operating offi cer)
2011
Reduced the number of directors (from 27 to 11)
Established the position of senior managing offi cer
2013 Appointed outside directors
2015
Appointed a non-Japanese executive vice president
Implemented measures to comply with the Corporate
Governance Code
2016 Adopted the in-house company system
2017 Clarifi ed the roles of the directors and operating offi cers
2018 Established the Sustainability Meeting
30
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Corporate Governance
Board of Directors
Toyota’s Board of Directors comprises nine members,
three of whom are outside members. The Members
of the Board of Directors are selected based on com-
prehensive consideration of suitability with the aim of
ensuring prompt, appropriate decision making and
appointing the right person to the right position.
Toyota believes that it is crucial to appoint individuals
who comprehend and are capable of putting into
practice its core concepts of making ever-better cars
and Genchi Genbutsu (onsite, hands-on experience).
Moreover, these individuals must be able to contrib-
ute to decision making aimed at sustainable growth
into the future. Toyota’s Executive Appointment
Meeting, half the members of which are Outside
Members of the Board of Directors, makes recom-
mendations to the Board of Directors regarding such
appointments. In order to ensure that outside per-
spectives are adequately refl ected in management
decision making, the Company has three Outside
Members of the Board of Directors, all of whom are
registered as independent offi cers with the relevant
fi nancial instruments exchanges. When selecting
Outside Directors who will serve as independent offi -
cers, Toyota considers candidates in line with the
requirements set forth in the Companies Act and the
standards of independence established by the rele-
vant fi nancial instruments exchanges. Toyota’s
Outside Members of the Board of Directors draw on
their broad experience and insight, including their
respective fi elds of expertise, to inform decision mak-
ing from a perspective that is independent of busi-
ness execution.
Audit & Supervisory Board
Toyota has adopted an Audit & Supervisory Board
system. The six Audit & Supervisory Board Members
(including three outside members) play a key role in
Toyota’s corporate governance by undertaking audits
in line with the audit policies and plans established by
said board. Toyota’s appointments to the Audit &
Supervisory Board are based on the belief that candi-
dates must offer broad-ranging experience and
insight, particularly in their respective fi elds of exper-
tise, and be able to audit business execution and
advise management from a fair and neutral stand-
point. Toyota’s Executive Appointment Meeting, half
the members of which are Outside Members of the
Board of Directors, makes recommendations to the
Audit & Supervisory Board regarding such appoint-
ments. Three individuals, all of whom are registered
as independent offi cers with the relevant fi nancial
instruments exchanges, have been appointed as
Outside Audit & Supervisory Board Members. When
selecting Outside Audit & Supervisory Board
Members, Toyota considers candidates in line with
the requirements set forth in the Companies Act as
well as the standards of independence established by
the relevant fi nancial instruments exchanges.
Remuneration of Members of the Board
of Directors and Audit & Supervisory
Board Members
Basic remuneration and bonuses for Members of the
Board of Directors are effectively linked to corporate
performance while refl ecting individual job responsi-
bilities and performance. Remuneration standards in
each member’s home country are also taken into
account when determining remuneration amounts
and methods. Bonuses are paid based on the rele-
vant fi scal year’s consolidated operating income,
comprehensively taking into account dividends, the
levels of bonuses for employees, trends at other
companies, medium- to long-term business perfor-
mance and past remuneration. Because the role of
Outside Members of the Board of Directors includes
monitoring and supervising management from an
independent standpoint, they are not paid bonuses.
Director remuneration and bonuses are limited to the
scope determined by resolution of the Shareholders’
Meeting and decided by the Board of Directors with
reference to proposals submitted by the Executive
Compensation Meeting, half the members of which
are Outside Members of the Board of Directors.
Remuneration for Audit & Supervisory Board
Members consists only of fi xed basic payments and
does not include bonuses. As a result, this remunera-
tion is not readily impacted by business performance,
helping to ensure independence from management.
Remuneration for Audit & Supervisory Board
Members is determined by the Audit & Supervisory
Board within the scope determined by resolution of
the Shareholders’ Meeting.
Analysis and Evaluation of the
Effectiveness of the Board of Directors
Based on instruction given by the Chairman of the
Board of Directors, the Secretariat of the Board of
Directors conducts quantitative analyses of the exe-
cution of the Board of Directors’ duties, followed by a
survey of the members of the Board of Directors and
Audit & Supervisory Board on the execution of such
duties and its oversight. Furthermore, based on the
results of this survey, the secretariat conducts individ-
ual interviews with the members of the Board of
Directors, including its outside members and the
Outside Members of the Audit & Supervisory Board.
The Secretariat of the Board of Directors compiles
the results of these efforts and presents them to the
Chairman of the Board of Directors, after which they
are reported to and discussed by the Board of
Directors. In fi scal 2018, these evaluations found that
the Board was effective. The insights gleaned from
these evaluations regarding accelerating decision
making and business execution oversight are being
used in fi scal 2019 to further improve effectiveness.
Fundamental Approach to and
Maintenance of Internal Control Systems
Basic Stance on System for Ensuring Appropriate
Business Operations
Toyota and its subsidiaries work to foster a sound
corporate culture based on the Guiding Principles at
Toyota and the Toyota Code of Conduct. Toyota inte-
grates the principles of problem identifi cation and
Kaizen into its operational processes and continuous-
ly strives to develop employees who will put these
principles into practice.
System to Ensure Appropriate Operations
Toyota endeavors to maintain and properly operate a
system for ensuring the appropriateness of business
operations as a corporate group in accordance with
its Basic Policies on Establishing Internal Controls.
Each fi scal year, Toyota inspects the maintenance
and implementation of internal controls to confi rm
that the organizational units responsible for imple-
menting internal controls are functioning autono-
mously and enhancing said controls as necessary.
The fi ndings of these inspections are reviewed by the
Sustainability Meeting and Board of Directors.
Corporate Structure (as of June 14, 2018)
Institutional design
Company with an Audit &
Supervisory Board
Directors
(Outside directors)
Audit & Supervisory Board
Members
(Outside members)
9 (3)
6 (3)
Term of offi ce for directors
1 year
Voluntary committees
Executive Appointment Meeting
Executive Compensation Meeting
Public accounting fi rm
PricewaterhouseCoopers Aarata LLC
WEB
Corporate Governance Report
31
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors
Respect for Human Rights and SCM Working to Better the World around Us
Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Messages from the Outside Directors
Messages from the Outside Directors
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Remaining Irreplaceable by Leading the Way
to the Mobility Society of the Future
The Five Keywords of the Toyota Way Are the
Core of Future Success
The Boldness, Steadfastness, and Courage
to Thrive over the Next Century
Teiko Kudo
Sir Philip Craven
Ikuro Sugawara
The auto industry is at a once-in-a-century turning point. Serving as
an outside director at such a time is a tremendous responsibility, but
the chance to push forward as part of the Toyota team is also very
rewarding.
I feel a strong affi nity with Toyota’s approach of maintaining its
monozukuri (manufacturing) core while incorporating technological
innovations and continuously evolving as well as its aspiration as a
mobility company to create a world where everyone can move about
freely and enjoyably.
As an outside director, I will represent the perspectives of Toyota’s
broad range of stakeholders, including shareholders, users, and soci-
ety at large. By doing so, I will strive to help ensure that Toyota will
continue to play a major part in sustainable global development and
provide irreplaceable value to society over the next 100 years.
At the Ordinary General Shareholders’ Meeting I experienced the
indomitable spirit of Toyota both from the shareholders and also from
the senior executives.
What attracted me to work with Toyota? It is this human spirit, this
passion and the basic principles which underpin TMC and are so
fundamental to its future success.
From my experience, if you choose to ignore the basic principles upon
which you are founded, you will be in trouble sooner rather than later.
These principles are laid out in the fi ve keywords of the Toyota Way.
The spirit of Challenge leading to the creation of opportunities and
Kaizen, continual improvement, are crucial in the 21st century.
Genchi Genbutsu—get to the root cause, the source—then we can
move forward together. Respect is not a given right but has to be
earned by everyone. And,Teamwork—always giving to the team and
the team then gives back to you! It is great to be on board!
32
TOYOTA Annual Report 2018
Over the past century, global competition has whittled down the
number of companies in the auto industry to just a few major players.
In just the past few years, however, a number of companies from
other fi elds have entered the industry in quick succession. This is
because the scope of the industry is rapidly expanding, refl ecting a
change in the very defi nition of an automobile—from a means of
transport with an engine and four wheels to a mobile space providing
comfort and serving as an information hub.
To survive the next century, Toyota will need the boldness to let go
of its past successes and move forward, the steadfastness to safe-
guard the sources of its true strength, and the courage to leap into
new, unfamiliar fi elds, like mobility as a service (MaaS). Bringing to
bear my experience in government and an unfettered perspective, I
will do my utmost to contribute to the creation of such a new Toyota.
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Corporate Governance
Board of Directors and Audit & Supervisory Board Members (As of June 14, 2018)
Chairman of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
Apr. 1969 Joined TMC
Jun. 1998 Member of the Board of Directors of TMC
Jun. 2001 Managing Director of TMC
Jun. 2003 Senior Managing Director of TMC
Jun. 2005 Executive Vice President of TMC
Jun. 2012 Vice Chairman of TMC
Jun. 2013 Chairman of TMC (to present)
Takeshi Uchiyamada
[Position and areas of
responsibility]
Frontier Research Center
(Chairman)
Koji Kobayashi
[Position and areas of
responsibility]
Chief Financial Offi cer
Chief Risk Offi cer
Apr. 1972 Joined TMC
Jun. 2004 Executive Director of DENSO Corporation
Jun. 2007 Senior Executive Director, Member of the Board of Directors of
DENSO Corporation
Jun. 2010 Executive Vice President of DENSO Corporation
Jun. 2015 Vice Chairman of DENSO Corporation
Feb. 2016 Advisor of TMC
Apr. 2017 Senior Advisor of TMC
Jan. 2018 Executive Vice President of TMC (to present)
Jan. 2018 Member of the Board of Directors of DENSO Corporation
Jun. 2018 Retired as Member of the Board of Directors of
DENSO Corporation
Jun. 2018 Member of the Board of Directors and Executive Vice President
of TMC (to present)
Ikuro Sugawara
Outside and
Independent Director
Apr. 1981 Joined Ministry of International Trade and Industry
Jul. 2010 Director-General of the Industrial Science and Technology Policy
and Environment Bureau, Ministry of Economy, Trade and Industry
Sep. 2012 Director-General of the Manufacturing Industries Bureau, Ministry
of Economy, Trade and Industry
Jun. 2013 Director-General of the Economic and Industrial Policy Bureau,
Ministry of Economy, Trade and Industry
Jul. 2015 Vice-Minister of Ministry of Economy, Trade and Industry
Jul. 2017 Retired from the Ministry of Economy, Trade and Industry
Aug. 2017 Special Advisor to the Cabinet (to present)
Jun. 2018 Outside Member of the Board of Directors of TMC (to present)
Vice Chairman of the Board of Directors
Member of the Board of Directors
Apr. 1977 Joined Toyota Motor Sales Co., Ltd.
Jun. 2007 Managing Offi cer of TMC
Sep. 2007 President of Toyota Motor North America, Inc.
Jun. 2009 Retired as President of Toyota Motor North America, Inc.
Apr. 2012 Senior Managing Offi cer of TMC
Jun. 2015 Member of the Board of Directors and Senior Managing Offi cer
of TMC
Apr. 2017 Vice Chairman of TMC (to present)
Shigeru Hayakawa
President, Member of the Board of Directors
Apr. 1984 Joined TMC
Jun. 2000 Member of the Board of Directors of TMC
Jun. 2002 Managing Director of TMC
Jun. 2003 Senior Managing Director of TMC
Jun. 2005 Executive Vice President of TMC
Jun. 2009 President of TMC (to present)
Akio Toyoda
Didier Leroy
[Position and areas of
responsibility]
Business Planning &
Operation (President)
Chief Competitive Offi cer
Shigeki Terashi
[Position and areas of
responsibility]
Advanced R&D and
Engineering Company
(President)
Powertrain Company
(Chairman)
Chief Safety Technology
Offi cer
Sep. 1982 Joined Renault S.A.
Aug. 1998 Retired from Renault S.A.
Sep. 1998 Joined Toyota Motor Manufacturing France S.A.S.
Sep. 1998 Vice President of Toyota Motor Manufacturing France S.A.S.
Jan. 2005 President of Toyota Motor Manufacturing France S.A.S.
Jun. 2007 Managing Offi cer of TMC
Jul. 2007 Executive Vice President of Toyota Motor Europe NV/SA
Jul. 2009 Chairman of Toyota Motor Manufacturing France S.A.S.
Jun. 2010 President of Toyota Motor Europe NV/SA
Jul. 2010 Retired as Chairman of Toyota Motor Manufacturing France S.A.S.
Apr. 2011 President and CEO of Toyota Motor Europe NV/SA
Apr. 2012 Senior Managing Offi cer of TMC
Apr. 2015 Chairman of Toyota Motor Europe NV/SA (to present)
Jun. 2015 Member of the Board of Directors and Executive Vice President
of TMC
Jun. 2017 Member of the Board of Directors and Executive Vice President
of TMC (to present)
Sir Philip Craven
Outside and
Independent Director
Oct. 1998 President of the International Wheelchair Basketball Federation
Dec. 2001 President of the International Paralympic Committee
Jul. 2002 Retired as President of the International Wheelchair Basketball
Federation
Sep. 2017 Retired as President of the International Paralympic Committee
Jun. 2018 Outside Member of the Board of Directors of TMC (to present)
Apr. 1980 Joined TMC
Jun. 2008 Managing Offi cer of TMC
Jun. 2008 Executive Vice President of Toyota Motor Engineering &
Manufacturing North America, Inc.
Apr. 1987 Joined Sumitomo Bank
Apr. 2014 Executive Offi cer of Sumitomo Mitsui Banking Corporation
Apr. 2017 Managing Executive Offi cer of Sumitomo Mitsui Banking
Corporation (to present)
May 2011 President and COO of Toyota Motor Engineering & Manufacturing
Jun. 2018 Outside Member of the Board of Directors of TMC (to present)
North America, Inc.
Apr. 2012 President and CEO of Toyota Motor Engineering & Manufacturing
North America, Inc.
Apr. 2012 President and COO of Toyota Motor North America, Inc.
Apr. 2013 Retired as President and CEO of Toyota Motor Engineering &
Manufacturing North America, Inc.
Apr. 2013 Retired as President and COO of Toyota Motor North America, Inc.
Apr. 2013 Senior Managing Offi cer of TMC
Jun. 2013 Member of the Board of Directors and Senior Managing Offi cer
of TMC
Jun. 2015 Executive Vice President of TMC
Jun. 2017 Member of the Board of Directors and Executive Vice President of
Teiko Kudo
Outside and
Independent Director
TMC (to present)
33
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Corporate Governance
Board of Directors and Audit & Supervisory Board Members (As of June 14, 2018)
Full-Time Audit & Supervisory Board Members
Outside Audit & Supervisory Board Members
Oct. 1972 Joined TMC
Jun. 2007 President of Toyota Motor Corporation Australia Ltd.
May 2014 Chairman of Toyota Motor Corporation Australia Ltd.
Dec. 2017 Retired as Chairman of Toyota Motor Corporation Australia Ltd.
Jun. 2018 Audit & Supervisory Board Member of TMC (to present)
Apr. 1970 Joined the Fuji Bank, Limited
Dec. 1973 Retired from the Fuji Bank, Limited
Apr. 1977 Assistant Lecturer of Faculty of Business and Commerce of
Keio University
Apr. 1982 Associate Professor of Faculty of Business and Commerce of
Keio University
Apr. 1993 Professor of Faculty of Business and Commerce of Keio
University
Jun. 2011 Outside Audit & Supervisory Board Member of TMC (to present)
Apr. 2013 Professor Emeritus of Keio University (to present)
Masahide Yasuda
Yoko Wake
Outside and
Independent Member
Apr. 1975 Joined TMC
Jan. 2009 President of Toyota Motor (China) Investment Co., Ltd.
Jun. 2009 Managing Offi cer of TMC
Apr. 2011 Retired as President of Toyota Motor (China) Investment Co., Ltd.
Jun. 2011 Audit & Supervisory Board Member of TMC (to present)
Jul. 2012 Prosecutor-General
Jul. 2014 Retired from Prosecutor-General
Sep. 2014 Registered as Attorney
Jun. 2015 Outside Audit & Supervisory Board Member of TMC (to present)
Masahiro Kato
Hiroshi Ozu
Outside and
Independent Member
Apr. 1983 Joined TMC
Jun. 2015 Audit & Supervisory Board Member of TMC (to present)
Yoshiyuki Kagawa
Nobuyuki Hirano
Outside and
Independent Member
Apr. 1974 Joined Mitsubishi Bank
Jun. 2001 Executive Offi cer of The Bank of Tokyo-Mitsubishi, Ltd.
Oct. 2005 Director of Mitsubishi UFJ Financial Group, Inc.
Jan. 2006 Managing Director of The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Oct. 2008 Senior Managing Director of The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Jun. 2009 Deputy President of The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Jun. 2009 Managing Offi cer of Mitsubishi UFJ Financial Group, Inc.
Oct. 2010 Deputy President of Mitsubishi UFJ Financial Group, Inc.
Apr. 2012 President of The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Apr. 2012 Director of Mitsubishi UFJ Financial Group, Inc.
Apr. 2013 President & CEO of Mitsubishi UFJ Financial Group, Inc.
Jun. 2015 Director, President & Group CEO of Mitsubishi UFJ
Financial Group, Inc. (to present)
Apr. 2016 Chairman of the Board of Directors of Bank of
Tokyo-Mitsubishi UFJ, Ltd.
Apr. 2018 Company name changed from The Bank of
Tokyo-Mitsubishi UFJ, Ltd. to MUFG Bank, Ltd.
Jun. 2018 Outside Audit & Supervisory Board Member of TMC (to present)
34
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Toyota Environmental Challenge 2050 and 2030 Milestone
Toyota Environmental Challenge 2050
Toyota has long carried out a wide range of initiatives aimed at addressing a host of mounting environmental
problems, including extreme weather phenomena attributable to greenhouse gases, biodiversity loss due to
development, and water shortages due to population growth. Toyota announced the Toyota Environmental
Challenge 2050 in October 2015. In addition to continuing efforts to reduce the environmental burden attribut-
able to automobiles to zero, we have set ourselves six challenges aimed at helping to build a sustainable world
through initiatives that will positively impact the earth and society.
Achieving the Toyota Environmental Challenge 2050: The 2030 Milestone
In December 2017, Toyota announced a new medium- to long-term initiative centered on the development and
rollout of electrifi ed vehicles to help realize the targets of the Toyota Environmental Challenge 2050. This initiative
will focus on popularizing electrifi ed vehicles in the decade from 2020 to 2030. The 2030 Milestone indicates
the progress we aim to have made as of 2030 toward the six challenges of the Toyota Environmental Challenge
2050. We are advancing these initiatives in concert with the Toyota Environmental Action Plan, which lays out
specifi c action plans and targets for every fi ve-year period, to contribute to the realization of a sustainable society.
Milestones for 2030, on the Way to Achieving
the Toyota Environmental Challenge 2050
Toyota Environmental Challenge 2050
Challenge 1
New Vehicle Zero CO2 Emissions Challenge
Reduce global average CO2 emissions during operation from
new vehicles by 90% from Toyota’s 2010 global level
Toyota Environmental Challenge 2050
Challenge 2
Life Cycle Zero CO2 Emissions Challenge
Completely eliminate all CO2 emissions from the entire vehicle life cycle
2030 Milestone
Toyota Environmental Challenge 2050
Challenge 3
Plant Zero CO2 Emissions Challenge
(cid:129) Reduce CO2 emissions by 25% or more over the entire vehicle life cycle compared
Achieve zero CO2 emissions at all plants worldwide by 2050
2030 Milestone
to 2013 levels by promoting activities for the milestones of Challenges 1 and 3 and initiatives
2030 Milestone
(cid:129) Record annual global sales of more than 5.5 million electrifi ed vehicles,
including more than 1 million zero-emission vehicles (BEVs and FCEVs)
35% or more from 2010 levels
Reduce global average CO2 emissions from new vehicles (g-CO2/km)
(note that this is an estimate and results may vary depending on market conditions)
Toyota Environmental Challenge 2050
Challenge 4
Challenge of Minimizing and Optimizing Water Usage
Minimize water usage and implement water discharge management
based on individual local situations
2030 Milestone
(cid:129) Implement measures, on a priority basis, in the regions where the water environment is consid-
ered to have a large impact
Water quantity: Complete measures at the 4 challenge-focused plants
Water quality: Complete impact assessments and countermeasures at all of the 22
in North America, Asia, and South Africa
plants where used water is discharged directly into rivers in North America, Asia, and Europe
(cid:129) Disclose information appropriately and communicate actively with
local communities and suppliers
with support from stakeholders, such as suppliers, energy providers, infrastructure developers,
governments, and customers
(cid:129) Reduce CO2 emissions from global plants by 35% compared to 2013 levels
2050
2030
2030
MILESTONE
MILESTONE
Toyota Environmental Challenge 2050
Challenge 5
Challenge of Establishing a Recycling-based Society
and Systems
Promote global deployment of end-of-life vehicle treatment
and recycling technologies and systems developed in Japan
2030 Milestones
(cid:129) Complete establishment of battery collection and recycling systems globally
(cid:129) Complete set up of 30 model facilities for appropriate treatment and recycling of
end-of-life vehicles
35
TOYOTA Annual Report 2018
Toyota Environmental Challenge 2050
Challenge 6
Challenge of Establishing a Future Society in
Harmony with Nature
Connect nature conservation activities beyond the Toyota Group and
its business partners among communities, with the world, to the future
2030 Milestone
(cid:129) Realize “Plants in Harmony with Nature”—12 in Japan and 7 overseas—
as well as implement activities to harmonize with nature in all regions where Toyota operates in
collaboration with local communities and companies
(cid:129) Contribute to biodiversity conservation activities in collaboration with NGOs and others
(cid:129) Expand initiatives both in-house and outside to foster environmentally
conscious persons responsible for the future
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Toyota Environmental Challenge 2050 and 2030 Milestone
Key Fiscal 2018 Initiatives under Toyota Environmental Challenge 2050
New Vehicle Zero CO2 Emissions Challenge
Challenge of Minimizing and Optimizing
Water Usage
Challenge of Establishing a Future Society in
Harmony with Nature
20th Anniversary of the Prius’s Launch
Since its launch in 1997 as the world’s fi rst mass-produced hybrid pas-
senger vehicle, the Prius has continued to blaze the trail forward. 2017
marked the 20th anniversary of the Prius’s launch. The name “Prius,”
derived from the Latin for “to go before,” was chosen to embody the
idea of a vehicle that will help shape the future of the Earth. The Prius
has gained the support of millions of customers with whom this idea res-
onates. Based on the concept that eco-friendly vehicles can best con-
tribute to society if they are in widespread use, through the Prius and the
other electrifi ed vehicles that have inherited its environmental technolo-
gies, we will strive to contribute to the global environment alongside the
customers who use these vehicles.
The Toyota Water Environment Policy—Helping Achieve
Our Aquatic Environment Challenge Globally
While the specifi c issues and ways of addressing them vary by region,
Toyota has created the Toyota Water Environment Policy to help it accom-
plish the challenge it has set itself with regard to the aquatic environment.
The Toyota Water Environment Policy promotes activities aimed at eval-
uating and minimizing Toyota’s impact on the natural aquatic environment
in terms of both input, by rigorously reducing the amount of water it uses,
and output, by rigorously cleaning water it has used. We take action on
three fronts—the pursuit of environmental technologies, community-root-
ed operations, and cooperation with society—and strive to be the best
factory in the region and thus contribute to regional prosperity.
The Heritage and Future of Toyota Hybrid Technologies
The Toyota Hybrid System (THS) used in the fi rst-generation Prius
evolved into the THS II and, later, its use was expanded to other models.
Toyota positions hybrid technologies as core technologies as it develops
a range of electrifi ed vehicles, including PHEVs, BEVs, and FCEVs.
Prius Sales
Annual sales (left axis)
Cumulative sales (right axis)
Fourth-generation Prius
Debuted December 2015
Fuel economy: JC08 test cycle
34.0–40.8 km/l
(Millions of vehicles)
Third-generation Prius
Debuted May 2009
Fuel economy: JC08
test cycle
30.4–32.6 km/l
4.23 million
Second-generation Prius
Debuted September 2003
Fuel economy: JC08 test cycle
27.0–29.6 km/l
Fuel economy: 10.15 test cycle
30.0–35.5 km/l
3 million
1
1 million
First-generation
Prius
Debuted
December 1997
Fuel economy:
10.15 test cycle
28.0–31.0 km/l
’97 ’98 ’99
’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14
’15 ’16 ’17 ’18
0.6
0.5
0.4
0.3
0.2
0.1
0
5
5
4
3
2
1
0
Rigorous Reduction of Water Consumption
Based on evaluations of the impact of water usage volume on the water
environment, we designated four plants in three regions as challenge-
focused plants and are advancing related initiatives at said plants.
Rigorous Cleaning of All Water before Discharge
We are working to maintain and control the water quality of our water
discharge, not only maintaining strict legal compliance, but setting volun-
tary control standards that are even more stringent than those specifi ed
by laws and regulations. In fi scal 2018, we designated 22 water-quality
challenge-focused plants in three regions.
Toyota Water Environment Policy
Toyota prioritizes the sustainability of water resources and aims to create an affluent society
to ensure that sound aquatic environments can be shared by future generations.
Being the best factory in the region
to contribute to the whole community’s prosperity
I N
OUT
Rigorous reduction of water consumption
Rigorous cleaning of all water before discharge
Minimize water intake at each factory
and utilize rainwater to minimize impact
on local water sources
Make a positive impact on the environment
by making wastewater cleaner than
the body into which it is discharged
(January–March)
36
TOYOTA Annual Report 2018
Five-year Partnership with IUCN to Enhance Data
on Global Threats to Biodiversity
Toyota began a fi ve-year partnership with the
International Union for Conservation of Nature (IUCN)1
in May 2016 to raise awareness of the present biodi-
versity crisis. Under the partnership, we are providing
annual grants of approximately US$1.2 million to sup-
port the broadening of the IUCN Red List of
Threatened Species™.2 With this support, the IUCN will conduct extinc-
tion risk assessments for more than 28,000 species, approximately 35%
of all species requiring such assessment. This represents a major step
toward the IUCN’s goal of gaining a comprehensive view of the conser-
vation status of earth’s biodiversity.
1. The International Union for Conservation of Nature: Founded in 1948 as an international initia-
tive, the IUCN is a global nature conservation network comprising nations, government agen-
cies, non-governmental organizations, and other organizations
2. The IUCN Red List of Threatened Species™ is a global inventory of the conservation status of
species that is managed by the international organization IUCN
Five-Year Partnership with WWF for the Living Asian Forest Project
In July 2016, Toyota and the World Wide Fund for Nature (WWF) began
a fi ve-year partnership aimed at accelerating the globe’s transition to
sustainability. Toyota is the fi rst car company and the fi rst Japanese
company to sign a Global Corporate Partnership agreement with WWF.
To help conserve biodiversity under the partnership, Toyota has donat-
ed US$1 million a year since 2016 and offered other forms of support to
the Living Asian Forest Project. The Living Asian Forest Project is reinforc-
ing existing WWF initiatives to conserve tropical rainforests and biodiver-
sity in Southeast Asia and helping develop new conservation initiatives.
WEB
Environmental Report 2018
© naturepl.com / Mark Carwardine / WWF
© naturepl.com / Mark Carwardine / WWF
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Employees
Toyota prioritizes respect for people, aiming to pro-
vide employees with opportunities to make social
contributions and realize self actualization through
their work and to allow them to exercise their ability
to think, create, and take action.
To achieve this goal, a relationship of mutual
trust and mutual responsibility between labor and
management is essential. In such a relationship,
the company places the highest priority on ensur-
ing stable employment for its employees and pro-
actively strives to improve labor conditions, while
employees do their utmost to enhance the pros-
perity of the company. This philosophy is shared by
all Toyota affi liates around the world and, together
with considerations for regional characteristics, is
refl ected and implemented in Toyota’s manage-
ment and policies.
Toyota believes that this approach leads not only
to management that operates with respect for peo-
ple, but to customer satisfaction and social contri-
bution and thus to the sustainable growth of both
the company and society.
To this end, Toyota is implementing human
resource development aimed at sustainable growth
through a global educational program centered on
the application of the Toyota Way. On-the-job training
(OJT) is the foundation of this program.
Fundamental Approach regarding
Human Resource Development
Toyota is committed to developing human resources
in accordance with its philosophy that monozukuri
(manufacturing) is about developing people. In order
to sustain growth, it is essential to utilize the wisdom
of our people to make constant improvements.
At the same time, while employees bring a wide
range of cultures and customs, to make ever-better
cars and carry out our Customer First policy, all
employees must share certain values.
WEB
Toyota Way 2001
On the Job Training
Human Resource Development Rooted
in Genchi Genbutsu
In line with Toyota’s concept of Genchi Genbutsu
(onsite, hands-on experience), we believe that the
workplace is the basis for human resource develop-
ment at Toyota. Being mentored by supervisors and
senior colleagues and, in turn, mentoring subordi-
nates and junior colleagues to build mutually benefi -
cial learning relationships in the course of daily work
(OJT) provide the basic experiences that drive profes-
sional growth. In addition, to supplement OJT, Toyota
offers a variety of off-the-job training programs.
Toyota’s Approach to OJT
OJT
Personnel
system
In tandem with OJT
Off-the-job
training
Sharing the Values of
the Toyota Way Globally
We have organized job skills and techniques into a
framework that we call Global Content to help Toyota
employees around the world understand and prac-
tice the Toyota Way as a shared set of values and
ways of thinking. Global Content is utilized by Toyota
employees through both on- and off-the-job training
in Japan and overseas.
Applying the TPS and
Accelerating Business Innovation
The Toyota Production System (TPS) is based on the
concepts of Jidoka (automation with a human touch)
and Just-in-Time and aims to completely eliminate
waste and steadily reduce costs. To promote TPS-
related activities on a company-wide basis, bridging pro-
duction, administrative and engineering departments,
Toyota created the TPS Group in January 2018.
To make work in administrative and engineering
divisions better, more cost effective, and more timely,
we are beginning by applying a similar approach to
that taken at production sites, fi nding ways to achieve
more consistent and standardized operations. Using
concepts from production processes, we are creating
workfl ow charts for these divisions to determine
where information is getting backed up so that we
can remove bottlenecks and reduce lead times.
By applying TPS principles to administrative and
engineering divisions, as at production sites, we are
reducing lead times, promoting rapid problem solv-
ing, and strengthening our organizations. These
efforts are helping promote business innovation.
Furthermore, we have newly identifi ed seven types
of waste at administrative and engineering divisions*
and are advancing company-wide efforts to change
mindsets and implement improvement measures. For
example, with the support of the TPS Group, the
Accounting Division has taken stock of end-of-period
accounting operations to identify waste and advance
improvement. We are steadily implementing similar
initiatives in all divisions and broadly sharing success-
ful examples as we work toward the application of
the TPS, a strength of Toyota, throughout the Company.
* The seven types of waste at administrative and
engineering divisions: Non-value-adding activities
related to meetings, consensus-building, documen-
tation, coordination, supervisors’ pridefulness, over-
reliance on routine, and lack of follow through.
WEB
Employees (Human Resource Development, Sustainability Data Book 2018, p. 61)
37
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Employees
Promoting Diversity and Inclusion
Toyota has positioned the promotion of diversity
and inclusion in the workplace as an important
management strategy. We are working to create
workplaces where human resources with diverse
abilities and values can thrive and each individual
can achieve positive self actualization.
Diverse perspectives help to generate novel
ideas and identify new issues. Toyota aims to use
these contributions to help enhance its competi-
tiveness and make ever-better cars.
Gender
Nationality
Age
Childcare/
Nursing
care
Diversity
&
Inclusion
Disability
Work Style Innovation
Toyota is advancing work style innovation to improve
productivity and support employees seeking to contin-
ue working by providing child care or nursing care for a
family member. In October 2016, we expanded our
remote working program with the introduction of the
Free Time & Location (FTL) system. By adopting more
fl exible work styles, Toyota aims to make the most of
each individual’s abilities and maximize results. While
the previous remote working program was available
only to employees with childcare or nursing care
responsibilities, all employees that meet certain condi-
tions can request the permission of their supervisors to
use the FTL system. As of March 31, 2018, of the
approximately 13,200 employees who qualify for the
FTL system, approximately 3,300 are using it.
We have received a great deal of positive feedback
from users of the program already, with employees
commenting, for example, that the system has made
them more aware of time and thus more effi cient
when working, and that they have more time to
spend with family.
From April 2018, we have been introducing a new
partial remote working program for assistant staff
members.* We are advancing initiatives aimed at
reforming work styles throughout our workplaces.
* Available only for employees with childcare or nursing care responsibilities
Since 2016, 1,100 managers have begun posting
“Ikuboss declarations” related to diversity manage-
ment via the Group intranet. These declarations,
which include information about workplace initiatives
and messages to subordinates, are helping to foster
a culture of mutual support for the work and success
of diverse employees.
In 2018, we are implementing diversity management
training for employees who have been newly promoted
as managers. Furthermore, in addition to such training
for managers, we are implementing “Emotional Barrier-
free Training” for young employees to deepen under-
standing of LGBT individuals, wheelchair users and
other people often discriminated against.
We are advancing these and other initiatives with
the aim of practicing diversity management in all
Group workplaces.
Developing Executives Globally
The GLOBAL 21 program is aimed at developing
executives globally. The program serves to enable
outstanding human resources from around the world
to obtain the skills and discernment expected of
global-level Toyota executives and to fully realize their
individual strengths in their respective roles. The pro-
gram consists of the following three pillars.
1. Ensuring understanding of our management
philosophy and the expectations of executives
We are applying the Toyota Way and Toyota Global
Vision, incorporating them into global personnel eval-
uation systems and education.
Toyota’s employees in managerial positions are lead-
ing diversity management initiatives to create work-
places where diverse human resources can thrive. At
Toyota, we call a boss who can carry out diversity
management, Ikuboss. We are working to develop
supervisors who understand and support the values
and career goals of subordinates, taking a fl exible
approach to management to produce results at the
organizational level while also giving ample consider-
ation to the quality of both their own and their subor-
dinates’ private lives.
2. Personnel management
We are unifying evaluation standards and processes
globally to ensure fairness and consistency. Our main
evaluation criteria are individuals’ ability to set tasks,
carry out tasks, manage their organization, and effec-
tively utilize human resources as well as the level of
trust and respect that others have for them.
3. Development framework and education programs
We are allocating human resources and developing
executives globally. Our development of human
38
TOYOTA Annual Report 2018
resources at overseas affi liates is based on education
conducted by affi liates in each region, with OJT at
Toyota Motor Corporation (TMC) so that participants
can learn Toyota-style ways of working. In addition,
we are implementing a program similar to GLOBAL
21 for employees of TMC in Japan.
Localizing the Management of
Overseas Affi liates
Taking a long-term perspective, Toyota seeks to
localize the management of its overseas affi liates,
with deciding what to do as the role of TMC in Japan
and deciding how to do it the role of local affi liates.
In principle, chief offi cers and other executives
responsible for operations in overseas regions are
stationed in their respective regions as part of efforts
to create a management system closely rooted in
local communities.
We also actively hire and promote local human
resources. As of June 2018, three of the Group’s six
regional headquarters were led by non-Japanese
chief offi cers, and TMC’s top management includes
seven non-Japanese nationals (of whom one is an
Outside Member of the Board of Directors).
We are also advancing the localization of manage-
ment posts. This is enabling us to quickly process
feedback from customers and workplaces in each
region and utilize such information in management
decision making.
Overseas Executive Positions Held by
Local Employees
(%)
Fiscal year
2014
2015
2016
2017
2018
Local
employees
64.7
62.9
62.6
65.8
67.8
Non-Japanese Executives in Charge of
Operations in Overseas Regions
Region
Name
Title
North America Region James E. Lentz
Senior Managing Offi cer
Europe Region
Johan van Zyl
Senior Managing Offi cer
Latin America &
Caribbean Region
Steve St. Angelo
Senior Managing Offi cer
WEB
Employees
(Diversity & Inclusion, Sustainability Data Book 2018, p. 65)
LGBT
Diversity Management
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Employees
Taking the Initiative at Each Workplace
Putting Child Care-related Work Style Innovation into Practice
Let’s Change Toyota!
The Start of Reforms at
the Individual Level
Report from a Roundtable Held
by the Process Quality
Innovation Division
Making the Desire for
Change a Reality
The Future Project Department:
Soliciting Ideas within Toyota
for Co-Creation
Toyota has no future if it just keeps doing the same things—spurred by
this sentiment and sense of urgency communicated by top manage-
ment, bottom-up reforms led by front-line staff are getting under way.
As one example of an initiative based on an open-minded, pro-action
approach, a group of employees applied the Genchi Genbutsu (onsite,
hands-on experience) principle to humbly learn from the methods of
another company. By doing so, we were able to achieve a level of preci-
sion and speed in development that we had not reached before.
Thinking outside the bounds of existing methods, we went back to the
basics, starting by focusing on fi guring out what it is that customers are
really looking for. From there, everyone put their heads together, expand-
ing the scope of our activities across business areas and functions to
arrive at solutions. By sharing such initiatives in which each individual
takes a proactive role and by learning from one another, we are working
to change the old methods that we have taken for granted.
Activities like these are now starting at all kinds of workplaces across
Toyota, regardless of organization or individual position. To be rewarded
with the smiles of customers and to create the mobility society of the
future, we understand that every employee will have to change, and we
are putting the full strength of the company into accelerating reforms
that involve every employee.
Since its establishment in 2012, the Future Project Department has
advanced Future Scenario & Concept (FSC) activities as one of its main
functions. These activities entail drawing up future scenarios and then
planning and proposing services and business models to enable freer
urban mobility. Now, under the Breakthrough-project (B-project), the
department is going a step beyond FSC activities, not only fi nding ideas
from across the company, but aiming to provide incubation to develop
them and shepherd them all the way to commercialization and the cre-
ation of exit strategies.
Specifi cally, driven individuals can sign up to participate in “B Dojo”
study meetings outside normal work hours to develop their ideas and
draft proposals. The division then selects the most promising proposals
to take into the incubation phase. As part of this idea creation process,
we ask the divisions to which these projects are likely to be handed off
after incubation to help come up with exit strategies. Until now, the
Future Project Department’s new initiatives have mostly involved outside
partners. The B-project, however, is an attempt to co-create new value
by connecting with people who want to make something new both in
and outside Toyota. This is why Toyota has named the project
“Breakthrough.”
One-month Parental
Leave for Fathers
Hidemasa Komatsu,
Design Department
What I Learned from
Using Work-Life Balance
Support Programs
Tomoko Motohashi,
Purchasing Planning Division
My household consists of myself, my wife, and my daughter. My wife
and I both work. When my daughter was about nine months old, I used
the parental leave system for about a month.
During my leave, I took full charge of the care of our daughter, which
helped give my wife peace of mind, knowing that I could handle things if
something happened and she couldn’t be there. Although it was only a
month, it was thus an important experience for me and for my family.
Because I took parental leave, my wife, who had been away from work
since before our daughter was born, was able to go back sooner, which
I think will be benefi cial for her career.
My parental leave also provided a chance to really experience the
world outside the parameters of the company. I was reminded that the
values that hold true within the company aren’t everything, and that it is
essential to look at the real world when engaging in manufacturing. In
this sense, my leave was extremely valuable for me as a father and as
someone involved in manufacturing. I very much hope to see further
reforms to work systems and styles so that it will be easy and unremark-
able for anyone to take this kind of leave.
Starting when I was pregnant with my fi rstborn, I took three years off
before returning to work. When I found out I was going to have a child, I
was incredibly happy. At the same time, though, no one at my work-
place had ever used the support systems for working parents. I couldn’t
see how I would be able to keep working and thought about resigning.
Seeing my unease, my boss recommended that I use the systems and
try to adjust my work style, so I decided to give it a try.
When I fi rst came back to work, I used the shortened working hours
system. My husband helped me handle emergencies, like when our
child suddenly developed a fever and had to be picked up from daycare.
Even so, there were never enough hours in the day, and I wasn’t able to
give as much as wanted to work or to childcare. I came close to throw-
ing in the towel many times. I then decided to use the full-time telecom-
muting system, which freed me from the pressure of having to leave
work by a set time every day. I was the fi rst at my workplace to use this
system, but, with the support of my family and colleagues, I was able to
continue working.
It was often hard, but I realized that time management is the key to
working while raising children. I also strive to break down my everyday
work into specifi c tasks, prepare effectively, and identify the important
tasks to focus on.
For me, these realizations are irreplaceable experiences, and I will
continue to give my all to improve various aspects of my work.
39
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Risk Management
Fundamental Approach
Organization and Structure
Toyota has been working to reinforce its risk manage-
ment systems since the series of recall issues in
2010. In June 2010, Toyota established the Risk
Management Committee (now the Sustainability
Meeting and ESG Committee) and appointed risk
managers for the global group and each business
division as part of global measures to prevent and
mitigate the impact of risks that could arise in the
course of business activities.
Appointment of Risk Management Personnel
Toyota has appointed a global chief risk offi cer (CRO)
to head global risk management. The global CRO is
charged with handling major risks and coordinating
and directing the response to major emergencies on
a global basis.
Beneath the global CRO are regional CROs
appointed to oversee specifi c regions, and each
region has its own risk management structure.
Within the head offi ce (accounting, purchasing,
etc.), risk management is assigned by function to
chief offi cers and risk managers, while in each in-
house company, risk management is assigned to the
company president and company risk managers.
Furthermore, the regional head offi ces and individual
sections coordinate and cooperate with one another
on risk management.
Implementation Framework
Shareholders’ Meeting
Sustainability Meeting
ESG Committee
Respective regions
Regional CROs
Regional functions
Respective head
offi ce sections
Respective
companies
Chief Offi cers
Presidents
Collaboration
Collaboration
Secretariats for
functions
Companies’ risk
managers
Sustainability Meeting and ESG Committee
The ESG Committee is responsible for global risk
management. Meeting participants comprehensively
identify risks to business activities, review and report
on major current risk items in order to promote pre-
ventive action. The results of the ESG Committee’s
activities are reported to the Sustainability Meeting,
which provides oversight of related operations.
In addition, the meeting advances special mea-
sures related to information security and business
continuity management (BCM), areas in which the
level of risk corporations face has been growing in
recent years.
Risks related to Toyota’s businesses and other fac-
tors that could signifi cantly impact the decisions of
investors are listed in Toyota’s Form 20-F under the
categories Industry and Business Risks; Financial
Market and Economic Risks; and Regulatory, Legal,
Political, and Other Risks.
WEB
Risk Management
(Sustainability Data Book 2018, p. 139)
WEB
Form 20-F for the year ended March 31, 2018
Information Security Initiatives
Cyber attacks are growing more sophisticated and
complex. Their corporate targets have expanded
from confi dential information and information sys-
tems to include systems that control plants and
vehicles, such as those for on-board devices.
Information security is thus an increasingly impor-
tant priority for Toyota.
Toyota considers ensuring the safety and peace
of mind of its customers as well as protecting its
customers’ personal information and other assets
to be its social responsibility. Accordingly, we are
advancing a range of initiatives to reinforce infor-
mation security from the perspectives of gover-
nance and risk management.
Business and Other Risks
Industry and Business Risks
(cid:129) The worldwide automotive market is highly competitive
(cid:129) The worldwide automotive industry is highly volatile
(cid:129) Toyota’s future success depends on its ability to offer
new, innovative and competitively priced products that
meet customer demand on a timely basis
(cid:129) Toyota’s ability to market and distribute effectively is an
integral part of Toyota’s successful sales
(cid:129) Toyota’s success is signifi cantly impacted by its ability to
maintain and develop its brand image
(cid:129) Toyota relies on suppliers for the provision of certain sup-
plies, including parts, components, and raw materials
(cid:129) The worldwide fi nancial services industry is highly
competitive
(cid:129) Toyota’s operations and vehicles rely on various digital
and information technologies
Financial Market and Economic Risks
(cid:129) Toyota’s operations are subject to currency and interest
rate fl uctuations
(cid:129) High prices of raw materials and strong pressure on Toyota’s
suppliers could negatively impact Toyota’s profi tability
(cid:129) A downturn in the fi nancial markets could adversely
affect Toyota’s ability to raise capital
Regulatory, Legal, Political, and Other Risks
(cid:129) The automotive industry is subject to various governmen-
tal regulations
(cid:129) Toyota may become subject to various legal proceedings
(cid:129) Toyota may be adversely affected by natural calamities, polit-
ical and economic instability, fuel shortages or interruptions
in social infrastructure, wars, terrorism, and labor strikes
In June 2016, Toyota established an Information
Security Policy that clearly lays out Toyota’s basic
approach to information security and related initia-
tives to facilitate united information security initia-
tives by TMC and its consolidated subsidiaries.
WEB
Information Security Policy
Key Points of Our Information Security Policy
(Toyota’s Basic Approach)
1. Compliance
2. Maintenance of stable business infrastructure
3. Providing safe products and services
4. Contribution to the establishment of safe
cyberspace
5. Information security management
40
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Compliance
Fundamental Approach
Organization and Structure
Checks to Enhance Compliance
The Guiding Principles at Toyota state that Toyota
shall “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.”
Toyota believes that by adhering to this principle in its
actions, it can fulfi ll its corporate social responsibility
and ensure compliance.
In accordance with its basic internal control poli-
cies, Toyota promotes initiatives centered on the con-
struction of frameworks, including the adoption and
enforcement of the Code of Conduct as well as edu-
cation and other means of human resource develop-
ment. Toyota has also established consultation
hotlines; any concerns that are reported to said are
assiduously addressed to ensure that no potential
problem is overlooked.
Toyota Code of Conduct
The Toyota Code of Conduct (adopted in 1998 and
revised in March 2006) outlines the basic frame of
mind that all Toyota personnel should adopt and sets
forth concrete guidelines to assist them in upholding
the Guiding Principles at Toyota and doing their part
to ensure that Toyota carries out its corporate social
responsibility. A booklet containing the Toyota Code
of Conduct is distributed to all employees to better
enable them to put the code into practice in their own
lives both at work and in the community.
WEB
Toyota Code of Conduct
The Sustainability Meeting discusses the expectations
of stakeholders and responses to various social
issues. In particular, the meeting deliberates on mat-
ters related to corporate governance and compliance.
In fi scal 2009, Toyota began implementing internal
checks to enhance its compliance structure. In fi scal
2010 these checks were extended to subsidiaries in
and outside Japan. Since then, these checks have
been carried out and improved upon every year.
Results are reported to the Sustainability Meeting and
used as a basis for further improvement. By incorpo-
rating improvement initiatives into each year’s action
plans, we ensure that these checks lead to ongoing
positive action.
Moreover, Toyota holds meetings with subsidiaries
in order to keep track of their compliance efforts and
provide them support as needed.
WEB
Compliance (Sustainability Data Book 2018, p. 143)
Implementation Framework
Shareholders’ Meeting
Board of Directors
Sustainability Meeting
Chairman: Chief Risk Offi cer
(Executive Vice President)
Frequency: Twice a year
Governance, risk management
ESG Committee
Activity Diagram
Within Toyota (HQ)
Secretariat and
specialized divisions
Individual
divisions
Self-
inspections
Incorporation
into policy
A
P
C
D
Self improvement
i
i
i
D
v
s
o
n
s
m
a
n
a
g
n
g
i
i
s
u
b
s
d
a
r
i
e
s
i
Distribution and
collection of
inspection sheets
Feedback
Support for
improvement
Subsidiary
Second-tier Subsidiary
Self-
inspections
Incorporation
into policy
Self-
inspections
Incorporation
into policy
A
P
C
D
A
P
C
D
Self improvement
Self improvement
Ensuring Compliance
To ensure that awareness of compliance extends
from top management all the way to each and
every employee, Toyota conducts training pro-
grams for directors and executives, managers, and
new hires as well as Company-wide e-learning
programs.
In addition to standard legal topics, such as
labor law, antimonopoly law, and subcontracting
law, we conduct seminars covering bribery preven-
tion, personal information protection, the Product
Liability Act, and other topics. Around 1,000
employees attended these seminars in fi scal 2018.
In addition, based on specifi c needs, the Legal
Division conducts on-site seminars on a wide
range of topics at individual divisions.
Main Training Themes to Date
(cid:129) Contracts
(cid:129) The Product Liability Act
(cid:129) The Act against
(cid:129) Bribery prevention
Unjustifi able Premiums and
(cid:129) Export operations
Misleading Representations
management
(cid:129) Intellectual property
(cid:129) Subcontracting law
(trademarks)
(cid:129) Copyright
(cid:129) Confi dentiality management
(cid:129) The Act on the Protection
(cid:129) Labor
of Personal Information
(cid:129) Antimonopoly law
(cid:129) Taxes
(cid:129) Insider trading regulations
(cid:129) Safety and health
41
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Customer First and Quality First Measures
Fundamental Approach
The origins of Toyota’s Customer First and Quality
First principles lie in the Five Main Principles of
Toyoda, which embody the thinking of Sakichi
Toyoda, and the spirit of audit and improvement
espoused by Kiichiro Toyoda. Since its foundation,
Toyota has built a corporate culture that focuses par-
ticular attention on customer-pleasing quality and
continuous Kaizen (improvement) achieved through
Genchi Genbutsu (onsite, hands-on experience). In
accordance with our commitment to quality as stated
in the Toyota Global Vision, each employee in each
fi eld maintains a constant and strong awareness of
issues and a sense of ownership, striving to continu-
ously implement Kaizen and collaborating closely with
personnel in other fi elds to enhance customer safety,
peace of mind, and satisfaction.
Initiatives to Improve Quality
Toyota sees quality as the combination of product
quality, sales and service quality, and, as the founda-
tion supporting these, the quality of the work per-
formed by each employee.
We believe that our products and services can only
gain the confi dence of customers when all employees
engaged in every process, from development, pur-
chasing, production, and sales to after-sales service,
build in quality, coordinate with one another across
processes, and implement the quality assurance cycle.
Quality starts with the spirit of audit and improve-
ment. Through continuous improvement based on
repeated implementation of the PDCA cycle, Toyota
pursues ever-higher quality—this is the unchanging
core of Toyota’s manufacturing.
Customer First Measures
The essence of Toyota’s principle of Customer First is
providing customers with products and services that
bring smiles to their faces. Toyota aims to provide
cars that achieve superior environmental, safety, and
quality performance without sacrifi cing driving perfor-
mance or other aspects of the intrinsic appeal of
cars, at an affordable price. We humbly and openly
accept information provided by our dealers and cus-
tomer feedback received at customer assistance
centers, taking such input to heart and utilizing it to
make ever-better cars.
After-sales Services Measures
To bring smiles to the faces of as many customers as
possible, it is essential to realize both better cars and
better services. Customer car use requires regular ser-
vicing, inspections, and repairs following breakdowns
or accidents. After-sales service provides safety, peace
of mind, and comfort to customers at these times,
supporting the Toyota and Lexus brands.
In recent years, the average duration of car use has
been lengthening. In fi scal 2018, the average length
of use of passenger vehicles in Japan (excluding
mini-vehicles) was 12.9 years, 1.3 years longer than
a decade earlier. Accordingly, the role of after-sales
service is becoming increasingly important. More
than 100 million Toyota vehicles are currently in use
worldwide, and each one is irreplaceable to a cus-
tomer. Toyota strives to provide ever-better services
in accordance with the 3S Spirit (Seikaku + Shinsetsu
= Shinrai, meaning Accuracy + Caring = Trust) to
ensure that customers will be highly satisfi ed with
their vehicles.
WEB
Customer First and Quality First Measures
(Sustainability Data Book 2018, p. 20)
Maintaining Focus on the Series of Recall Issues
Training Centers Develop Global Service Engineers
February 24, the anniversary of the day that President Akio Toyoda attended U.S. Congressional hearings held to investigate
the series of recall issues that occurred in 2010, has been designated Toyota Restart Day. We have created mechanisms and
are taking measures to raise awareness in order to keep the lessons learned from the series of recall issues fresh.
Customer Quality Learning Center
In 2014, Toyota established the Customer Quality Learning
Centers to convey the experiences and lessons learned from the
series of recall issues to future generations of employees. With
exhibits that appeal to the fi ve senses, such as actual examples
of faulty parts and vehicle simulators, these centers serve an
important educational role, especially for new employees who
did not experience the events fi rsthand. The content of the cen-
ters is updated every year to cover the most recent quality
issues. Toyota has established approximately 30 Customer
Quality Learning Centers globally (as of March 31, 2018).
Storytelling Activities
Employees who experienced the 2010 series of recall issues take
on the role of storyteller to convey the facts and lessons learned
from those events at their own work sites. The number of
employees who experienced the recall issues fi rsthand decreas-
es every year, but it is important to keep the experiences and les-
sons learned alive. To this end, starting in 2017, this initiative was
expanded Company-wide to train the next generation of storytell-
ers and thereby keep the lessons learned from fading.
The Tajimi Service Center provides training on vehicle servicing technologies and body repair and paint to service technicians
from dealers in Japan and distributors worldwide.
Opened in July 2013, the Tajimi Service Center is fully equipped
classrooms, practice areas, and drive evaluation courses with a
variety of road conditions on a vast 187,000 m2 site. In fi scal
2018, approximately 2,200 staff from 26 locations in Japan and
overseas trained at the center, bringing the center’s cumulative
total number of training alumni to approximately 9,800.
Research and development of new technologies for the ser-
vice, repair, and painting of new vehicles equipped with cutting-
edge technologies is also concentrated at the center. As a
global training facility, the center enables staff who come to the
center for training improve their knowledge and skills, helping
build a solid foundation for reinforcing global competitiveness in
service technology.
Service Technology Training Process
r
e
t
n
e
C
e
c
v
r
e
S
i
i
m
i
j
a
T
Region
Country
Regional affiliate/trading company
Europe, Africa, the Caribbean,
Oceania, some Asian countries
(Outside the above regions/countries)
Regional affiliate/trading company
Distributors under regional affiliate
Distributors in
each country
(Japan)
Dealers
Dealers
Dealers
Implementation at the Tajimi Service Center
Implementation by training alumni in each region/country
Tajimi Service Center
42
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Respect for Human Rights and Supply Chain Management
Respect for Human Rights
Fundamental Approach
The Guiding Principles at Toyota, Toyota’s CSR poli-
cy, and the Toyota Code of Conduct state that Toyota
shall respect the human rights and other rights of all
people. Moreover, the Toyota Way, based on the
Guiding Principles at Toyota, lays out the values that
all employees working at Toyota should embrace.
The two pillars of the Toyota Way are Continuous
Improvement and Respect for People. Respect for
People entails respect for all stakeholders as well as
respect for the character and abilities of employees
as individuals. It also facilitates self actualization by
linking the personal growth of employees to
Company performance.
The Toyota Way is a set of shared values for all our
affi liates around the world. Referencing each nation’s
laws and customs as well as international guidelines
and norms, such as the Universal Declaration of
Human Rights and the United Nations Guiding
Principles on Business and Human Rights, we pro-
mote a range of activities to ensure that employees
can work with peace of mind and thrive while aiming
always to meet the expectations of our stakeholders.
We strive to ensure that these values are put into
practice throughout Toyota’s global business activi-
ties, including at subsidiaries and suppliers.
Organization
We hold Sustainability Meetings to discuss such top-
ics as human rights issues, keeping in mind the
expectations of our stakeholders. These meetings
serve to secure structures that enable the sustainable
growth of both the Company and society by gather-
ing relevant information and strengthening and revis-
ing relevant measures.
Initiatives Related to Confl ict Minerals
Collaboration with Suppliers
Toyota has adopted the Policies and Approaches to
Confl ict Minerals Issues, which it applies as a set of
guidelines when tackling confl ict mineral-related
issues.
Please see the page below for information about
activities in 2017.
WEB
Toyota’s Approaches to Confl ict Minerals Issues
(Sustainability Data Book 2018, p. 45)
Sharing and Applying Policies on Respect for Human Rights
Toyota
Subsidiaries
Suppliers
Dealers
CSR Policy: Contribution towards
Sustainable Development
Toyota Supplier
CSR Guidelines
Dealer CSR Guidelines
(Japan)
Consolidated Compliance Program
Improvement requests
to suppliers as
necessary
Self-checks
Training
43
TOYOTA Annual Report 2018
Since its establishment, Toyota has worked closely
with its suppliers in its manufacturing businesses.
As part of these efforts, Toyota has globally imple-
mented its Basic Purchasing Policies in accordance
with a spirit of mutual benefi t based on mutual trust.
While maintaining close relationships with longstand-
ing and new partners alike, we are promoting initia-
tives in line with our Customer First policy.
In recent years, interest in the social responsibility of
companies, including their supply chains, is increasing.
Toyota will continue to contribute to the sustainability
of society and the earth by working with suppliers to
ensure compliance, promote respect for human rights,
and reduce negative environmental impact.
Toyota Supplier CSR Guidelines
Based on the belief that collaboration with suppliers
on CSR issues is important, Toyota established the
Toyota Supplier CSR Guidelines in February 2009.
Toyota suppliers are requested to implement their
own CSR activities based on the guidelines and
develop their own CSR policies and guidelines for
their respective suppliers.
WEB
Toyota Supplier CSR Guidelines
Toyota Green Purchasing Guidelines
Toyota purchases a wide range of materials, parts,
and equipment from many different suppliers. We col-
laborate with suppliers to implement environmental
initiatives using the Toyota Green Purchasing
Guidelines.
WEB
Toyota Green Purchasing Guidelines
Example Activities
(cid:129) Dialogue with executives of suppliers
(cid:129) Independent efforts by suppliers (CSR lectures,
CSR workshops, volunteering)
(cid:129) Improving awareness and knowledge among all
employees, including buyers, through seminars and
other internal training
WEB
Collaboration with Suppliers (Sustainability Data Book
2018, p. 49)
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Working to Better the World around Us
Based on a philosophy of contributing to soci-
ety through the manufacture of automobiles,
Toyota endeavors to contribute to sustainable
development.
Toyota seeks to make ever-better cars in
order to bring happiness to customers. At the
same time, Toyota implements a wide range of
activities, such as fostering initiatives related to
mobility through the Toyota Mobility Foundation,
sponsoring sporting events—including the
Olympic Games, Paralympic Games and Special
Olympics—and promoting social contribution
activities. All of these efforts are aimed at
realizing the mobility society of the future and
richer lifestyles.
Toyota will continue to contribute to the real-
ization of a prosperous mobility society with
greater happiness for all.
The Toyota Mobility Foundation:
Supporting Ideas and Initiatives
to Enrich Mobility
Established by Toyota in August 2014, the Toyota
Mobility Foundation (TMF) aims to enable more peo-
ple to go more places by sharing TMF knowledge,
partnering with others, and innovating to build a more
joyful mobile society.
Currently, TMF’s global initiatives support diversifying
transportation in Thailand, Vietnam, India and Brazil and
providing better freedom of mobility in remote mountain-
ous communities in Japan(Photo (cid:2)). Additionally, TMF
is conducting a challenge prize competition to incorpo-
rate smart technology into mobility devices for people
with lower-limb paralysis. Finally, TMF’s research efforts
include a breadth of mobility topics from hydrogen to
traffi c fl ow optimization using artifi cial intelligence.
Going forward, in addition to improving existing ini-
tiatives, TMF plans to expand them to other cities
facing similar mobility challenges. Alongside their
partners, TMF plans to leverage insights gained from
current projects to advance future initiatives to help
solve mobility issues around the world.
WEB
Toyota Mobility Foundation
Themes of the Toyota Mobility Foundation’s Initiatives
Motorization/
Public Transport
Developed
countries
Theme
Personal Mobility
Vulnerable populations
such as people with disabilities,
senior citizens, and others
Maturation
Harmony in Mobility
Traffic flow optimization
Diversification of transportation
Improving overall
convenience
Reducing social costs
(congestion, pollution,
accidents)
CO2
PARK &
RIDE
Emerging
countries
Disaster
response
Energy
(hydrogen
supply chain)
Olympic and Paralympic Worldwide
Partnerships
Taking Our Founding Principle of
Social Contribution Global
In 2015, aiming to use sports to create a peaceful and
inclusive society and to use mobility to contribute to the
realization of a sustainable society, Toyota formed a part-
nership with the International Olympic Committee (IOC)
and International Paralympic Committee (IPC) in the
areas of vehicles, mobility services, and mobility solu-
tions, making it the fi rst Worldwide Olympic and
Paralympic Partner in the mobility category.
Through the Olympic and Paralympic Games, Toyota
is aiming to achieve the following goals: “Ever Better
MOBILITY FOR ALL,” “Ever Better SOCIETY” and
“Ever Better TOYOTA.” Toyota is carrying out initia-
tives in the areas of mobility, sports, and social
issues, aiming to realize a society in which everyone
can participate and strive.
At the Tokyo 2020 Games, Toyota aims to provide
mobility solutions that go beyond its conventional
framework of supplying vehicles based on three pil-
lars: 1. Mobility for all, 2. Sustainability centered on
the realization of a hydrogen-powered society (envi-
ronment and safety), and 3. Transportation support
leveraging the Toyota Production System for those
involved in the games.
WEB Olympic Games, Paralympic Games and
Special Olympics (Sustainability Data Book 2018, p. 34)
Toyota has a long history of social contribution that
traces back to the desire of Sakichi Toyoda—the
father of Toyota Motor Corporation’s founder, Kiichiro
Toyoda—to support inventions that would enrich
people’s lives. Kiichiro and his team, who together
built Toyota’s automotive business, kept this spirit of
social contribution alive after Sakichi’s death, espous-
ing the concepts of contributing to the development
and welfare of the country and remembering to
always be grateful. These concepts were eventually
woven into the Five Main Principles of Toyoda, the
Guiding Principles at Toyota, and the Toyota Global
Vision. In these various forms, this spirit of social
contribution has been handed down to today.
In addition to contributions made through its busi-
nesses, Toyota is pursuing social contribution in three
designated global priority fi elds: the environment
(Photo (cid:3)), traffi c safety, and education. We are also
promoting activities in social, cultural, and other fi elds
to meet the social needs of specifi c countries and
regions, utilizing our technologies, expertise, and
other resources to proactively advance initiatives.
Going forward, Toyota will continue striving to sup-
port volunteering and to sustain automotive and
manufacturing cultures.
WEB
Social Contribution Activities
(cid:2) Providing mobility in remote mountainous communities
(cid:3) Forest of Toyota hands-on nature program
44
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Initiatives for Sustainable Growth
Corporate Philosophy Corporate Governance Messages from the Outside Directors Toyota Environmental Challenge Employees Risk Management Compliance Customer First and Quality First
Respect for Human Rights and SCM Working to Better the World around Us
Working to Better the World around Us
“Team Morii”
(YouTube, Japanese with English Subtitles, 12:35)
Developing a More Advanced Sit-Ski with a World-Class Athlete
Toyota supported more than 50 athletes from about 20 countries, including fi ve
to involve tens of employees, who formed “Team Morii.” Working toward ideal
Toyota employee athletes, at the Olympic and Paralympic Winter Games
performance at speeds of more than 100 km/h, Team Morii created a sit-ski that
PyeongChang 2018 in South Korea. Together, these athletes comprised
is 15% lighter than and three times as rigid as Morii’s previous model. Team mem-
“Team Toyota.”
bers were inspired by the uncompromising striving of the world-class athlete,
“Team Toyota” included 25 athletes from 12 countries who competed in the
commenting that the experience helped them step up the mindset they bring to
PyeongChang 2018 Paralympic Winter Games. One of these was Para alpine
making cars.
skier Taiki Morii. A world-class athlete, Morii was already a four-time veteran of
the Paralympic Winter Games, with a total of four medals from three of the
Based on a commitment to support the creation of a more inclusive and sus-
Harnessing Ideas from around
the World for Innovative Assistive
Mobility Devices for People with
Lower-limb Paralysis
In November 2017, the Toyota Mobility Foundation
launched the Mobility Unlimited Challenge. Working in
partnership with Nesta’s*1 Challenge Prize Centre,*2
a UK-based non-profi t organization, the Mobility
Unlimited Challenge uses a competition format to
develop assistive devices that improve the mobility and
independence of people with lower-limb paralysis. The
Challenge asks innovators around the world to incor-
porate smart technologies into their devices and
requires co-creation with end-users to ensure the
devices address their needs. Five teams will be select-
ed as fi nalists in early 2019, and the winning team will
be announced in the summer of 2020.
*1 Nesta: An innovation foundation that backs new ideas to
tackle the big challenges of our time. It is a UK charity that
works all over the world. To fi nd out more visit www.nesta.
org.uk
*2 Challenge Prize Centre: A body within Nesta that utilizes
challenge prizes to stimulate and speed up problem-solving
activity on some of the most diffi cult challenges we face in
Games. Looking for new challenges, he came to work at Toyota in 2014.
tainable society in which everyone can challenge their impossible in order to
society.
There, Toyota’s desire to use its technological capabilities honed by making
cars and other products to develop better sporting equipment aligned with Morii’s
improve the lives of its customers and society as a whole, Toyota is promoting
its “Start Your Impossible” global corporate campaign. The spirit of the Olympics
drive to take home the gold. In July 2015, with sights set on PyeongChang 2018,
and Paralympics, representing the tireless pushing of limits and coming together
Toyota began the joint development of a new sit-ski, working with Morii and
across national borders, has much in common with Toyota’s corporate culture
wheelchair manufacturer Nissin Medical Industries Co., Ltd. Toyota handled the
of Kaizen (improvement) and respect for people. We want movement to present
design of the sit-ski frame and link mechanism, which move in a way similar to a
not an impediment, but the possibility of fulfi lling dreams. Based on this desire,
car suspension, as well as experiments aimed at reducing air resistance.
we will continue working to provide a wide range of mobility solutions.
Beginning with just a handful of individuals, by the end, the endeavor had grown
Mobility Unlimited
Challenge Launch Film
(YouTube, 1:58)
WEB
Mobility Unlimited
Challenge
45
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Corporate Data At a Glance History Financial Summary Non-Automotive Business Corporate/Stock Information
At a Glance
Global Perspective/Data by Region
Number of Plants and
Manufacturing Companies*
(As of March 31, 2018)
Distributors*
(As of March 31, 2018)
R&D Sites*
(As of March 31, 2018)
*Number of bases for Toyota and Lexus brands
Europe
8
29
3
Asia
excluding Japan
Japan
24
21
4
17
—
6
North
America
10
5
3
Other
8
114
0
Financial Highlights
for the Year Ended
March 31, 2018
(Consolidated)
The second of each pair of
fi gures is the year-on-year
change.
Total Vehicle Sales
8,964 thousand
-7 thousand
Net Revenues
¥29,379.5 billion
+6.5 %
Operating Income
¥2,399.8 billion
+20.3%
Total Liquid Assets (net)
¥8,025.9 billion
+¥262.9 billion
Total Shareholder Return (max)
¥1,200.1 billion
+¥117.7 billion
R&D Expenses
¥1,064.2 billion
+¥26.7 billion
Net Income
¥2,493.9 billion
+ 36.2%
Capital Expenditures
¥1,302.7 billion
+¥90.9 billion
46
TOYOTA Annual Report 2018
Number of Employees
369,124
(Consolidated, as of March 31, 2018)
Other
Asia
Europe
North
America
Japan
Total Vehicle Production
8,964,133
(Consolidated, FY 2018)
Total Vehicle Sales
8,964,394
(Consolidated, FY 2018)
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Corporate Data At a Glance History Financial Summary Non-Automotive Business Corporate/Stock Information
History
Founding and entry
into the automobile
industry
Establishing
the Toyota identity
Leaping forward as
a global corporation
Toward the mobility
society of the future
Domestic/Overseas Vehicle Production (Thousands of units)
(Including Daihatsu and Hino brands since 2002)
(cid:2) Domestic (cid:2) Overseas
Toyoda Model AA passenger
car launched (1936)
Toyopet Crown launched
(1955)
Corolla launched
(1966)
Celica launched
(1970)
Soarer launched
(1981)
Lexus LS400 launched
(1989)
Prius launched (1997)
MIRAI launched (2014)
(cid:3) Labor disputes (1950)
(cid:3) Toyota Motor and Toyota Motor Sales merged
(cid:3) Recall issues (2009–2010)
(cid:3) TRI established (2016)
History of
Toyota
(cid:3) Toyota Motor Co., Ltd. established (1937)
(cid:3) Total Quality Control (TQC) introduced (1961)
(cid:3) Toyoda Model AA passenger car launched (1936)
(cid:3) Kanban method adopted (1963)
(cid:3) Five Main Principles of Toyoda
(cid:3) The Toyota Production System established
established (1935)
with TMC (1982)
(cid:3) NUMMI, a joint corporation
with GM, established in
the U.S. (1984)
(cid:3) Losses (FY 2009)
(cid:3) Prius launched (1997)
(cid:3) MIRAI launched (2014)
(cid:3) The Toyota Way 2001 adopted (2001)
(cid:3) Toyota Environmental Challenge 2050
established (2015)
(cid:3) Guiding Principles at Toyota adopted (1992)
(cid:3) Toyota Global Vision adopted (2011)
Major
World
Events
(cid:3) World War II (1939-1945)
(cid:3) Rapid economic growth period
in Japan (1960s-1970s)
(cid:3) Berlin Wall comes down (1989)
(cid:3) U.S.-Japan trade friction (1980s)
(cid:3) The Great East Japan Earthquake,
Thailand fl oods (2011)
(cid:3) The 2008 fi nancial crisis (2008)
(cid:3) Oil crisis (1973 & 1979)
(cid:3) Rio Earth Summit (1992)
(cid:3) Trade friction surrounding cars (1990s)
(cid:3) Tighter control on exhaust emissions (1970s)
(cid:3) Kyoto Protocol adopted (1997)
(cid:3) UN SDGs adopted (2015)
(cid:3) Paris Agreement adopted
(2015)
47
TOYOTA Annual Report 2018
WEB
75 Years of Toyota
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Corporate Data At a Glance History Financial Summary Non-Automotive Business Corporate/Stock Information
Financial Summary (Consolidated)
Fiscal years ended March 31
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Consolidated Vehicle Sales
(thousands of units)
7,567
7,237
7,308
7,352
8,871
9,116
8,972
8,681
8,971
8,964
Foreign
Exchange
Rates
(Average)
Yen to US Dollar Rate
Yen to Euro Rate
101
144
93
131
86
113
79
109
83
107
100
134
110
139
120
133
108
119
111
130
Net Revenues
(billions of yen)
20,529.5
18,950.9
18,993.6
18,583.6
22,064.1
25,691.9
27,234.5
28,403.1
27,597.1
29,379.5
Operating Income (Loss)
(billions of yen)
(461.0)
Income (Loss) before Income Taxes
(billions of yen)
(560.4)
Net Income (Loss)
(Note 1)
(billions of yen)
(437.0)
Common
Shares
Cash Dividends
(billions of yen)
313.5
Cash Dividends per Share
Payout Ratio
(yen)
(%)
Value of Shares Repurchased
[shareholder return]
(Note 2)
(billions of yen)
100
—
—
147.5
291.4
209.4
141.1
45
67.4
—
R&D Expenses
(billions of yen)
904.0
725.3
Depreciation Expenses
(Note 3)
(billions of yen)
1,072.1
1,032.0
Capital Expenditures
(Note 3)
(billions of yen)
1,302.5
579.0
468.2
563.2
408.1
156.8
50
38.4
—
730.3
812.3
642.3
355.6
1,320.8
2,292.1
2,750.5
2,853.9
1,994.3
2,399.8
432.8
1,403.6
2,441.0
2,892.8
2,983.3
2,193.8
2,620.4
283.5
157.7
50
55.6
—
779.8
732.9
706.7
962.1
1,823.1
2,173.3
2,312.6
1,831.1
2,493.9
285.0
522.9
631.3
645.5
627.5
642.6
90
29.6
165
28.7
200
29.0
210
28.3
210
34.6
—
180.0
293.3
639.3
449.9
220
26.1
549.9
(maximum)
807.4
727.3
910.5
1,004.5
1,055.6
1,037.5
1,064.2
775.9
806.2
885.1
893.2
964.4
852.7
1,000.7
1,177.4
1,292.5
1,211.8
1,302.7
Total Liquid Assets
(Note 4)
(billions of yen)
3,324.1
4,656.3
4,943.4
4,968.1
5,883.1
7,661.9
8,508.2
9,229.9
9,199.5
9,372.1
Total Assets
(billions of yen)
29,062.0
30,349.2
29,818.1
30,650.9
35,483.3
41,437.4
47,729.8
47,427.5
48,750.1
50,308.2
Toyota Motor Corporation Shareholders’ Equity
(billions of yen)
10,061.2
10,359.7
10,332.3
10,550.2
12,148.0
14,469.1
16,788.1
16,746.9
17,514.8
18,735.9
Return on Equity
Return on Asset
(%)
(%)
(4.0)
(1.4)
2.1
0.7
3.9
1.4
2.7
0.9
8.5
2.9
13.7
4.7
13.9
4.9
13.8
4.9
10.6
3.8
13.7
5.0
(Note 1) Shows “Net income (loss) attributable to Toyota Motor Corporation”
(Note 2) Value of common shares repurchased (shareholder return on Net Income for the period, excluding shares constituting less than one unit that were purchased upon request and repurchases made to avoid dilution of shares)
(Note 3) Figures for depreciation expenses and capital expenditures do not include vehicles in operating lease
(Note 4) Excludes fi nancial subsidiaries
WEB
SEC Filing
48
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Corporate Data At a Glance History Financial Summary Non-Automotive Business Corporate/Stock Information
Financial Summary (Consolidated)
Consolidated Vehicle Sales
Net Revenues
Operating Income
(Thousands of units)
10,000
9,116
8,972
8,681
8,971
8,964
8,000
6,000
4,000
2,000
0
(Billions of yen)
30,000
25,000
25,691.9
27,234.5
28,403.1
27,597.1
29,379.5
20,000
15,000
10,000
5,000
0
(cid:2)(cid:2) Operating income (cid:3)(cid:3) Operating income ratio (Right scale)
(Billions of yen)
3,000
2,853.9
2,750.5
（%）
12.0
2,500
2,000
1,500
1,000
500
0
2,292.1
10.1
8.9
10.0
2,399.8
10.0
1,994.3
8.2
8.0
7.2
6.0
4.0
2.0
0
FY
2014
2015
2016
2017
2018
FY
2014
2015
2016
2017
2018
FY
2014
2015
2016
2017
2018
Net Income
R&D Expenses
Capital Expenditures
(cid:2)(cid:2) Net income (cid:3)(cid:3) Net income ratio (Right scale)
(cid:2)(cid:2) R&D expenses (cid:3)(cid:3) Ratio to net revenues (Right scale)
(cid:2)(cid:2) Capital expenditures (cid:2)(cid:2) Depreciation expenses
(Billions of yen)
2,500
2,493.9
（%）
10.0
(Billions of yen)
1,200
（%）
6.0
(Billions of yen)
1,500
2,312.6
2,173.3
1,823.1
7.1
8.1
8.0
1,831.1
6.6
2,000
1,500
1,000
500
0
8.5
8.0
1,000
1,004.5
910.5
1,055.6
1,037.5
1,064.2
3.5
3.7
3.7
3.8
3.6
6.0
4.0
2.0
0
800
600
400
200
0
5.0
4.0
3.0
2.0
1.0
0
1,250
1,292.5
1,302.7
1,177.4
1,211.8
1,000
1,000.7
885.1
893.2
964.4
775.9
806.2
750
500
250
0
FY
2014
2015
2016
2017
2018
FY
2014
2015
2016
2017
2018
FY
2014
2015
2016
2017
2018
49
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Corporate Data At a Glance History Financial Summary Non-Automotive Business Corporate/Stock Information
Non-Automotive Businesses
Financial Services
Housing Services
Toyota Financial Services Corporation provides fi nan-
cial services, mainly auto loans and leasing, to more
than 26,000,000 customers across its network,
which spans more than 35 countries and regions. In
fi scal 2017, the fi nancial services business recorded
net revenues of ¥2,017.0 billion and operating
income of ¥285.5 billion.
Toyota’s fi nancial services center mainly on sales
fi nancing, which serves as a tool to promote car
sales. At the same time, we are working in new busi-
ness areas to realize a better future mobility society.
The basic role of the fi nancial services business is
to enable more customers to use our cars. We do
our utmost to fulfi ll that role by promoting digitization,
developing and offering new fi nancial products, and
expanding our network to countries where the auto-
motive market is growing. For example, in fi scal
2017, we established and began sales at a fi nancial
services company in Ireland.
Furthermore, with the automotive industry undergo-
ing major changes, we are implementing initiatives to
improve customers’ lifestyles and the convenience of
society as a whole by expanding our value chain to
create added value through fi nancial services across
the car life cycle, from manufacture to disposal.
In addition, to help customers realize the joy and
freedom of movement through fi nancial services, we
are partnering with such ridesharing companies as
Uber Technologies, Inc. and Grab Holdings Inc. and
working to apply the big data provided by cars in the
telematics car insurance business.
Going forward, we will continue to develop and
provide fi nancial services in line with customer needs
and local market characteristics to help enrich cus-
tomers’ lives.
WEB
Toyota Financial Services Corporation
Toyota Housing Corporation operates a range of
housing-related businesses, including detached
house construction as well as condominium develop-
ment and housing renovations. Under the brand
vision “Sincerely for You,” we strive to deliver peace
of mind during construction, after construction, and
through support in order to help customers realize
their ideal lifestyles. The mainstay detached house
construction business has a sales area covering 29
of Japan’s prefectures, with three factories across the
country. In fi scal 2017, the housing services business
sold 16,222 units on a consolidated basis and gener-
ated net revenues of ¥547.9 billion.
In response to the popularization of net zero ener-
gy houses (ZEH), we are adopting various solutions
that meet ZEH thermal insulation specifi cations as
standard features. Moreover, we have recently
received recognition under the Good Design Award.
As these examples show, we are providing housing
that realizes high quality in terms both of basic
performance and design. At the same time, the
KenBiKenJu Laboratory, a next-generation housing
research facility that brings together technologies
from across the Toyota Group, is researching new
services that leverage IoT and AI and developing
advanced technologies to create housing that meets
the needs of working women and enable seniors to
enjoy rich, active lives.
In 2017, Toyota Housing made Misawa Homes
Co., Ltd. a consolidated subsidiary. Working together
in such areas as condominium marketing, the two
companies are actively building a solid track record.
Going forward, we will continue to realize synergies in
a range of fi elds, such as community development
and overseas businesses, working to accelerate the
progress of both companies’ growth strategies and
provide customers with better products and services.
WEB
Toyota Housing Corporation (Japanese language only)
A Network Spanning More Than 35 Countries and Regions
Net Zero Energy House (ZEH)
Insulate
(cid:4) Insulating exterior walls, roofs, and floors
(cid:5) Insulating windows and doors
Reduce
(cid:6) Smart Airs
(cid:7) High-efficiency AC units
(cid:8) High-efficiency water heater
(cid:9) Pure 24 Central
(cid:10) LED lighting
(cid:11) HeMS Pro
Generate
(cid:2) Solar power
(cid:3) ENE-FARM type 5 generator
Power
company
Sensor-
enabled power
distribution
board
Toyota
Smart
Center
Smartphone
Tablet
50
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Corporate Data At a Glance History Financial Summary Non-Automotive Business Corporate/Stock Information
Corporate Information and Stock Information (As of March 31 2018)
Corporate Data
Company Name
Established
Common Stock
Fiscal Year-End
Public Accounting Firm
Number of Affi liates
Number of Employees
Corporate Website
Stock Data
Number of Shares Authorized
Number of Shares Issued
Number of Treasury Stock
Number of Shareholders
Number of Shares per Trading Unit
Stock Listings
Toyota Motor Corporation
August 28, 1937
¥635.4 billion
March 31
PricewaterhouseCoopers Aarata LLC
Consolidated subsidiaries: 606
Affi liates accounted for by the equity method: 57
369,124 (Parent company: 74,890)
Corporate information: http://www.toyota-global.com
IR information: http://www.toyota-global.com/investors
10,000,000,000 shares
Common shares: 3,262,997,492 shares
First series Model AA class shares: 47,100,000 shares
353,073,500 shares
632,418
100 shares
Japan: Tokyo, Nagoya
Overseas: New York, London
Japan: 7203
Securities Code
American Depositary Receipts (ADRs) Ratio: 1 ADR=2 Common Stock
Transfer Agent in Japan
Symbol: TM
Mitsubishi UFJ Trust and Banking Corporation
1-1, Nikko-cho, Fuchu City, Tokyo 183-0044, Japan
Japan toll-free: (0120) 232-711
Depository and Transfer Agent for ADRs The Bank of New York Mellon
240 Greenwich Street, New York, NY 10286, U.S.A.
Tel: +1 (0) 201-680-6825
U.S. toll-free: (888) 269-2377, (888) BNY-ADRS
Depositary Receipt: http://www.adrbnymellon.com
Transfer Agent: https://www-us.computershare.com/investor
Contact Points for Investors
Japan Toyota City Head Offi ce: 1, Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan
Tel: (0565) 28-2121 Fax: (0565) 23-5721
Tokyo Head Offi ce: 1-4-18, Koraku, Bunkyo-ku, Tokyo 112-8701, Japan
Tel: (03) 3817-7111 Fax: (03) 3817-9092
U.S.A. Toyota Motor North America, Inc.
U.K.
6565 Headquarters Drive, Plano, TX 75024, U.S.A.
Tel: +1 (0) 469-292-4000
irteam@tma.toyota.com
Toyota Motor Europe, London Offi ce
Second Floor, Caroline House, 55-57 High Holborn, London WC1V 6DX, U.K.
Tel: +44 (0) 207-290-8500
irteam@toyota-europe.com
Major Shareholders (Top 10)
Name
Japan Trustee Service Bank, Ltd.
Toyota Industries Corporation
The Master Trust Bank of Japan, Ltd.
State Street Bank and Trust Company (Standing Proxy:
Settlement & Cleaning Services Division, Mizuho Bank, Ltd.)
Nippon Life Insurance Company
DENSO Corporation
JP Morgan Chase Bank, N.A.
(Standing Proxy: Settlement & Cleaning Services Division,
Mizuho Bank, Ltd.)
Mitsui Sumitomo Insurance Company, Limited
Trust & Custody Services Bank, Ltd.
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Common
shares
(1,000 shares)
First series
Model AA class
shares
(1,000 shares)
Total
(1,000 shares)
381,087
232,037
172,408
119,497
110,834
89,784
77,287
58,811
58,234
51,045
180
—
—
—
560
—
—
—
—
—
381,267
232,037
172,408
119,497
111,394
89,784
77,287
58,811
58,234
51,045
Percentage of
Shareholding
(%)
12.89
7.85
5.83
4.04
3.77
3.04
2.61
1.99
1.97
1.73
Note: The percentage of shareholding is calculated after deducting the number of shares of treasury stock (353,073 thousand shares) from the total
number of shares issued.
Ownership Breakdown
Individuals, etc.
(including treasury stock):
761,620 thousand shares
(23.00%)
Other corporate entities:
693,984 thousand shares
(20.97%)
Financial institutions,
brokerages:
1,125,334 thousand shares
(34.00%)
Foreign corporate entities
and others:
729,158 thousand shares
(22.03%)
Note: Ratio indicates the share of ownership to the total number of shares issued.
51
TOYOTA Annual Report 2018
Table of Contents
Message from the President
Toward the Mobility Society of the Future
Initiatives for Sustainable Growth
Corporate Data
Toyota is a Worldwide Olympic/Paralympic Partner in the category of vehicles, mobility ser-
vices and mobility solutions.
Cautionary Statement with Respect to Forward-Looking Statements
This report contains forward-looking statements that refl ect Toyota’s plans and expectations.
(v) Toyota’s ability to realize production effi ciencies and to implement capital expenditures at the
(xiii) fuel shortages or interruptions in electricity, transportation systems, labor strikes, work stop-
These forward-looking statements are not guarantees of future performance and involve known
levels and times planned by management; (vi) changes in the laws, regulations and government
pages or other interruptions to, or diffi culties in, the employment of labor in the major markets
and unknown risks, uncertainties and other factors that may cause Toyota’s actual results, per-
policies in the markets in which Toyota operates that affect Toyota’s automotive operations, par-
where Toyota purchases materials, components and supplies for the production of its products
formance, achievements or fi nancial position to be materially different from any future results, per-
ticularly laws, regulations and government policies relating to vehicle safety including remedial
or where its products are produced, distributed or sold; and (xiv) the impact of natural calamities
formance, achievements or fi nancial position expressed or implied by these forward-looking
measures such as recalls, trade, environmental protection, vehicle emissions and vehicle fuel
including the negative effect on Toyota’s vehicle production and sales.
statements. These factors include, but are not limited to: (i) changes in economic conditions,
economy, as well as changes in laws, regulations and government policies that affect Toyota’s
market demand, and the competitive environment affecting the automotive markets in Japan,
other operations, including the outcome of current and future litigation and other legal proceed-
A discussion of these and other factors which may affect Toyota’s actual results, performance,
North America, Europe, Asia and other markets in which Toyota operates; (ii) fl uctuations in cur-
ings, government proceedings and investigations; (vii) political and economic instability in the
achievements or fi nancial position is contained in Toyota’s annual report on Form 20-F, which is
rency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar,
markets in which Toyota operates; (viii) Toyota’s ability to timely develop and achieve market
on fi le with the United States Securities and Exchange Commission.
the euro, the Australian dollar, the Russian ruble, the Canadian dollar and the British pound, and
acceptance of new products that meet customer demand; (ix) any damage to Toyota’s brand
interest rates fl uctuations; (iii) changes in funding environment in fi nancial markets and increased
image; (x) Toyota’s reliance on various suppliers for the provision of supplies; (xi) increases in
competition in the fi nancial services industry; (iv) Toyota’s ability to market and distribute effectively;
prices of raw materials; (xii) Toyota’s reliance on various digital and information technologies;
WEB SEC Filling
52
TOYOTA Annual Report 2018