Toyota’s Global Strategy

1 toyota s Global Strategy Moving toward Global Motorization ToyotaToyota s Global Strategys Global Strategy Moving toward Global MotorizationMoving toward Global Motorization April 16, 2003 April 16, 2003 toyota Motor CorporationToyota Motor Corporation1 Cautionary Statement with Respect to Forward-Looking StatementsThis presentation contains forward-looking statements that reflect toyota s plans and expectations. These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause toyota s actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. These factors include: (i) changes in economic conditions affecting, and the competitive environment in, the automotive markets in Japan, North America, Europe and other markets in which toyota operates; (ii) fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the dollar, the euro and the British pound; (iii) toyota s ability to realize production efficiencies and to implement capital expenditures at the levels and times planned by management; (iv) changes in the laws, regulations and government policies affecting toyota s automotive operations, particularly laws, regulations and policies relating to environmental protection, vehicle emissions, vehicle fuel economy and vehicle safety, as well as changes in laws, regulations and government policies affecting toyota s other operations, including the outcome of future litigation and other legal proceedings.

2 (v) political instability in the markets in which toyota operates; (vi) toyota s ability to timely develop and achieve market acceptance of new products; and (vii) fuel shortages or interruptions in transportation systems, labor strikes, work stoppages or other interruptions to, or difficulties in, the employment of labor in the major markets where toyota purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold. A discussion of these and other factors which may affect toyota s actual results, performance, achievements or financial position is contained in the Operating and Financial Review and Prospects and Information on the Company sections and elsewhere in toyota s annual report on Form 20-F, which is on file with the United States Securities and Exchange Motor CorporationToyota Motor Corporation3 Overseas outputGlobal outputI. Global Manufacturing & Marketing in 2002I.

3 Global Manufacturing & Marketing in 2002 Growth in Production VolumeGrowth in Production VolumeGrowth in Production Volume2002200219861986 Global output(Millions of units) Global output(Millions of units) output(Millions of units)Overseas output(Millions of units) years13 years2002 Global (million units)Output *Sales *2002 Global2002 Global (million units)(million units)Output :Output **Sales :Sales **CorollaCorollaAnnual sales surpass 1 million unitsAnnual sales surpass Annual sales surpass 1 million units1 million units3 3 3 3 yearsyearsyearsyears3 3 3 3 3 3 3 3 yearsyearsyearsyearsyearsyearsyearsyears * includes toyota /Lexus, Daihatsu and Hino brands.* includes toyota /Lexus, Daihatsu and Hino 2010 Global VisionII. 2010 Global Vision200220022010s2010sGlobalmotorizati onGlobalmotorization<Expected society> <Expected society>Taking onthe challengesfor changeTaking onTaking onthe challengesthe challengesfor changefor changeAchieve Global production & sales of 6 million unitsAchieve Achieve Global Global production & production & sales of sales of 6 million units6 million unitsStrong growth of Asian marketsStrong growth of Asian marketsMarket & population growthin the USMarket & population growthin the USRise of markets in Eastern & Central Europe and in RussiaRise of markets in Eastern & Central Europe and in Russia* Regional strategies North America, Europe, Asia, China and Japan* Technological innovation* Regional strategies North America, Europe, Asia.

4 China and Japan* Technological innovationMajor change in the Global economic environmentMajor change in the Global economic environment5 North American Market (1):Creating market through new product launches North American Market (1):Creating market through new product launches 551010151500(Millions of units)(Millions of units)Passenger vehicle marketPassenger vehicle marketPassenger vehicle marketCommercial vehicle (light truck) marketCommercial vehicle Commercial vehicle (light truck) market(light truck) marketLexus GX470 Lexus RX330 Tundra Double CabLuxury SUVsFull-sized trucksScionxAxBEntry-level vehicle for young drivers2002 units2002 units19901990199519952000200020022002 CorollaCamryNo. 1 in 2002passenger vehiclesalesNo. 1 in 2002passenger vehiclesalesIII. Regional StrategyIII. Regional Strategy <US market> <US market>6#1 NUMMI#1 NUMMIN orth American Market (2):Production growth centered on light truck manufacturingNorth American Market (2):Production growth centered on light truck manufacturing#3 Canada First Lexusproduction base#3 Canada First Lexusproduction base#2 Kentucky#2 Kentucky#4 Indiana#4 Indiana#5 Mexico#5 Mexico<Manufacturing capacity expansion plan> <Manufacturing capacity expansion plan>PresentPresentFall 2003 Fall 20032005200520062006 Indiana plant expansion (Sienna)Indiana plant expansion (Sienna)Canada plant expansion (RX330)Canada plant expansion (RX330)Mexico plant (Tacoma)Mexico plant (Tacoma)Texas plant (Tundra)Texas plant (Tundra)#6 Texas Made-in-Texas trucks#6 Texas Made-in-Texas trucksIII.

5 Regional StrategyIII. Regional Strategy (Millions of units)(Millions of units) Market: Integrated manufacturing & marketingEuropean Market: Integrated manufacturing & marketingNew Avensis launched in March 2003 as upper core modelNew Avensis launched in March 2003 as upper core modelFranceFranceTurkeyTurkeyToyota Motor Europe (TME) Leading marketing companies Manufacturing plants2002 sales:760,000units2002 sales:760,000unitsMarketingorganizationr estructuringstartingApril 2003 Marketingorganizationrestructuringstarti ngApril 2003 Action in the wider EU marketAction in Action in the wider the wider EU marketEU marketIII. Regional StrategyIII. Regional Strategy First Japan market launch of UK-made vehicle in fall 2003 First Japan market launch of UK-made vehicle in fall 2003 Czech RepublicCzech RepublicUnited KingdomUnited Kingdom8 Asian Market: Manufacturing & export base for pickups/multipurpose vehicles Development of Global manufacturing base and mutual distribution network (IMV Project starts in 2004)Asian Market: Manufacturing & export base for pickups/multipurpose vehicles Development of Global manufacturing base and mutual distribution network (IMV Project starts in 2004): Pickups & multipurpose vehicles: Engines & main components: Pickups & multipurpose vehicles: Engines & main componentsIII.

6 Regional StrategyIII. Regional StrategyThailandThailandIndonesiaIndones iaIndiaIndiaPhilippinesPhilippinesJapanJ apanOthersOthersThailand: Global manufacturing baseOther Asian nations: Manufacturing bases for engines & main componentsThailand: Global manufacturing baseOther Asian nations: Manufacturing bases for engines & main componentsSouth AfricaSouth AfricaArgentinaArgentinaTo more than 80 nations/regionsTo more than 80 nations/regionsTo Europe & AfricaTo Europe & AfricaTo South AmericaTo South AmericaSouth Africa & Argentina:Intra-regionalmanufacturing basesSouth Africa & Argentina:Intra-regionalmanufacturing bases92002200320042005200620072008200920 10 Establish fullproduct lineupEstablishToyota brand imageProduct lineupProduction capacityDaihatsu(Compact)Vios25,000 units 115,000 units/year50,000units/yearChinese Market: Manufacturing & marketingto be strengthened in response to market growthChinese Market: Manufacturing & marketingto be strengthened in response to market growthLarge & Luxury sedanLuxurySUVS everal hundredthousand units/year30,000units/yearCompactIII.

7 Regional StrategyIII. Regional StrategyAggressive product launchesAggressive product launchesAggressive product launchesCrownCorollaLand Cruiser/Prado50,000units/yearCompact10 Japanese Market: Introduction of Lexus & Reorganization of Sales Channel Preparations for future changes (in market structure & customer values)Japanese Market: Introduction of Lexus & Reorganization of Sales Channel Preparations for future changes (in market structure & customer values)After reorganizationAfter reorganizationDevelopment of new Lexus dealership network in 2005 (150 dealers)Lexus (new)III. Regional StrategyIII. Regional StrategyToyota brandToyota brand11 Japanese Market: Introduction of Lexus & Reorganization of Sales Channel Preparations for future changes (in market structure & customer values)Japanese Market: Introduction of Lexus & Reorganization of Sales Channel Preparations for future changes (in market structure & customer values)PresentPresentToyota brandToyota brandToyota brandToyota brandAfter reorganizationAfter reorganizationDevelopment of new Lexus dealership network in 2005 (150 dealers)Lexus (new)Consolidation ofNetzNetz& VistaVistanetworks in spring 2004 Foothold in new market segmentNetzLargest volume-sales channel, centering on compact vehiclesCorollaLeading channel for the medium-size car marketToyopetLuxury vehicle channel for the toyota brandToyotaIII.

8 Regional StrategyIII. Regional StrategyVistaNetzToyotaToyopetCorolla(5 channels)(5 channels)(5 channels)(4 channels)(4 channels)(4 channels)12IV. Technology Strategy (1)IV. Technology Strategy (1)Development of a wide range of technologies and products with focus on market creationDevelopment of a wide range of technologies and products with focus on market creationEnergytechnologyNanotechnologyMa terial technologyBiotechnologyEngineBodyElectro nicsTransmissionChassisITEnvironmentSafe ty<Technology development> <Marketing>Leading-edge technologiesLeading-edge technologiesNext-generation technologiesNext-generation technologiesExisting technologiesExisting technologiesAssessingcustomer needsProposal ofbusiness visionProducts focused on market creation Comfort Kindness Excitement 13IV. Technology Strategy (2)IV. Technology Strategy (2)Harmonizing Ecology with Emotion Harmonizing Ecology with Emotion EcologyEcologyEmotionEmotion14 Global -scale motorizationGlobal-scale motorizationRise of markets in Eastern & Central Europe and in RussiaRise of markets in Eastern & Central Europe and in RussiaStrong growth of Asian marketsStrong growth of Asian marketsV.

9 ConclusionV. ConclusionMarket & population growth in the USMarket & population growth in the USAddressing challenges for change toward further growthAddressing challenges for change toward further growth15 April 16, 2003 April 16, 2003 toyota Motor CorporationToyota Motor CorporationToyota s Global Strategy Moving toward Global Motorization ToyotaToyota s Global Strategys Global Strategy Moving toward Global MotorizationMoving toward Global Motorization 16 toyota s Financial StrategyToyotaToyota s Financial Strategys Financial StrategyApril 16, 2003 April 16, 2003 toyota Motor CorporationToyota Motor Corporation1 Ryuji ArakiRyuji ArakiExecutive Vice PresidentExecutive Vice PresidentToyota Motor CorporationToyota Motor Corporation2I. Business PerformanceI. Business PerformanceOperating income by market segmentOperating income by market segment41198 Asia & other regions-17-19-12 Consolidated elimination 1,1101,123818 Consolidated total5-12-2 Europe268265175 North America813870649 JapanFY2003/9mos.

10 (April-Dec.,2002)FY2002(April,2001-March ,2002)FY1998 (April,1997-March,1998)(Japan GAAP)(Billions of yen) incomeOperating income ratioROEII. Profit EarningsII. Profit EarningsGrowth and targets in operating income ratio & ROEG rowth and targets in operating income ratio & ROEROE 10%(Japan GAAP)(%)Operating income ratio9%(%)69105 05001,000FY1999 FY2000 FY2001 FY2002 April-Dec.,2002 Target (Billions of yen)4 III. Dividend Payments & Share BuybackIII. Dividend Payments & Share BuybackCash flow allocated to dividend payments and share buybackCash flow allocated to dividend payments and share buyback* Cash flow = Current net income + Depreciation costs - Capital expendituresCash flowDividend & share buybackFY1999FY2000FY2001FY200205001,000 400 Capital expendituresR&D(Japan GAAP)(Billions of yen)5IV. Change in Share OwnershipIV. Change in Share OwnershipBanksApprox. 15%[March 31, 2003 (estimate)][Sept.]