1. Japan Trip Presentation:
TOYOTA
Jose F. Rodrigues Neto
Paolo Gencarelli
Greg McKelvey
Giulio Pappalardo
Kazutoshi Tominaga

2. • Company Background
• Car Industry Trends
• Toyota Challenges & Strategies
• Our Questions for Toyota
AgendaAgenda

3. Company BackgroundCompany Background

4. • Annual sales: $114 Billion
• Production: ~5.8 million Units/Yr.
• Employees: ~210,000 people
• 56 manufacturing plants in 6 continents
• 3rd
largest automotive manufacturer in the
global market
Headline Facts: ToyotaHeadline Facts: Toyota

5. • Established in 1937 out of Sakichi Toyoda’s
weaving machine company
• Launched first car (SA Model) in 1947
• “Toyota Production System” formed in 1950
based on Just-In-Time principle
• Overseas production starts in 1959 (Brazil)
• In 1972, cumulative production >10M units
• In 2002, entry in the Formula 1 circuit
Company HistoryCompany History

6. • Automotive [90.0% Sales]
– Design, manufacture and sales of passenger cars,
recreational vehicles, SUVs and related parts
• Financial Services [4.5% Sales]
– Provisions of loans to car buyers and car dealers
• Others [5.5% Sales]
– Industrial vehicles (forklifts, etc.)
– Pre-fabricated housing
Business Segments -Business Segments - Low DiversificationLow Diversification

7. Japan Market (2000)
Strong International Presence and DominantStrong International Presence and Dominant
Position in the Domestic MarketPosition in the Domestic Market
GM
Ford
T
O
Y
O
T
A
VW
Daimler
Chrysler
Fiat Nissan
PSA
Honda
Renault
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Int’l Market (2000)
In 1,000 Units

8. 8
Other 0,1
Asia 0,3
Europe 0,2
North America 1,1
Japan 3,5
Other 0,6
Asia 0,3
Europe 0,7
North America 1,8
Japan 1,8
Production Sales
Toyota Production and Sales (MM Units)
21%
67%
12%
35%
35%
30%
Balanced Global SalesBalanced Global Sales
vs. Predominantly Export Based Productionvs. Predominantly Export Based Production

9. 3-year stock price comparison
Strongest Stock Market PerformanceStrongest Stock Market Performance
Relative to the IndustryRelative to the Industry

10. • Market Cap
• 5-Yr CAGR Revenues
• 5-Yr Pre tax Profit Margin
• 5-Yr CAGR Earnings
• ROE
• $ 102 Bn
• 3.0%
• 7.3%
• 17.3%
• 9.5%
• $ 43 Bn (DaimC)
• 3.8%
• 4.5%
• –12.63%
• 11.8%
INDUSTRY
Strong Financial PerformanceStrong Financial Performance

11. • Revolutionized manufacturing industry
• At its core is “lean” principle
– Relentless drive to improve efficiency and
eliminate waste
• Beginnings of TPS were born out of
necessity due to lack of resources in
post-war Japan
Revolutionary Production SystemRevolutionary Production System

12. Toyota Production System:Toyota Production System:
Key Main ConceptsKey Main Concepts
• Just In Time manufacturing
• Small batches which reduced inventory costs,
tightened relationship with suppliers and improved
quality control
• Just In Time manufacturing
• Small batches which reduced inventory costs,
tightened relationship with suppliers and improved
quality control
• Low cost
supplier
• Low cost
supplier
• Asking “Why?” 5 times to locate source of problems
• Stopping the production line whenever there are quality
problems to ensure they are not repeated
• Asking “Why?” 5 times to locate source of problems
• Stopping the production line whenever there are quality
problems to ensure they are not repeated
• JIT• JIT
• “5 Whys”
Quality
• “5 Whys”
Quality
• Long term supplier relationships• Long term supplier relationships

13. Car Industry TrendsCar Industry Trends

14. • Consolidation
• Push to Emerging Markets for Growth
• Global Emphasis on Small-Size Vehicles
• Environmentally Friendly Products
• Internet as a Key Enabler of Change of
Automotive Retailing
Car Industry TrendsCar Industry Trends

15. Drivers of ConsolidationDrivers of Consolidation
Platform Sharing
Purchasing Rationalization
Capacity Rationalization
Supply Base Rationalization
Forge Strong VBO
Relationships
Integration of Production &
Capability Sets
Create & Manage Global
Supply Network
VehicleBrandOwnerSupplier
Market
Drivers
Product
Drivers
NewCapabilitiesDrivers
New Scale Economies in
Production, Purchasing and
Product Platforms
Enhanced Market Penetration
Progress Toward Integration
Status
New Scale Economies
“Of the 20 auto makers in 1965, 14 have since merged or been taken over.
By 2006, the top 14 VMs will account for 90% of light vehicle output.”
Type Rationale Tactics

16. Growth by Region 1998-2006
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Asia-
Pacific
East
Europe
North
America
West
Europe
South
America
Africa /
Middle
East
%ofGrowth
Emerging Markets to Provide Long-TermEmerging Markets to Provide Long-Term
Growth in Light Vehicle ProductionGrowth in Light Vehicle Production

17. Light Vehicle Segment
% Growth
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
A
B
C
C/D
D
Small-size Utility
Small-size Van
Mid-Size Utility
Mid-Size Van
Full-Size Pick-up
Global Emphasis on Small-Size VehicleGlobal Emphasis on Small-Size Vehicle

18. Reduction in Polution Standards
(Grams of NOx per mile)
0
0.5
1
1.5
2
2.5
3
3.5
1975 1977 1981 1994 1999 2004 -2009
Cars
Smaller SUVs, Minivans, and Light Trucks
(Less that 6000 lbs)
Reduction in Emission StandardsReduction in Emission Standards

19. Toyota ChallengesToyota Challenges

20. • Industry overcapacity
• Economic downturn
• Globalization
• Environmental concerns
• The IT revolution
• Diverse and shifting consumer demand
Toyota Challenges - SummaryToyota Challenges - Summary

21. Toyota’s StrategyToyota’s Strategy
• Increase competitive strength through
advanced technology
• Promoting a global perspective
• Value-driven cost reduction
(CCC21 program)
• Expanding the value chain—becoming
the Total Mobility Services Provider
• Expansion of model offerings—Quality,
value, and style?

25. Our Questions to ToyotaOur Questions to Toyota

26. Toyota QuestionsToyota Questions
• What do you see as the key elements to succeeding in the European
market?
• After Japan, U.S., and Europe, where do you see as the next critical
market to Toyota’s globalization effort?
– Emerging markets
• What have been the most difficult challenges in the global
implementation of “The Toyota Way?”
• While sales continue to globalize, non-Japan production footprint
appears to be leveling at 35%. What is Toyota’s strategic direction on
“make where sell”? Challenges?
• Does Toyota foresee Internet as viable infrastructure in purchasing,
supplier relationships? How will Toyota integrate into TPS?
• When do you think hybrid vehicles will reach critical mass?
• What is Toyota’s view on industry consolidation and potential benefits
of acquisitions / mergers?
• How does Toyota’s recent initiatives reflect future strategic focus (e.g.
new channel brand in U.S., participation in Formula-1)

27. Reduction in Emission StandardsReduction in Emission Standards