Section 1. Heightened Presence in the North American Market

Item 2. Expansion of Lineup

Until the 1980s, Toyota's brand image in North America had centered on small and medium sized passenger vehicles such as the Camry and Corolla models, and small pickup trucks such as the Hilux. However, the company rolled out a series of new models in the 1990s, undergoing a major revamp of its image.

The first step, in 1989, was the company's entry into the luxury vehicle market with the establishment of its Lexus brand. Lexus vehicles exceeded their German rivals in terms of performance and competitive price, and together with the company's new network of dealerships, which placed emphasis on delivering high quality customer service, the brand won high approval from U.S. customers. In 2000, the Lexus brand recorded the highest sales in the luxury vehicle market with 204,000 cars sold, and further extended sales to 327,000 vehicles in 2007.

The second step was full-scale entry into new markets with the release of several new SUVs, minivans and pickup trucks, vehicle types that enjoyed popularity among U.S. consumers starting around the 1990s. In 1996 Toyota released the RAV4, widely recognized as the first crossover SUV, followed in 1997 by the Sienna minivan. The company also entered the large pickup truck and full-size SUV markets, which were previously the domains of the Big Three, releasing the Tundra pickup truck and the Sequoia SUV by 2000. Along with the Tundra, the Tacoma and the T100 were among pickup trucks released exclusively for the U.S. market. The ratio of Toyota's U.S. light truck1 sales versus passenger car sales grew from 29.9 percent in 1988 to 42.6 percent in 2007.

The third step was the release of the Prius hybrid vehicle in 2000, which greatly boosted Toyota's environmentally conscious image. Toyota also released hybrid vehicle versions of existing models such as the Camry, Lexus brand vehicles, and even SUVs-ahead of rival companies-and the company's annual hybrid vehicle sales grew rapidly from 5,500 units in 2000 to 277,000 in 2007. As of 2007, the all-time total of U.S. hybrid vehicle sales exceeded 700,000 vehicles.

The fourth step was the establishment of the Scion brand geared toward younger users in 2003. Targeting Generation Y (people born between 1975 and 1989), a demographic into which Toyota had comparatively little penetration, the company experimented with new advertising and sales channels, developing internet sales and marketing, including establishment of the website. The brand's first models, the xA and xB, sold steadily, and in 2004 the tC model was released exclusively for the U.S. market. Cumulative sales of Scion models reached 500,000 units in four years.

Through these actions, starting in the 1990s Toyota was able to successfully make full use of its core models-such as the Corolla, Camry and Hilux-while at the same time revamp its image and heighten its market presence by expanding its lineup to include luxury vehicles and cars targeting the younger generation, increasing its offerings of light trucks, and making bold advances into hybrid technology.

As Toyota expanded and improved its product lineup and dealer network in North America, the company also adopted new sales strategies. For example, in 1991, when releasing the new-model Camry, a sales training program was tested for the first time. Toyota Motor Sales, U.S.A., Inc. (TMS) dispatched 26 training teams to dealerships nationwide, conducting initiatives to broaden product knowledge, such as test driving rival models including the Honda Accord and the Ford Taurus. This method was also deployed horizontally across the organization for the launch of the 1992 new-model Corolla.

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