Section 6. Strengthening Development and Sales Efforts in the Japanese Market

Item 1. Structural Changes in the Japanese Automotive Market

Corolla's fall from the leading position

For 33 years since 1969, the Corolla had continued to hold the top position in annual sales volume in Japan's registered car market. That streak was broken in 2002. The Fit, launched by Honda Motor Co., Ltd. in June 2001, prevented the ninth-generation Corolla-launched as part of the NVC (New Century Value) Series in 2000-from winning its 34th title. The Fit recorded a whopping sales volume of 104,000 vehicles in just the six-month sales period it was available in 2001.

The Japan Sales & Marketing Group of Toyota Motor Corporation (TMC) and Corolla dealers rolled out a campaign to win the title for the 34th time. Partially redesigns were made in all models within the series, setting up models with affordable specifications, and more ads were run than the amount normally run following a complete redesign. Furthermore, individual dealers worked on creating more opportunities for customers to come to showrooms through various programs such as the All-Out Contact Plan, targeted at the entire range of customers.

Additionally, many Toyota business customers offered to replace their vehicles with new Corollas, turning what was known as the "V34" campaign into a program that united TMC, its dealers, and affiliated companies. However, the Corolla, which reached only 226,000 vehicles sold in 2002, could not surpass the Fit's 250,000, bringing an end to the Corolla's winning streak. Although the Corolla did win back the top position in 2003, the fact that it had fallen from the top was a stark indication that a structural change toward downsizing had occurred in the market.

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