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

Item 2. Challenging the Market with New Brands and New Genres

Strengthening development through VVC

As structural changes were taking place in the Japanese automotive market, another issue became clear. The younger generations and women tended to shy away from the Toyota brand. Toyota's product offerings were falling out of touch with changing social conditions and lifestyles, as a result of the popularization of new devices such as cell phones.

TMC President Hiroshi Okuda, appointed in August 1995, shared the assessment of the current situation held by the previous TMC president, Tatsuro Toyoda, who called the period the "Second Founding Period". President Okuda fervently asked everyone within TMC to challenge every aspect of the company's business in the way TMC employees did during the company's founding period and to continue changing in response to the constant changes in consumer tastes.

Toyota's share of the Japanese market had fallen below 40 percent. During his inaugural press conference, President Okuda expressed his strong sense of crisis regarding Toyota's weakened position in the Japanese market and listed the following as high-priority issues: 1) accelerating business expansion outside Japan, 2) developing and growing new business ventures, 3) fundamentally strengthening product planning ability and technical development ability, and 4) quickly regaining TMC's share of the Japanese market. As part of this initiative, TMC established the Virtual Venture Company (VVC) in August 1997 as a measure to strengthen development of products and services targeted at younger people in their 20s and 30s.

The VVC consisted of young employees openly recruited internally and adopted new methodologies for all steps from product planning and new vehicle styling to marketing. As part of this activity, TMC joined with Asahi Breweries, Ltd., Kao Corporation, Kinki Nippon Tourist Co., Ltd., and Matsushita Electric Industrial Co., Ltd. (now Panasonic Corporation) in August 1999 to create a new cross-industry brand called "WiLL" that would offer lifestyle solutions for younger and female consumers.

Based on the central concept of this brand, VVC proceeded to plan and develop new products, announcing the WiLL Vi compact car as its first offering in January 2000. The innovative design was a complete departure from traditional Toyota vehicles and attracted a great deal of attention from many industries. Subsequently, the WiLL VS and WiLL CYPHA were launched in 2001 and 2002, respectively. Although the sales volume of the WiLL series reached only approximately 45,000 vehicles, the VVC activities significantly impacted the decision-making processes in TMC's planning and development divisions, and turned out to be instrumental in the subsequent development of models targeted at young people, such as the bB.

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