Annual Report 2007

"I am committed to steadily improving Toyota's corporate value by continuing to pursue farsighted innovations and building a solid management platform."

In fiscal 2007, ended March 31, 2007, Toyota posted new records for net revenues and all income categories for the second year in a row. At the same time, we increased dividends paid to our shareholders for the eighth consecutive year. I am particularly pleased that we were able to increase revenues and earnings despite tougher-than-usual business conditions in the automotive industry.

I am confident that the global automotive industry has growth potential. Centered on emerging markets, automotive markets worldwide are likely to continue to expand in the medium-to-long term. However, competition is intensifying. We have entered an era in which companies that do not have the flexibility to respond precisely to a multitude of changes will not survive. By maintaining a sense of crisis in that respect, I will adopt a management approach that balances aggressiveness and prudence.

In the two years since I became Toyota's president, I have reasserted the importance of building a solid foundation for sustainable growth. Given that the source of our growth is innovation, we will invest efficiently in research and development to continue building vehicles that meet customer needs. In securing our foundation, we intend to steadily tackle three key areas: quality, cost competitiveness, and personnel training.

Toyota's tradition and strength stem from carrying out these clear steps in an honest, steadfast, and uncompromising manner. Avoiding complacency over recent successes, I am committed to steadily improving Toyota's corporate value by continuing to pursue farsighted innovations and building a solid management platform. As we pursue that goal, I ask our shareholders for their continued support.

July 2007

Katsuaki Watanabe, President